Felix Protocol vs Ondo Finance

Felix Protocol

Felix Protocol is the primary stablecoin issuance and money market platform on Hyperliquid's HyperEVM, functioning as both a collateralized debt position (CDP) engine and a variable-rate lending marketplace. Built natively on HyperEVM, Felix has established itself as one of the largest DeFi protocols in the Hyperliquid ecosystem, having crossed $1 billion in total value locked in September 2025 before settling to approximately $440 million TVL by October 2025. The protocol's core thesis is that Hyperliquid's on-chain liquidity and composability create the ideal environment for a stablecoin primitive that earns real yield for its users rather than extracting value from them. WHAT IT IS Felix operates two distinct but complementary products: a CDP system that mints feUSD (a dollar-pegged synthetic stablecoin) against on-chain collateral, and Vanilla Markets, which are variable-rate lending pools for borrowing and earning yield against major assets. The protocol has also launched USDhl, a fiat-backed, T-bill-collateralized stablecoin powered by M0 (a wholesale dollar infrastructure), broadening Felix's stablecoin suite beyond purely algorithmic constructions. Together, these products position Felix as the stablecoin factory and lending backbone for the HyperEVM ecosystem. HOW IT WORKS The feUSD CDP system is built on a fork of Liquity v2's codebase, modified with additional risk controls suited to Hyperliquid's asset landscape. Users deposit accepted collateral — HYPE, wrapped BTC (UBTC), and liquid staking tokens like kHYPE — into Troves (individual CDP vaults) and mint feUSD against it at a conservative 40% loan-to-value ratio. This is notably lower than most DeFi lending platforms, a deliberate choice to limit systemic risk given the relative volatility of the collateral base. feUSD holders can redeem their tokens for $1 worth of underlying collateral at any time, and a Stability Pool absorbs liquidated positions, distributing collateral and earned interest to Stability Pool depositors. Interest rate selection is borrower-controlled, but positions with the lowest interest rates face first-redemption risk if feUSD depegs below $1 — a soft liquidation mechanism that enforces peg discipline. Vanilla Markets, the second pillar, are variable-rate lending pools built on Morpho's lending infrastructure. Lenders deposit stablecoins (USDhl, USDe, USDT0, USDH) and earn variable interest, while borrowers post collateral (HYPE, kHYPE, UBTC) to borrow. Interest rates adjust algorithmically with pool utilization, and liquidations execute automatically when a borrower's health factor falls below 1. All positions are over-collateralized. The July 2025 CoreWriter upgrade — which enables HyperEVM smart contracts to write data to HyperCore — means Felix can now route liquidations directly through HyperCore's orderbook rather than AMM pools, reducing slippage and creating tighter integration with Hyperliquid's core liquidity engine. USDhl, the third product, is a fiat-backed stablecoin issued via M0, a wholesale dollar infrastructure backed by T-bills with on-chain reserve attestations. Convertibility is enforced at 1:1 between M0 tokens and USD, and a maintained Uniswap v3 liquidity pool ensures low-friction arbitrage. The stablecoin distributes its 4%+ T-bill yield back to users as Hyperliquid incentives, split across HyperCore spot and HyperEVM liquidity pools and reweighted every two weeks. KEY FEATURES - Dual stablecoin architecture: feUSD (CDP, algorithmic peg via Liquity v2 mechanics) and USDhl (fiat-backed, M0-powered, yield-distributing) serve different user needs and risk profiles from a single platform. - Morpho-powered Vanilla Markets: Variable-rate lending pools with dynamic interest rates and automatic on-chain liquidations. Supports HYPE, kHYPE, UBTC as collateral against stablecoin borrowing. - CoreWriter liquidation integration: Since July 2025, Felix can programmatically send liquidation orders to HyperCore's orderbook, reducing slippage and execution risk during market stress. - Conservative risk parameters: 40% LTV cap on CDP positions, mint caps, admin-controlled pause mechanisms, and incremental collateral onboarding — reflecting a deliberate approach to risk management in a novel ecosystem. - Points and incentive program: An ongoing points program rewards users for minting feUSD, supplying to Vanilla Markets, and holding USDhl, creating strong growth incentives while the governance token remains unlaunched. TEAM AND BACKING Felix has operated without publicly naming its founding team, maintaining a degree of pseudonymity common in the Hyperliquid ecosystem. The project launched on HyperEVM shortly after the mainnet EVM became available in early 2025 and has not announced formal venture funding rounds as of the time of writing. The protocol operates under the usefelix.xyz domain and has an active development roadmap that includes "Chapter 2" — a planned expansion expected to unify incentive structures across HyperCore and HyperEVM and introduce new collateral types and evolved risk parameters. Community messaging has described Chapter 2 as a significant protocol upgrade aligned with full CoreWriter integration. Felix has maintained a partnership with Hyperion DeFi, a NASDAQ-listed company that has integrated with Felix's broader product suite. TRACTION AND METRICS Felix launched on HyperEVM in early 2025 and grew rapidly alongside the broader HyperEVM ecosystem. By June 2025, the protocol had crossed $100 million in outstanding loans — a milestone reported by The Defiant. September 2025 marked its all-time high with over $1 billion in TVL, as HyperEVM total TVL itself surged 350% in two months. As of October 2025, Felix held approximately $440 million in TVL, making it the second-largest native DeFi protocol on HyperEVM by this metric behind HyperLend. The protocol has accumulated significant volume through its Stability Pool mechanism and Vanilla Markets, with HYPE and UBTC serving as the primary collateral assets driving growth. An active points program has sustained user engagement and encouraged protocol experimentation. COMPETITIVE POSITION Within the HyperEVM ecosystem, Felix competes most directly with HyperLend for lending market share. Felix's differentiation lies in its CDP stablecoin product (feUSD), which HyperLend does not offer, and in the more conservative, risk-adjusted design of its collateral parameters. Versus Liquity on Ethereum, Felix inherits architectural inspiration but layers in pause mechanisms and admin controls that Liquity deliberately avoids — a trade-off between censorship resistance and pragmatic risk management. Against MakerDAO/Sky on Ethereum, Felix benefits from Hyperliquid's throughput and HyperCore composability. The USDhl product competes with Ethena's USDe and other yield-bearing stablecoins, but is differentiated by its M0 T-bill backing and distribution of real yield back to Hyperliquid participants rather than to protocol treasuries. HYPERLIQUID INTEGRATION Felix is architected exclusively for HyperEVM and deeply integrates with HyperCore at multiple levels. The feUSD CDP system accepts HYPE (HyperCore's native staking token) and kHYPE (Kinetiq's HyperCore-staked liquid staking token) as collateral — assets that are native to the Hyperliquid L1. The Vanilla Markets build on Morpho, which itself relies on HyperEVM's EVM execution. USDhl's yield distribution is routed through HyperCore spot market liquidity incentives. Critically, CoreWriter integration allows Felix to place liquidation orders directly on HyperCore's CLOB rather than routing through AMM pools — making Felix one of the first protocols to actively exploit the bidirectional HyperCore-HyperEVM bridge at a liquidation engine level. Felix's points program allocates rewards across both HyperCore spot and HyperEVM, incentivizing the dual-layer activity that is central to Hyperliquid's long-term design. RISKS AND CONSIDERATIONS The 40% LTV ratio provides a reasonable buffer against collateral volatility, but HYPE is the dominant collateral and is itself a relatively illiquid and volatile asset by traditional standards. A severe HYPE price shock could trigger cascading liquidations that test the Stability Pool's absorptive capacity and the CoreWriter liquidation pipeline. The feUSD peg mechanism's reliance on redemption pressure means that during market stress, borrowers with low interest rates face forced liquidation through redemption — a mechanism that is economically sound but can create adverse user experiences. The protocol's admin-controlled pause functionality and mint caps represent meaningful centralization versus Liquity's immutable design. Team pseudonymity creates limited accountability in the event of critical vulnerabilities or governance disputes. Governance token launch (not yet live as of the research period) introduces tokenomics uncertainty. Dependency on Morpho for Vanilla Markets means Felix inherits any bugs or risks from the Morpho lending infrastructure. Overall, Felix is well-designed for its environment but carries ecosystem concentration risk — its growth is tightly coupled to HYPE's price trajectory and HyperEVM's adoption curve.

