> For the complete documentation index, see [llms.txt](https://learn.hex1.club/hex-one-protocol/llms.txt). Markdown versions of documentation pages are available by appending `.md` to page URLs; this page is available as [Markdown](https://learn.hex1.club/hex-one-protocol/basics/how-usdhex1-works.md).

# 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.