After receiving an inflow of questions from HYPE holders on what’s next (Who are the HYPE liquid staking providers? Where can I borrow against my HYPE? When is HyperEVM going live?), Felix protocol contributors have created a straightforward breakdown of the overall Hyperliquid ecosystem as we see it.

The key question: what’s next for HYPE?

Setting the stage: the future is bright

A week after its Token Genesis Event, Hyperliquid is still in its infancy. Other L1 networks like Base, Sui, Solana, Tron, or even Ethereum highlight that there is not only TVL growth to be had, but that the market has yet to fully digest the scale of Hyperliquid‘s metrics to date. For reference, Hyperliquid has $1.367B TVL and trades at a circulating market cap of $4.3B. The aforementioned chains have the following metrics:

• Sui: $1.472B TVL | $12.65B MC

• Base: $3.7B | No token

• Tron: $7.84B | $28.4B MC

• Solana: $9.10B | $113.23B MC

• Ethereum: $71.6B | $468.53B FDV

The next stage for Hyperliquid‘s growth will be the mainnet launch of the HyperEVM, allowing builders to deploy apps beyond just the core perp and spot DEX products.

A mental model for Hyperliquid

For those of you who have been purely focused on the trenches: Hyperliquid is evolving into a generalized L1. In addition to its high-performance, opinionated blockchain, it will soon have an EVM execution environment as well. Anyone will be able to deploy an EVM app onto Hyperliquid. Users will be able to seamlessly transfer assets between the three environments and, importantly, tap into DeFi services with the assets they have been holding on the network.

With this evolution of Hyperliquid, the HYPE token will now also be used as a gas token (like other EVM L1s) as well as a governance token. For now, the HyperEVM remains on testnet and will likely go live in the coming months.

There’s a few further milestones up ahead that HYPE holders should be on the lookout for:

• Activation of HYPE staking and mainnet validators

• Launch of Hyperliquid network governance

• Bridges for spot assets going live

What can I do with my HYPE?

For those looking to put their HYPE to work, there will be a few options with the launch of the HyperEVM beyond just staking HYPE, including borrowing against HYPE or its liquid-staked analogues. A brief breakdown of each follows here:

Stake HYPE:

By staking HYPE to a validator, you effectively participate in the L1 network consensus, and will likely be rewarded with additional HYPE rewards. There are two staking options: 1) you can directly delegate to a validator of your choice, or 2) you can deposit into an LST provider.

The first option, delegating directly to a validator, gives you more flexibility to choose a delegator that you prefer while also minimizing the need to go through an LST protocol (which involves further smart contract risk). However, the risk is that you select an incompetent validator, which will hurt your yield or even risk the loss of your HYPE holdings should there be slashing conditions in the HyperBFT implementation.

The second option is to go through an LST provider like Kinetiq (kHYPE) or Thunderhead (stHYPE) at the cost of a fee. Going through a specialized provider allows you to delegate the validator selection job to a third party. If the third party provider is competent, that party will select the highest performing validators for you and optimize your staking rewards. Furthermore, going through an LST provider allows you to maintain your staking position in tokenized form, which you can then use as collateral and deposit it into a protocol like Felix for liquidity and leverage.

Once more information is released on HyperBFT design, and both Kinetiq and Thunderhead release their codebases, Felix contributors and other Hyperliquid power users will review the designs of each to inform risk perspectives.

Borrow against HYPE (or staked HYPE):

If you would like to unlock additional liquidity, you can use your HYPE (or staked HYPE) as collateral and take a loan via Felix or other money markets. You’d want to do this if you are interested in doing one or more of the following:

• You want to maintain HYPE exposure while unlocking liquidity to trade.

• You want to maintain HYPE exposure while executing carry trades via high yield opportunities like deposits into the HLP

• You want to execute a delta neutral trade on HYPE by holding spot and shorting the perp

• You want to maintain HYPE exposure while having that liquidity to do more points farming in other apps that will go live once HyperEVM mainnet is released

Why Felix?

If HYPE goes parabolic and remains bullish, Felix provides two use cases.

1] Maintain Exposure to (staked) HYPE and unlock liquidity with feUSD

Deposit HYPE tokens into the Felix protocol, borrow feUSD against your holdings. This gives you access to immediate capital for new trading and/or farming opportunities. While this remains all speculation, many believe that there will be more opportunities to earn HYPE tokens by continuing to participate in the ecosystem, whether that be taking on perp positions, spot positions, or participating on apps on the EVM.

It’s important to remind yourself that taking on leverage comes with risks. If HYPE price plummets, you risk getting liquidated before you can adjust your position. The Felix app provides a straightforward way for you to track your position health. To learn more about managing your position and keeping your position healthy, we recommend you read the Felix docs.

2] Earn stablecoin yield

Furthermore, for those who want to diversify their HYPE holdings and earn stablecoin yield, you can convert a portion of your HYPE to feUSD. With this feUSD you can deposit into Felix (via the stability pools) to earn borrower interest and liquidation proceeds. feUSD stakers will earn protocol revenues in exchange for underwriting liquidations in Felix stability pools. The more users are willing to pay to mint feUSD, the more yield is available for stability pool deposits

Choosing your DeFi provider

Interacting with DeFi protocols is inherently risky on multiple levels. Therefore, Felix contributors find that risk and security should be the primary focuses when selecting a DeFi protocol for your HYPE. If security and risk management is something you care about when assessing a DeFi provider, there are a few questions that can be top of mind for you:

• What is the personnel and background of the contributors? Do the contributors have prior experience with security / risk management? Do they understand what matters?

• Was the codebase audited by high quality auditors? What changes were made to the codebase? Did the contributing team audit the codebase after any smart contract changes? Is the protocol code immutable or not?

• Does the protocol have active monitoring in place to inform against attackers as well as provide visibility to protocol health?

If you have any questions about Felix’s approach towards security and risk management, feel free to check out our docs or get in touch with protocol contributors in the discord. The ticker is HYPE: what comes next?