Felix Protocol: feUSD, Morpho Vaults and Hyperliquid Lending

Felix's Terms are an agreement with Felix Labs Inc, a Delaware company based in Newark, Delaware ³. The same Terms say the platform isn't offered to people who live in, are citizens of or are located in the United States, or in sanctioned regions such as Crimea, Cuba, Iran, North Korea, Syria and Russia. They also allow geoblocking ³. Disputes go to arbitration seated in England and Wales, under Delaware law ³.

Felix's Morpho forum post calls Felix "the curator for Morpho on Hyperliquid," backed by an internal risk team ¹⁰. Its docs say it works with Anthias Labs on risk monitoring and parameter setting, and uses RedStone as its main oracle ⁶.

Felix's first product is a collateralized debt position (CDP) market built on Liquity V2's design ⁴:

1. You deposit collateral, such as HYPE, UBTC or liquid staking tokens, and mint feUSD, a dollar-pegged stablecoin.
2. You pay a one-time fee up front and choose your own ongoing interest rate.
3. If feUSD trades below $1, holders can redeem it for $1 of collateral. Redemptions hit the lowest-rate positions first, so a cheap rate carries more redemption risk.
4. Liquidations are absorbed by a Stability Pool, whose feUSD depositors earn interest and liquidation gains.

The Liquity V2 code was audited by ChainSecurity, Dedaub, Coinspect and others and formally verified by Certora. Felix's own changes were audited by Dedaub and Coinspect ⁷. Those changes add mint caps, admin control over some parameters and an admin pause. Felix says its contracts stay upgradeable ⁷.

Vanilla Markets are Felix's variable-rate lending pools on Morpho. Borrowers post collateral and borrow assets like USDC, USDT0 or HYPE, with typical loan-to-value limits of 75–80% ⁵. Lenders deposit into Felix-curated Morpho vaults. As curator, Felix chooses which markets each vault supplies, sets caps and sets the fee ¹⁰.

As of October 23, 2026, Felix's listed Morpho vaults are all on HyperEVM ¹²:

Felix also runs newer Vault V2 versions, created in August 2026 and not yet listed in the app, holding roughly $16 million combined. It also has an unlisted USDC Frontier vault of about $6 million ¹². "Frontier" vaults accept newer or riskier collateral with tighter caps ¹⁰. Most lending is against HYPE and HYPE liquid staking tokens (kHYPE, wstHYPE), plus UBTC and UETH ¹³.

• Vaults: 10% performance fee on curated Morpho vaults, a share of the interest earned. No management fee ¹².
• Vanilla lenders: earn the borrow rate minus "a small protocol spread" ⁵.
• feUSD borrowers: pay an up-front fee plus the interest rate they set ⁴.

Network gas on HyperEVM applies to all transactions.

• Spot equities. Felix routes trades in more than 260 tokenized US stocks and ETFs from Ondo Global Markets, with accounts on Ethereum ⁸. The tokens track share prices and dividends but aren't real shares. Ondo Global Markets (BVI) Limited holds the underlying securities. Eligibility follows Ondo's rules ⁸.
• Perpetual futures. Felix runs equity and commodity perpetual markets on Hyperliquid ⁹. Its docs include a guide to sunsetting its first "FLX" HIP-3 market deployment ⁹.
• USDhl. A fiat-backed stablecoin Felix deployed on HyperEVM, backed by US Treasury bills held by the M0 Foundation, per Felix's Terms ³.

• One-ecosystem concentration. Vault collateral is mostly HYPE and HYPE derivatives, so a sharp HYPE drop affects many markets at once ¹³.
• Socialized bad debt. If a liquidation doesn't cover a loan, the shortfall is spread across all lenders in that market ⁵.
• Withdrawal queues. At high utilization, lenders may have to wait for repayments ⁵.
• Admin powers. Felix's CDP contracts are upgradeable and can be paused by an admin ⁷.
• Shrinking listed vaults. USDT0 Frontier held about $230,000 in October 2026, down from a peak of about $23.8 million, per a third-party tracker ¹⁵.