# Resources
Source: https://docs.hylo.so/developer-resources
SDKs, integrations, and developer support for building on Hylo.
## SDK
The Hylo SDK provides Rust crates for interacting with the protocol on Solana. The SDK and all of Hylo's math are open source.
Rust SDK for Hylo protocol integration.
### Crates
| Crate | Purpose |
| -------------- | ------------------------------------------------------- |
| `hylo-core` | Protocol math, fee curves, conversions, rebalance zones |
| `hylo-idl` | Anchor IDL codegen, PDA derivations, token definitions |
| `hylo-clients` | Transaction builders and execution clients |
| `hylo-quotes` | Quoting strategies from cached state or simulation |
| `hylo-jupiter` | Jupiter AMM trait implementation |
| `hylo-stats` | Offchain yield statistics, Earn Pool APY math |
## API
Public APIs coming soon.
## Developer Support
Join the Hylo developer relations channel for integration support.
# Introduction
Source: https://docs.hylo.so/introduction
What Hylo is, what you can do with it, and where to start.
![Hylo V2.0, built for scale]()
## What is Hylo?
Hylo splits crypto and tokenized assets into two things users want: **liquidation-resistant leverage**, and **a highly decentralized stablecoin with no single point of failure**.
### For leverage traders
Deposit collateral like SOL or BTC and receive a leveraged token that absorbs the market swings. You get amplified upside that's liquidation-resistant with no margin calls. Hold through volatility without losing your position.
### For stablecoin holders
hyUSD is backed by the combined value of every collateral pool rather than any single asset or issuer. You get safety and yield from a protocol that runs itself, fully autonomous and onchain.
## Products
Liquidation-resistant leverage with xSOL, xBTC, xHYPE, and soon more. Hold a token, get 3x upside without margin calls.
hyUSD, a decentralized stablecoin backed by every collateral pool. Mint eHYUSD with it to compound yield from the entire protocol.
hyloSOL for sustainable staking yield, hyloSOL+ for maximum XP while keeping SOL exposure.
Every dollar held in Hylo products earns XP daily. Climb tiers, collect crowns, stack boosts.
Trade Leveraged Tokens and earn yield.
## Guiding Principles
Built to compose, scale, and evolve with Solana DeFi.
Use Hylo products across Solana DeFi in lending markets, liquidity pools, and yield strategies.
Autonomous and self-contained. No fund manager, no third-party trading dependencies.
Multiple audits and incentive-driven risk management with guaranteed onchain liquidity for all tokens.
## Where next?
New here? Start with [Leveraged Tokens (xAssets)](/product-guide/xassets), Hylo's flagship product, then see [Stablecoin and Yield](/product-guide/stablecoin) to put your dollars to work with eHYUSD. Want the mechanics? The [Protocol Overview](/protocol-overview/core-mechanism) explains how the system holds together, and the [Technical Addendum](/technical-addendum/hylo-equations) has the math.
# Liquid Staking Tokens
Source: https://docs.hylo.so/product-guide/liquid-staking-tokens
hyloSOL and hyloSOL+:Hylo's yield-bearing and XP-focused LSTs.
## ![]()
hyloSOL
Yield-bearing LST. SOL deposited into hyloSOL is staked to Hylo's institutional-grade validator, operated in partnership with [Sentinel](https://www.sentinelstake.com/) and [Phase Labs](https://www.phaselabs.io/).
**5–7%**, varies with network conditions
**1x**
Sustainable staking yield + XP
hyloSOL will gradually gain allocation in Hylo's backing reserves alongside jitoSOL.
[Mint hyloSOL](https://hylo.so/lst)
## ![]()
hyloSOL+
XP-focused LST. Tracks SOL price but redirects all staking yield to Hylo growth initiatives.
**0%**, yield redirected to hyloSOL
**5x**
Maximize XP while maintaining SOL exposure
Yield from hyloSOL+ boosts the hyloSOL APY and may later fund liquidity incentives across the Solana ecosystem.
[Mint hyloSOL+](https://hylo.so/lst)
# Stablecoin and Yield
Source: https://docs.hylo.so/product-guide/stablecoin
hyUSD and eHYUSD: Hylo's decentralized stablecoin and its yield-bearing Earn Pool token.
