USDhl (by Felix Labs)
About
USDhl is a fiat-backed stablecoin custom-built for the Hyperliquid ecosystem, serving as a foundational building block for HIP-3, FX, payments, and other applications. It is designed to bring value back to the Hyperliquid ecosystem by distributing treasury yield to users, unlike traditional fiat-backed stablecoins. The stablecoin is built by Felix Labs and leverages M0's stablecoin infrastructure for collateral management.
Where Does Yield Come From?
USDhl is a stablecoin built for the Hyperliquid ecosystem. It generates yield through a structured rewards program funded by U.S. Treasury holdings.
Each USDhl is backed 1:1 by a wholesale dollar asset called M. M itself is backed by short-term U.S. Treasury bonds, which earn an annual yield of approximately 4% or more. 100% of the revenue from these treasury holdings is currently paid out as ecosystem incentives to users.
The rewards program operates in two‑week epochs. The total incentives are split evenly:
- 50% is allocated to HyperCore – the spot market where USDhl trades against USDC.
- 50% is allocated to HyperEVM – a group of automated market maker (AMM) venues that includes Hyperswap, KittenSwap, and Vanilla Lending.
The way rewards are distributed differs between the two groups:
- In HyperCore, rewards are given out proportionally to trading volume. To encourage market making, volume from makers (those providing liquidity) is counted three times more than volume from takers.
- In HyperEVM, rewards are distributed proportionally to each liquidity provider’s share of a pool’s 14‑day average total value locked (TVL).
This whole design aims to incentivize activity across the Hyperliquid ecosystem. For transparency, any purchases of the HYPE token related to this process are made through a specific, publicly visible on‑chain address.
Audits
| Audit / Date | Findings | Verdict |
|---|---|---|
THREE SIGMA28-04-2025 - 05-05-2025 |
| The audit found no security vulnerabilities in the M*0 M-Extensions protocol, indicating a clean security review for the wrapped token system with designated yield recipient functionality. |
Quantstamp08-01-2024 - 29-01-2024 |
| The audit revealed no critical or high severity vulnerabilities, with the majority being low-risk or informational issues that were either fixed or acknowledged. The protocol demonstrates solid security fundamentals, though its reliance on trusted validators for off-chain collateral introduces systemic trust assumptions. |
Three Sigma Labs08-01-2024 - 02-02-2024 |
| The audit uncovered several high and medium severity issues that were addressed before deployment, with no critical vulnerabilities found. The protocol demonstrates satisfactory code maturity overall, though attention to edge cases and gas optimizations is recommended. |
Certora18-01-2024 - 07-03-2024 |
| The audit uncovered critical vulnerabilities in PowerToken accounting that could allow attackers to double balances and claim unauthorized inflation, but all high-severity findings were addressed before deployment, leaving primarily informational recommendations for gas optimization and code quality improvements. |
ChainSecurity08-01-2024 - 01-03-2024 |
| The audit identified several medium and low severity issues primarily related to governance resets, rounding precision, and parameter management, with the majority being resolved during the engagement, resulting in a codebase assessed to provide good security overall. |
OpenZeppelin08-01-2024 - 09-02-2024 |
| The audit uncovered one high-severity signature replay vulnerability and multiple medium-severity design flaws, particularly around rebasing token integration and reward distribution mechanics, which require careful remediation before production deployment. |
Prototech Labs08-01-2024 - 09-02-2024 |
| Prototech Labs identified several critical vulnerabilities that could have led to locked funds and accounting errors, most of which were resolved before the final report. The audit provides comprehensive invariant test coverage but notes some residual design risks acknowledged by the M4ZERO team. |
Kirill Fedoseev19-02-2024 - 08-03-2024 |
| The audit uncovered several security vulnerabilities including a high-severity signature validation flaw, but the majority were promptly fixed or acknowledged by the development team, indicating responsible security practices. |
Sherlock01-01-2024 - 31-03-2024 |
| The audit identified several security concerns in the USDhl protocol's collateral management and validator systems, though the fragmented document prevents precise severity quantification of the findings. |
Backers
USDhl is a stablecoin built by Felix Labs using M0's stablecoin infrastructure. M0 Foundation, the infrastructure provider, has raised significant venture funding:
- Series A: $35 million in June 2024 led by Bain Capital Crypto
- Series B: $40 million in August 2025 from Polychain and Ribbit Capital, bringing total funding to $100 million
M0's investor base includes Bain Capital Crypto, Polychain Capital, Ribbit Capital, Pantera Capital, Galaxy Ventures, Standard Crypto, Airtree, Earlybird, SALT, GSR, Fort West, Hack VC, ParaFi, Wintermute Ventures, Kraynos, Endeavor, Distributed Capital, Caladan, SCB 10X, and others.
No separate funding rounds or investors were found for Felix Labs itself in the official sources reviewed.
Legal
Legal form
Company (Inc)
Registration jurisdiction
Delaware, USA
Status and notes
Operator: Felix Labs Inc, registered in Delaware with business address at 131 Continental Drive, Newark, DE 19713. Terms & Conditions, Privacy Policy, and Cookie Policy available on GitBook.