Ondo Finance

Ondo Finance is a leading real-world asset tokenization platform bringing US Treasury bills, money market funds, and short-duration government bonds on-chain, creating a new asset class of compliant, yield-bearing tokenized securities accessible to both institutional and DeFi participants. Founded in 2021 and backed by Pantera Capital, Coinbase Ventures, and Tiger Global, Ondo has grown into one of the most prominent players in the rapidly expanding tokenized RWA sector. Ondo flagship products include OUSG, a tokenized fund holding BlackRock iShares Short Treasury Bond ETF, and USDY, a yield-bearing stablecoin collateralized by US Treasuries and bank deposits that generates real-world yield for holders. Both products are designed to bring the risk-free rate on-chain, giving DeFi protocols and users a stable, yield-generating asset that outperforms idle stablecoin deposits while maintaining minimal credit risk. For the Hyperliquid and HyperEVM ecosystem, Ondo tokenized RWAs serve as high-quality collateral assets and yield sources that can be integrated into lending protocols, yield vaults, and treasury management strategies. As HyperEVM protocols mature, incorporating USDY as collateral enables Hyperliquid users to earn US Treasury yields on idle capital while participating in DeFi, bridging the gap between TradFi yields and on-chain returns. Ondo Flux Finance protocol enables OUSG holders to borrow stablecoins against their tokenized Treasury holdings, creating a capital-efficient liquidity solution for institutions that want on-chain yield without giving up cash equivalents. This use case is increasingly relevant as DeFi protocols on HyperEVM seek high-quality, low-volatility collateral to underpin their risk frameworks. The tokenization infrastructure underpinning Ondo products is built with regulatory compliance as a first principle: KYC and AML verification, investor accreditation checks, and on-chain transfer restrictions ensure that OUSG and USDY comply with applicable securities laws where institutional participants operate. Ondo partnership with BlackRock for the BUIDL fund and its track record managing billions in tokenized assets make it the benchmark platform in the RWA space, a central component of mature DeFi ecosystems like Hyperliquid that seek to integrate real-world financial primitives alongside on-chain derivatives and spot markets.

Choose Felix Protocol if you...

• ✓Want a lending & borrowing solution on HyperEVM
• ✓Prefer a verified and vetted protocol
• ✓Need features like lending and CDP
• ✓Need: CDP lending protocol on HyperEVM — mint feUSD stablecoin

Choose Ondo Finance if you...

• ✓Want a rwa perps solution on Multi-Layer
• ✓Need: Institutional-grade tokenized US Treasuries and RWA assets for HyperEVM DeFi