## ![]()
hyUSD
Hylo's decentralized stablecoin, backed by the collateral of every xAsset pool across all categories. Each collateral pool is split into a leverage token and a virtual stablecoin worth exactly \$1. hyUSD is backed 1:1 by the combined value of all virtual stablecoins, while xAssets absorb all collateral price movements to protect the peg.
[Mint hyUSD](https://hylo.so)
## ![]()
eHYUSD
The yield-bearing version of hyUSD. Depositing hyUSD into the [Earn Pool](/protocol-overview/earn-pool) mints eHYUSD, representing a pro rata share of the pool. Every epoch, yield harvested across all collateral pools (staking rewards and borrow rates) compounds into the pool, so eHYUSD continuously appreciates against hyUSD.
[Mint eHYUSD](https://hylo.so/earn)
# Leveraged Tokens (xAssets)
Source: https://docs.hylo.so/product-guide/xassets
Liquidation-resistant leveraged long exposure.
## Crypto
### ![]()
xSOL
Liquidation-resistant leveraged long exposure to SOL. xSOL absorbs the full price movement of the SOL collateral pool, offering amplified upside while the protocol handles all leverage mechanics automatically.
[Mint xSOL](https://hylo.so/leverage)
### ![]()
xBTC
Liquidation-resistant leveraged long exposure to BTC. xBTC applies the same mechanism to a BTC collateral pool, offering amplified upside while the protocol handles all leverage mechanics automatically.
[Mint xBTC](https://hylo.so/leverage)
### ![]()
xHYPE
Liquidation-resistant leveraged long exposure to HYPE. xHYPE applies the same mechanism to a HYPE collateral pool, offering amplified upside while the protocol handles all leverage mechanics automatically.
[Mint xHYPE](https://hylo.so/leverage)
## Yield
Leveraged exposure to yield-bearing assets, amplifying both the underlying yield and price movement.
Coming soon.
## Equities
Leveraged exposure to tokenized equities and stock indices, bringing traditional markets onchain.
Coming soon.
## Commodities
Leveraged exposure to tokenized commodities.
Coming soon.
# XP System
Source: https://docs.hylo.so/product-guide/xp-system
How the Hylo points program works: earning, referrals, tiers, crowns, and boosts.
## How to earn XP
XP is earned by holding Hylo products. Each product rewards a base payout per dollar held per day.
| Product | XP / \$ / day |
| ----------------------------------------- | ------------- |
| ![]()
xSOL / ![]()
xBTC | **20** |
| ![]()
hyUSD | **5** |
| ![]()
hyloSOL+ | **5** |
| ![]()
eHYUSD (formerly sHYUSD) | **1** |
| ![]()
hyloSOL | **1** |
**Capital + Time = XP.** No sybil exploits, no shortcuts. A system fair for everyone.
## Referrals
Earn **10% of your referral's total XP**, forever.
New users signing up with a code receive a **5% XP boost**.
## Tiers and crowns
Climb XP tiers up to **Great Hylord (Lv. 200)**, earning crowns at each tier crossed. Crowns earned in previous seasons carry forward as boost multipliers:
**0.1%** boost per crown
**0.01%** boost per crown
**0.005%** boost per crown
## Boosts
Boosts increase base payouts and stack cumulatively. Active boosts from the private beta:
| Boost | Bonus |
| --------------- | ----- |
| Private Beta #1 | 5% |
| Private Beta #2 | 5% |
| Private Beta #3 | 10% |
| Private Beta #4 | 5% |
Flash boosts and promotional codes are announced on [Twitter](https://x.com/hylo_so) and [Telegram](https://t.me/hylo_so).
## Seasons
The XP program runs in seasons, each an evolution of the previous one: new boosts, new integrations, and new ways to earn. Seasons reward sustained engagement with the product suite as it grows.
## XP Integrations
XP is also earned through Hylo assets deployed across partner protocols.
Browse all live integrations and earning opportunities in the Hylo ecosystem.
# Collateral Rebalancing
Source: https://docs.hylo.so/protocol-overview/collateral-rebalancing
Hylo autonomously rebalances collateral pools to maintain target leverage.
