# Hyperliquid DeFi Ecosystem: The Complete Guide to DeFi on HyperEVM > Explore the full Hyperliquid DeFi ecosystem - lending on Felix Protocol, stablecoins (USDH, feUSD, USDhl, USDC), DEXes, liquid staking with kHYPE, vaults, and how it all composes together on HyperEVM. *Source: https://hyperliquidguide.com/ecosystem/hyperliquid-defi-ecosystem* ## The HyperEVM DeFi Stack Hyperliquid started as [an on-chain perpetuals DEX](/ecosystem/what-is-hyperliquid). It is now a full DeFi ecosystem. That trajectory is no accident — [the founders behind Hyperliquid](/ecosystem/who-created-hyperliquid) came from high-frequency trading and market making, and built the platform with the order-book depth and self-custodial design needed to support an entire on-chain financial stack. The catalyst was [HyperEVM](/ecosystem/hyperevm-explained) - Hyperliquid's Ethereum-compatible smart contract layer that launched on mainnet in early 2025. HyperEVM gave developers the ability to deploy Solidity smart contracts that interact directly with Hyperliquid's native order book and trading engine. No bridges. No oracles. No cross-chain complexity. Just composable DeFi built on top of one of the deepest liquidity pools in crypto. What has emerged in the months since is a coherent financial stack: lending and borrowing protocols, multiple stablecoins with distinct backing models, decentralized exchanges listing everything from Bitcoin to gold to Apple stock, liquid staking derivatives, market-making vaults, [yield strategies](/ecosystem/hyperevm-yield-strategies), and [options and structured products](/ecosystem/hyperliquid-options-structured-products) that compose across all of them. This guide maps the entire landscape. Whether you are looking for the best place to earn yield, trying to understand which stablecoin to use, or want to see how all the DeFi pieces fit together, this is your starting point. For a quick-reference directory of every protocol organized by category, see the [HyperEVM ecosystem map](/ecosystem/hyperevm-ecosystem-map). > **Key takeaway:** Hyperliquid's DeFi ecosystem is built on HyperEVM's shared-state architecture with HyperCore, meaning every protocol can compose directly with the native order book - no bridges, no oracles, no fragmented liquidity. ![Hyperliquid trading interface — foundation of the DeFi ecosystem](/images/compare/shared/hyperliquid-trading-interface.webp) --- ## Lending and Borrowing ### Felix Protocol - The Dominant Lending Venue [Felix Protocol](/ecosystem/felix-protocol-guide) is the #2 DeFi protocol on Hyperliquid by total value locked, holding over $1 billion in TVL. It is the primary place to borrow and lend on HyperEVM, and it operates two distinct lending models. **CDP (Collateralized Debt Position):** This is Felix's flagship product. You deposit collateral - HYPE, kHYPE, wstHYPE, or other supported assets - and mint feUSD, Felix's native stablecoin. It works similarly to MakerDAO's system on Ethereum: you lock up volatile assets and borrow a stable dollar-denominated token against them. If your collateral value drops below the liquidation threshold, your position gets liquidated to protect the system. **Vanilla Markets:** Felix's lending marketplace where suppliers deposit assets (USDC, HYPE, and others) into pools and borrowers take variable-rate loans against their collateral. This is closer to the Aave/Compound model - straightforward supply-and-borrow with algorithmically determined interest rates based on utilization. The combination of CDP and Vanilla Markets means Felix covers both sides of the lending spectrum. Want to mint a stablecoin and keep exposure to your HYPE? Use the CDP. Want to earn yield by lending your USDC? Deposit into Vanilla Markets. Want to borrow HYPE for a leveraged position? Vanilla Markets handles that too. > **Tip:** Felix Protocol is the most capital-efficient way to unlock liquidity from your HYPE holdings without selling. Deposit HYPE or liquid staking tokens like kHYPE, mint feUSD, and put that stablecoin to work elsewhere in the ecosystem - all while keeping your HYPE exposure. Beyond Felix, [HyperLend](/ecosystem/hyperlend-guide) offers an alternative lending model with traditional pooled markets, flash loans, and its HyperLoop automated leverage tool - giving borrowers and lenders another option on HyperEVM. For a deep dive into Felix's mechanics, collateral types, and liquidation parameters, read the full [Felix Protocol guide](/ecosystem/felix-protocol-guide). For step-by-step borrowing and lending instructions, see the [lending and borrowing guide](/guides/trading/lending-borrowing-guide). **Unlock Liquidity from Your HYPE** — Felix Protocol lets you borrow against HYPE, kHYPE, and other assets with competitive rates. Over $1B in TVL and growing. [Try Felix Protocol](https://www.usefelix.xyz?ref=DD467B42) --- ## Stablecoins Hyperliquid does not rely on a single stablecoin. The ecosystem has four distinct