# How $HEX1 works

{% hint style="info" %}
**TLDR:** People love to make profits but hate to experience volatility; while this is retarded, we understand how volatility makes one feel, and want to provide a service that makes everyone happy. $HEX1 is the logical solution for anyone who wants to earn yield without experiencing massive price volatility. Or if you want to take profits without selling $HEX.
{% endhint %}

<figure><img src="/files/YUCGTZ7fpOGlLCKEXWkM" alt=""><figcaption></figcaption></figure>

## Hex One Protocol

Hex One is the protocol that mints **$HEX1**. To participate in the Hex One protocol, depositors must create a stake through the Hex One Protocol contract. In turn, they can **borrow** the same dollar amount of the Hex deposited (as T-SHARE), in the form of $HEX1. Therefore, each 1 $HEX1 is worth $1 of Hex.&#x20;

To redeem the stake, depositors must burn the total borrowed $HEX1 against that stake.&#x20;

A 1% fee (HEX) is charged upon borrowing that buys back and burns HEX1 tokens.&#x20;

Positions may be liquidated if the [collateral ratio ](/hex-one-protocol/tokenomics/collateral-ratio.md)(health ratio) goes below 200%.

## Hex One Workflow

Depositors initially forego T-SHARES in order to borrow **$HEX1**. After acquiring the token, it can be used to purchase HEX or to provide liquidity.&#x20;

By pairing **$HEX1** with highly liquid tokens such as HEX, DAI, etc, **we're looking to increase the price stability of the token**, and substantially reduce slippage.

Hex One protocol offers the following main features:&#x20;

1. **Deposits are initially protected against liquidations due to the start buffer.**
2. [**Liquidations** ](/hex-one-protocol/tokenomics/liquidation-process.md)**once the collateral ratio is below 250%.**
3. **Re-borrow against your stake if the price of HEX goes up.**
4. **Embedded farming and an** [**incentive token**](#usdhexit-token) **to lock liquidity**.

## $HEX1 Token

The **$HEX1** token can be minted only by depositing T-SHARES into the collateral vault. Each **$HEX1** = $1, and the peg is maintained by the collateral vault. **$HEX1** is the first protocol-level yield-bearing stablecoin that does not require borrowing and lending to accumulate fees. The yield comes from T-Shares (future HEX payments).

## $HEXIT Token

The **$HEXIT** token can be earned by participating in the bootstrap phase or by farming $HEX1 and $HEX1 LPs.


---

# Agent Instructions: Querying This Documentation

If you need additional information that is not directly available in this page, you can query the documentation dynamically by asking a question.

Perform an HTTP GET request on the current page URL with the `ask` query parameter:

```
GET https://learn.hex1.club/hex-one-protocol/basics/how-usdhex1-works.md?ask=<question>
```

The question should be specific, self-contained, and written in natural language.
The response will contain a direct answer to the question and relevant excerpts and sources from the documentation.

Use this mechanism when the answer is not explicitly present in the current page, you need clarification or additional context, or you want to retrieve related documentation sections.