Hylo opens direct swap routes between volatile collateral and USDC when a pool's collateral ratio diverges significantly from the targeted **150%**. These routes allow the protocol to harness market forces to rebalance the leverage.
## Rebalancing Zones
Each volatile collateral pool (e.g. SOL, BTC) has two rebalancing zones:
* **Sell Zone**: at low CR, the protocol sells collateral for USDC to derisk
* **Buy Zone**: at high CR, the protocol buys more collateral with USDC
The USDC pool acts as a rebalancing buffer, providing liquidity on the other side of all collateral sells and buys across volatile pools.
The sell and buy zones each split into an inner and outer band that govern how aggressively the protocol prices each route. See [Rebalance Zones](/technical-addendum/hylo-equations#rebalance-zones) for the full six-zone model.
![Sell, Neutral, and Buy zones across the collateral ratio range]()
Rebalancing routes are **per-pair** and independent: one pair can be selling collateral while another is buying.
### Sell Zone
When a pool's CR drops into the sell zone, the protocol opens an **ASSET → USDC** route. This sells collateral from the stressed pool and moves its backing into USDC, de-leveraging the **xASSET** and raising the pool's CR toward **135%**. The amount of collateral available for sale is capped to avoid overshooting past the sell zone inner bound.
The zones are **asymmetric**: the sell-side pricing bands span a wider CR range (135% down to 100%) than the buy-side band (165% to 175%), because de-risking under stress demands a more graduated response.
### Buy Zone
When a pool's CR rises into the buy zone, the protocol opens a **USDC → ASSET** route for arbitrageurs. This deploys USDC reserves to purchase more collateral, simultaneously re-leveraging the **xASSET** and bringing the pool's CR down toward **165%**. The amount of buyable collateral is similarly capped to prevent overshooting.
See [Hylo Equations](/technical-addendum/hylo-equations#collateral-rebalancing) for the max sellable and buyable formulas.
## Rebalance Pricing
Rebalance pricing applies a **percentage spread** to the oracle spot price that scales with how much the pool needs the flow:
* Near the **inner bound** (CR close to target), the protocol rebalances **at a profit**, selling collateral above spot or buying below it, since the pool barely needs the flow
* At a **crossover point** partway through the zone, the protocol rebalances at **break-even**, exactly at oracle spot: no profit, no subsidy
* At the **outer bound** (pool most stressed), the protocol rebalances **at a subsidy** (a discount on collateral in the sell zone, a premium in the buy zone), paying counterparties to provide the flow it now urgently needs
* Beyond the outer bound, the spread clamps flat; beyond the inner bound, the route deactivates
Both endpoint percentages are **configurable per asset**, so each pool is tuned to its own volatility. Because the spread is a fixed schedule rather than a function of live market data, pricing stays deterministic.
### Profit and Loss Settlement
Every rebalance settles its profit or subsidy against the **Earn Pool** by minting or burning **hyUSD**:
* A rebalance executed **at a profit** mints hyUSD into the Earn Pool
* A rebalance executed **at a subsidy** burns hyUSD from the Earn Pool
The Earn Pool therefore absorbs the net P\&L of all rebalancing activity: profitable rebalances near the inner bound accrue value to depositors, while subsidized rebalances under stress draw it down, the cost of de-risking the system.
![Collateral Rebalancing Oracle Pricing (Pyth plus or minus CI)]()
## Virtual Stablecoin Accounting
Rebalancing routes adjust the virtual stablecoin supply across pools:
* **Sell** (ASSET → USDC): burns vUSD on the volatile pair, mints vUSD on the USDC pair
* **Buy** (USDC → ASSET): burns vUSD on the USDC pair, mints vUSD on the volatile pair
This ensures hyUSD's total backing remains consistent: collateral moves between pools, but the aggregate virtual stablecoin supply stays in balance.
# Core Mechanism
Source: https://docs.hylo.so/protocol-overview/core-mechanism
Understanding the basic equations behind Hylo.
At its core, Hylo is a decentralized stablecoin protocol supporting leveraged trades against its collateral. Unlike traditional stablecoins that depend on a single issuer or reserve asset, Hylo spreads its backing across multiple independent collateral pools including SOL LSTs, BTC, and USDC, leaving no single point of failure.