stablecoins, each backed differently and serving a different purpose. ### USDH - The Native Stablecoin (Sunset Complete) [USDH](/ecosystem/usdh-stablecoin-guide) was Hyperliquid's native, dollar-pegged stablecoin issued by Native Markets, backed 1:1 by cash and U.S. Treasury equivalents managed by BlackRock and Superstate. It was selected through a competitive validator vote and went live in September 2025. The critical advantage of USDH under the original aligned-quote-asset spec was trader-side alignment. USDH markets gave traders **20% lower taker fees**, **50% higher maker rebates**, and **20% more volume credit** toward [fee tier](/guides/fees/fees-explained) progression. The reserve yield from USDH did not go to an external company - 50% funded HYPE buybacks and 50% went to ecosystem development grants. > **Warning:** **Update (June 20, 2026) — the USDH sunset is complete.** Hyperliquid moved to **[AQAv2](/ecosystem/aqav2-usdc-aligned-quote-asset)**, making **USDC** the canonical quote asset for [HIP-4 outcome trading](/ecosystem/hip-4-outcome-trading) and validator-operated perp markets. **All USDH-denominated markets on HyperCore have settled.** If you still hold USDH, swap it to USDC — on the HyperCore spot order book, or 1:1 with no fees via Across on HyperEVM. Note: AQAv2 has no trader-facing fee perks, so the USDH discounts described above no longer apply. ### feUSD - The CDP Stablecoin feUSD is minted through [Felix Protocol's](/ecosystem/felix-protocol-guide) CDP system. Users deposit crypto collateral (HYPE, kHYPE, wstHYPE) and mint feUSD against it, similar to how DAI works on Ethereum. feUSD is native to HyperEVM and deeply integrated into Felix's lending and stability pool ecosystem. feUSD's peg is maintained through arbitrage incentives and Felix's liquidation mechanism. When feUSD trades below $1, arbitrageurs can buy it cheaply and use it to repay debt at face value, profiting from the difference. When it trades above $1, borrowers are incentivized to mint more, increasing supply. ### USDhl - T-Bill Backed USDhl is a collaboration between Felix Protocol and M0 Foundation. It is backed by U.S. Treasury bills, providing a stablecoin with transparent, yield-generating reserves. USDhl represents the growing trend of real-world asset (RWA) integration on HyperEVM, bringing T-bill exposure directly into the DeFi stack. ### USDC - The Bridge from TradFi Circle's USDC is available natively on HyperEVM via Cross-Chain Transfer Protocol (CCTP). It serves as the primary on-ramp for new users and remains the most widely held stablecoin on the platform. If you are [depositing to Hyperliquid for the first time](/guides/getting-started/deposit-usdc-to-hyperliquid), you are almost certainly starting with USDC. > **Note:** Each stablecoin serves a different role: **USDC** for trading, settlement, and onboarding (now the aligned quote asset), **feUSD** for capital-efficient borrowing against crypto collateral, and **USDhl** for T-bill backed stability. USDH, the original aligned stablecoin, has sunset. Most active users hold multiple stablecoins depending on what they are doing. --- ## DEXes and Trading Hyperliquid's trading layer spans three distinct venues, covering perpetual futures, spot markets, and a rapidly expanding universe of traditional finance assets. ### Hyperliquid Native DEX - Perps and Spot The native Hyperliquid exchange remains the core of the ecosystem. It operates a fully on-chain order book for perpetual futures and spot trading with sub-second finality and zero gas fees. Over 150 perpetual markets are available, covering major cryptocurrencies, memecoins, and increasingly, real-world assets. If you are new to the platform, the [beginner guide](/guides/getting-started/how-to-trade-on-hyperliquid) walks through everything from wallet setup to placing your first trade. ### trade.xyz - TradFi on HyperEVM trade.xyz is the leading [HIP-3 builder](/ecosystem/hip-3-builder-codes) on Hyperliquid, having listed approximately 50 markets that bring traditional finance assets on-chain. Through trade.xyz, you can trade perpetual futures on: - **Equities** - Individual stocks like Apple, Tesla, Nvidia, and major tech companies. See the [equity perps guide](/guides/trading/equity-perps-guide) for details. - **Commodities** - Gold, silver, crude oil, and other physical commodities. The [commodities trading guide](/guides/trading/commodities-trading-guide) covers strategies. - **Forex** - Major currency pairs including EUR/USD, GBP/USD, and USD/JPY. - **Indices** - S&P 500, Nasdaq, and other market benchmarks. trade.xyz uses HIP-3 builder codes to deploy and manage these markets, earning fees from the trading activity they generate. For traders, this means 24/7 access to [traditional markets](/ecosystem/hyperliquid-traditional-markets) without brokers, market hours, or geographic restrictions. ### Felix FLX DEX - Focused TradFi Markets Felix FLX is another [HIP-3 builder](/ecosystem/hip-3-builder-codes) operating on Hyperliquid, maintaining 14 markets across equities, commodities, and crypto assets. While smaller in scope than trade.xyz, FLX adds liquidity and market diversity to the ecosystem. Having multiple builders listing similar assets creates competitive market-making and tighter spreads for traders. **Trade Stocks, Gold, and Forex On-Chain** — Hyperliquid's DeFi ecosystem lets you trade traditional markets 24/7 with no KYC and self-custody. Use our referral link for a 4% lifetime fee discount. [Start Trading on Hyperliquid](https://app.hyperliquid.xyz/join/Concept211) --- ## Liquid Staking Liquid staking is the connective tissue of Hyperliquid's DeFi ecosystem. It solves a fundamental problem: when you stake [HYPE](/ecosystem/what-is-hype-token) to secure the network and earn rewards, those tokens are locked and cannot be used elsewhere. Liquid staking gives you a receipt token that represents your staked position, freeing your capital for DeFi. ### kHYPE (Kinetiq) kHYPE is the liquid staking token from Kinetiq, the leading liquid staking provider on Hyperliquid. When you stake HYPE through Kinetiq, you receive kHYPE in return. kHYPE accrues staking rewards automatically - its value relative to HYPE increases over time as rewards compound. ### wstHYPE wstHYPE is a wrapped version of staked HYPE, similar to how wstETH works on Ethereum. It provides another liquid staking option with slightly different mechanics, giving users choice in how they access staking yield. ### Liquid Staking as DeFi Collateral Here is where liquid staking becomes powerful. Both kHYPE and wstHYPE are accepted as collateral on [Felix Protocol](/ecosystem/felix-protocol-guide). This means you can: 1. Stake HYPE and receive kHYPE (earning staking rewards) 2. Deposit kHYPE into Felix as collateral 3. Borrow feUSD or other assets against it 4. Put those borrowed assets to work in other parts of the ecosystem You earn staking yield on the underlying HYPE while simultaneously using the liquidity for other purposes. This is capital efficiency that simply is not possible without liquid staking. For a complete walkthrough of how to liquid stake, the differences between kHYPE and wstHYPE, and risk considerations, see our [liquid staking guide](/ecosystem/liquid-staking-guide). > **Warning:** Liquid staking adds a layer of smart contract risk on top of native staking. If there were a vulnerability in Kinetiq's contracts, kHYPE holders could be affected even though the underlying HYPE is staked on-chain. This risk is generally considered low for audited protocols, but it is not zero. Diversify across staking methods if you hold significant amounts. --- ## Vaults and Yield Hyperliquid offers several distinct yield sources, from protocol-level market making to DeFi lending returns. Understanding where yield comes from - and what risks each source carries - is essential. ### HLP Vault - Protocol Market Making The [HLP vault](/ecosystem/hyperliquid-hlp-explained) is Hyperliquid's native market-making vault. When you deposit into HLP, your capital is used to provide liquidity across Hyperliquid's perpetual futures markets. Returns come from the bid-ask spread captured on trades and from liquidation proceeds. HLP is not a risk-free yield source. Market-making profits depend on trading volume and volatility, and the vault can experience drawdowns during extreme market moves. But for users who understand the risk profile, HLP provides exposure to Hyperliquid's core trading activity without needing to run a market-making bot yourself. For a complete breakdown of vault mechanics, performance history, and risk factors, read the [vaults guide](/ecosystem/hyperliquid-vaults-guide). ### Felix Stability Pools Felix Protocol's Stability Pools are the backstop for the CDP system. When you deposit feUSD into a Stability Pool, your funds are used to absorb liquidations from under-collateralized positions. In return, you earn two types of yield: - **Liquidation gains** - When a position is liquidated, Stability Pool depositors receive the liquidated collateral at a discount. If HYPE is liquidated at $20 but the market price is $22, depositors capture that difference. - **Borrower interest** - A share of the interest paid by CDP borrowers flows to Stability Pool depositors as ongoing yield. Stability Pool returns can be highly variable. During calm markets with few liquidations, yields are modest. During sharp drawdowns with mass liquidations, returns can spike significantly - but so can the risk of holding recently liquidated collateral that continues to fall in value. ### Vanilla Markets Lending Yield Felix's Vanilla Markets offer the most straightforward yield in the ecosystem. You deposit assets (USDC, HYPE, or others) into lending pools, and borrowers pay interest to access those assets. Interest rates are variable and adjust algorithmically based on pool utilization - high demand for borrowing means higher rates for lenders. This is the closest equivalent to a savings account in the Hyperliquid ecosystem. The risk profile is lower than market making or stability pools, though smart contract risk and borrower default risk (mitigated by over-collateralization) still apply. **Earn Yield on Your Crypto** — Deposit into Felix's Vanilla Markets, Stability Pools, or CDP system. Multiple yield strategies for different risk profiles - all on HyperEVM. [Explore Felix Yield](https://www.usefelix.xyz?ref=DD467B42) --- ## The Composability Flywheel The real power of Hyperliquid's DeFi ecosystem is not any single protocol - it is how they compose together. Each piece amplifies the others, creating a flywheel effect that makes the whole greater than the sum of its parts. Here is the canonical example: **1. Start with HYPE.** You hold [HYPE tokens](/ecosystem/what-is-hype-token), Hyperliquid's native asset. **2. Liquid stake for kHYPE.** You stake HYPE through Kinetiq and receive kHYPE. Your HYPE is now earning staking rewards while remaining liquid. **3. Collateralize on Felix.** You deposit kHYPE into [Felix Protocol](/ecosystem/felix-protocol-guide) as collateral. Your staking rewards continue accruing. **4. Mint feUSD.** You borrow feUSD against your kHYPE collateral. You now have liquid stablecoin value without selling any HYPE. **5. Deploy feUSD.** You can deposit feUSD into a Felix Stability Pool for liquidation yield, trade with it on the native DEX, or swap it for USDC to take profits - all while your original HYPE keeps earning staking rewards and your kHYPE position appreciates. This is one path through the ecosystem. Others exist: depositing USDC into Vanilla Markets for lending yield, providing HLP liquidity for market-making returns, or trading [equity perps](/guides/trading/equity-perps-guide) and [commodity perps](/guides/trading/commodities-trading-guide) listed by HIP-3 builders. > **Key takeaway:** The composability flywheel - stake HYPE, get kHYPE, collateralize on Felix, mint feUSD, deploy into yield - lets you earn staking rewards, borrowing capacity, and DeFi yield simultaneously from a single HYPE position. This is only possible because everything runs on one chain with shared state. ### What Makes This Different from Ethereum DeFi? On Ethereum, a similar loop would require moving assets between Layer 1 and multiple Layer 2s, paying gas fees at every step, trusting bridge contracts, and relying on oracle networks to price collateral. A single liquidation might need to propagate across three different chains. On Hyperliquid, the entire stack runs on one L1 with [shared state between HyperCore and HyperEVM](/ecosystem/hyperevm-explained). Liquidations are atomic. Price feeds come directly from the native order book. There is no bridge risk, no oracle manipulation vector, and no cross-chain latency. The composability is real, not stitched together with trust assumptions. This architectural advantage is why the DeFi ecosystem has grown so quickly. Developers can build protocols that genuinely compose with each other and with Hyperliquid's core trading infrastructure, and users get a seamless experience without the fragmentation that plagues multi-chain DeFi. --- ## Getting Started If you are new to Hyperliquid and want to explore the DeFi ecosystem, here is the practical path: 1. **Set up and deposit.** Follow the [deposit guide](/guides/getting-started/deposit-usdc-to-hyperliquid) to get USDC onto Hyperliquid. This is the starting point for everything. 2. **Learn the platform.** The [beginner trading guide](/guides/getting-started/how-to-trade-on-hyperliquid) covers the interface, order types, and basic mechanics. 3. **Explore DeFi.** Once you are comfortable, start with lower-risk options like Vanilla Markets lending on [Felix](/ecosystem/felix-protocol-guide) or the [HLP vault](/ecosystem/hyperliquid-vaults-guide) before moving to more complex strategies. 4. **Understand the assets.** Read up on [HYPE](/ecosystem/what-is-hype-token), [USDH](/ecosystem/usdh-stablecoin-guide), and [HyperEVM](/ecosystem/hyperevm-explained) to understand what you are interacting with. 5. **Explore beyond DeFi.** The ecosystem extends past lending and trading - there is a growing [NFT scene on Hyperliquid](/ecosystem/hyperliquid-nfts-guide) with marketplaces like Drip Trade and NFT lending via BAE. > **Tip:** Start small. The composability of Hyperliquid's DeFi stack is powerful, but layered positions (staking + collateralization + borrowing) multiply both returns and risks. Understand each layer independently before combining them. **Start Exploring Hyperliquid DeFi** — From perpetual futures to lending, liquid staking, and yield vaults - Hyperliquid's DeFi ecosystem is built for composability. Sign up with our referral link for a 4% lifetime fee discount. [Join Hyperliquid - Save 4% on Fees](https://app.hyperliquid.xyz/join/Concept211)