CDP Market (feUSD)

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Overview

The feUSD CDP Market is a money market that brings together feUSD borrowers / minters and Stability Pool depositors. It uses the Liquity v2 architecture. It is a CDP stablecoin protocol that matches two economic actors:

Side	Role	What they supply	What they earn
Borrowers / Minters	Deposit collateral and mint feUSD	Collateral (e.g. HYPE, UBTC, LSTs …)	Pay an up‑front borrow fee + an interest rate they set themselves
Stability‑Pool (SP) Depositors	Provide passive liquidity to absorb liquidations	feUSD bought on the secondary market	Earn the borrowers’ interest, a share of up‑front fees, and any liquidation gains

As a money market, the protocol’s job is to bring these two sides into rate equilibrium: borrowers compete to post an attractive rate, while SP depositors decide whether the offered return compensates them for risk.

Why use the CDP to borrow feUSD?

• Set your own interest rate → discover the cheapest cost of capital in real‑time.

• Capital efficiency → highest loan‑to‑value (LTV) due to the Stability Pool design. Because liquidations are absorbed by the Stability Pool rather than by liquidators into the secondary markets, each additional dollar in SP liquidity safely supports a larger system‑wide debt load. Borrowers can therefore unlock more liquidity per unit of collateral compared to other money market models.

Borrowers of feUSD must be aware of

• Liquidations — positions that go above the LTV can be liquidated into the Stability Pool.

• Redemptions — when feUSD trades below $1, arbitrageurs can redeem feUSD for $1 of collateral, starting with the positions with the lowest interest rate. This affects positions with low interest rates.

Why deposit feUSD into the Stability Pool?

SP depositors purchase feUSD on the secondary market and deposit it into the pool to earn:

• Streaming interest paid by borrowers.

• A share of up‑front borrow fees.

• Liquidation gains in the form of discounted collateral (event‑driven, not guaranteed).

feUSD Stability Pool depositors must be aware of

• Liquidations — during liquidations your feUSD is burned and you receive the respective collateral of the pool you deposited into instead (E.g. HYPE for the HYPE Stability Pool, exposing you to its price volatility.

Accepted Collaterals

Collateral	LTV	Oracle
HYPE	~59%	Redstone
UBTC	50.00%	Redstone