The core challenge in crypto-backed stablecoin design is hedging the underlying collateral volatility. Hylo achieves this delta-neutral positioning through a simple core equation which splits one asset into two synthetic components:
1. **Leverage Token (xASSET)**: A leveraged derivative absorbing the entire price exposure of the underlying asset.
2. **Virtual Stablecoin (vUSD)**: A dollar-pegged stablecoin with a value of exactly \$1.
**vUSD** are internal accounting units within Hylo's exchange program. They are not tradeable tokens. Users interact only with **hyUSD**, **xASSETs**, and collateral.
At any time, the total value locked (TVL) for the underlying asset must equate to the sum of its **vUSD** and **xASSET** market caps.
$$
\text{ASSET TVL} = \text{vUSD Supply} \cdot \text{\$1} + \text{xASSET Supply} \cdot \text{xASSET Price}
$$
The **xASSET Price** is [dynamically calculated](#pricing-xasset-tokens). As TVL fluctuates with the underlying asset's market price, the xASSET component absorbs all price movement, creating structural leverage while protecting the \$1 peg on **vUSD**.
See [Multi-Asset Architecture](/protocol-overview/multi-asset-architecture) for how individual pool invariants combine to back **hyUSD**.
# Dynamic Collateral Routing
Source: https://docs.hylo.so/protocol-overview/dynamic-collateral-routing
How hyUSD's backing collateral flows across pools with dynamic fees.
Dynamic collateral routing is one of two mechanisms Hylo uses to rebalance xASSET-vUSD pairs toward their target collateral ratio, the other being [collateral rebalancing](./collateral-rebalancing). It is also the most capital-efficient as it requires no protocol incentives. Collateral routing simply steers user flows where they're needed through dynamic fee curves that adjust automatically based on each pool's collateral ratio.
Low mint fee, and no redemptions above 150% CR. Attracts inflows, stops outflows.
No mints below 150% CR, and a low redeem fee. Stops inflows, attracts outflows.
## Routing Schema
**xASSET collateral flows cannot be directed** since users want leveraged exposure to a specific asset. However, **hyUSD flows can be directed**. When a user wants hyUSD they are not concerned with which collateral pool backs it.
Hylo employs a dynamic fee system to effectively route hyUSD mints and redemptions to and from the most optimal pool. By making it cheaper to mint hyUSD from healthier pools, the protocol naturally directs collateral where it's needed. Vice versa on the redemption side, the least healthy pool will surface the lowest fee. The USDC pool has flat fees, so it sets the baseline that the volatile pools compete against, and it takes the flow when no volatile pool can.
The DEX router (e.g. [Titan](https://titan.exchange), [Jupiter](https://jup.ag)) evaluates the proposed fee from each available pool and selects the cheapest path. In this example, the SOL pool's high CR yields the lowest fee, so the router swaps the user's input token to SOL LSTs and mints hyUSD through that pool.
![The DEX router selects the cheapest pool to mint hyUSD]()
## USDC Pool: Flat Fees
The USDC pool operates differently from standard collateral pools in that it acts as an overflow buffer for hyUSD demand. It applies a **flat mint fee** and a **flat redeem fee**, each configured separately and independent of CR. The mint fee is currently **0%** and the redeem fee is **0.2%**.
On fee alone, the USDC pool is the cheapest mint route, below the volatile pools' minimum fee. A router selects a volatile pool when the full path cost, including the swap into the deposit asset, is lower.
The redeem fee matches the top of the volatile pools' redeem fee curve. Redemptions therefore go to any pool below its target first, and the USDC pool pays out when no other pool offers a lower fee.
USDC converts to **hyUSD** one for one, at \$1. As a safeguard, USDC routes are only available while the Pyth USDC/USD price stays within a small configured tolerance of \$1 (at most \$0.001).
## Volatile Pools: Fee Curves
For volatile collateral pools (SOL, BTC, HYPE), Hylo uses two independent **piecewise fee curves**, one for minting and one for redemption. Each curve maps a pool's collateral ratio to a fee percentage.
