Reaz.hl

Some notes on sunsetting FLX HIP-3: First, will share that sunsetting HIP-3 changes nothing for Felix borrow/lend or Felix spot equities. Both will continue to see more upgrades in the weeks to come as our team narrows focus Our team began work on our HIP-3 offering in June of 2025 as the clear use case for Felix borrow/lend was borrow to trade; we viewed adding our own markets as a way to customize more of that user flow and capture more upside. We also saw HIP-3 as a way to launch perps for assets that had never had perp market before and set out for a novel way to do this Things obviously didn't play out in our favor over the months post-FLX launch, even though we were first to market with a few key markets, namely OIL, GOLD, and SILVER. These markets drove us solid fees during December and January and about 3bn in volume, but were eventually surpassed by TradeXYZ once they launched the same markets denominated in USDC A few takeaways I've pondered for why things didn't work out in our favor and what could have gone differently--curious to hear if others think otherwise too: 1. TradeXYZ went with USDC over USDH, which seems obvious to be the correct choice in hindsight. When we launched, we did not know growth mode was on the horizon, which made the cost benefits of USDH negligent and left USDH markets as a fragmentation issue as opposed to a new core asset HL users wanted to use as margin. USDH appears to have been a well-played pawn to get Circle/Coinbase to move on driving USDC yield back to HL, but we didn't see the board this way at the time 2. XYZ beat us to market by launching on the day HIP-3 went live and about a month before we went live. This allowed early brand traction to build + time to get ready to launch more markets sequentially 3. XYZ beat us on market listing numbers early-on and built a moat of market listings quickly, while being the sole USDC-based deployer. Probably a bit of a balance sheet advantage here to pay for tickers and get liquidity in those markets; we had to pick markets more carefully due to balance sheet constraints 4. XYZ had an early brand halo around a mystery airdrop, which led to heightened early usage, which helped build initial volume/OI/liquidity, which created a growth flywheel that we were unable to catch. They then leveraged this growth flywheel to keep doubling down with more markets, larger partnerships, etc 5. With the 4 points above, XYZ was able to dominate the HL-native / CT-native trader base on HIP-3. Our options then were 1) launch novel/more esoteric market types that other deployers wouldn't touch or 2) build distribution in a net-new market. 1 is not that interesting to me since, as we saw with SILVER and OIL, as soon as a market gets traction, the top deployer can likely copy it. And 2 is something we haven't accomplished yet; it's an area we are determining how we want to approach as a company. When we accomplish 2, we may return as a deployer, but maintaining the deployment in the meantime is an unnecessary cost and not driving unique value, especially with the USDH sunset I'm sure there are other factors too that I haven't unpacked yet, but those are the main set I see Thanks again to all the HL traders who gave feedback over the build out of FLX and post-launch. Hopefully we can continue to serve you with your debt and yield needs via Felix borrow/lend. Feel free to ping me any time with thoughts, questions, or needs