![CR Zone Map and Fee Curves]()
### Mint Fee Curve
The mint fee curve is active when CR is above the **150%** target. As the pool's CR rises, the minting fee decreases.
* **At the lower bound**: fee is highest
* **As CR rises**: fee decreases along the curve
* **Above the upper bound**: fee stays at its minimum, close to zero
If the pool's CR falls below the curve's lower bound, **minting is blocked entirely**. This means hyUSD cannot be minted from an over-leveraged pool.
### Redeem Fee Curve
The redeem fee curve is active when CR is below the **150%** target, mirroring the mint fee curve. As the pool's CR rises, redemption fees increase.
* **At and below the lower bound**: zero fee encouraging outflows from distressed pools
* **As CR rises**: fee increases along the curve
* **At the upper bound (150%)**: fee is highest
If a redemption would leave the pool's CR above the curve's upper bound, **that pool does not quote the redemption**. This means hyUSD redemptions cannot drain collateral from a pool that is already under-leveraged. Redemptions stay available through any pool below the target, and through the USDC pool while it holds enough USDC and USDC is within its par tolerance.
Together the two curves split the flow around the target. Above **150%** a pool accepts mints, and below **150%** it pays out redemptions. When one pool has a low CR, redemptions from it are nearly free.
# Earn Pool
Source: https://docs.hylo.so/protocol-overview/earn-pool
Earn Pool hyUSD and its yield sources.
**hyUSD** holders can earn yield by depositing into Hylo's Earn Pool. The pool aggregates yield from all collateral pools and distributes it to depositors automatically.
## Earn Pool hyUSD
Earn Pool **hyUSD** (**eHYUSD**) is a tokenized, yield-bearing version of **hyUSD** that represents a user's deposit in the Earn Pool.
When users deposit **hyUSD**, they receive **eHYUSD** tokens representing their pro rata share of the pool. **eHYUSD** compounds yield at the end of each network epoch.
**eHYUSD** is the same token as **sHYUSD**: same mint address, only the ticker has changed for Hylo V2. No migration or action of any kind is needed from holders.
## Yield Sources
Yield is aggregated from the protocol's underlying collateral pools:
Native staking rewards from LSTs
Borrow rate charged to **xBTC** and **xHYPE** holders
### Total Protocol Yield
The combined yield from all collateral pools flows to the Earn Pool:
$$
\text{Total Yield} = \sum_{i \in C}(\text{Pool}_i \text{ TVL} \cdot \text{Pool}_i \text{ Yield Rate})
$$
## Earn Pool APY
**eHYUSD** holders collect rewards from the entirety of Hylo's TVL across all pools.
![eHYUSD receives yield from all xAsset pools]()
US Treasury yield on USDC will be added in the coming weeks, adding a base yield of **4% APY**.
### APY Calculation
The per-epoch rate is:
$$
\text{Epoch Rate} = \frac{\text{Epoch Yield} \cdot \text{Pool Allocation}}{\text{hyUSD in Earn Pool}}
$$
The **pool allocation** is a configurable protocol parameter that determines how much of the harvested yield flows to the Earn Pool versus the treasury. The APY is then annualized across Solana's 182.5 epochs per year:
$$
\text{Earn Pool APY} = (1 + \text{Epoch Rate})^{182.5} - 1
$$
This example demonstrates how the Earn Pool offers higher yields by aggregating returns from multiple collateral pools.
**Hypothetical Setup** (simplified: rates are shown as a yearly percentage of each pool's TVL):
* **SOL Pool:** 80M TVL, 6% staking yield
* **BTC Pool:** 20M TVL, 5% borrow rate
* **hyUSD Supply:** 70M
* **hyUSD in Earn Pool:** 70% (49M)
**Revenue Generation:**
* SOL Pool: 80M × 6% = 4.8M/year
* BTC Pool: 20M × 5% = 1.0M/year
* **Total:** 5.8M/year
**Effective Yield (assuming all yield flows to Earn Pool depositors):**
$$
\text{Effective Yield} = \frac{5.8M}{49M} \approx \textbf{11.8\%}
$$
Because only **hyUSD** in the Earn Pool earns yield, the effective APY is amplified beyond any individual pool's rate.
## How Yield Compounds
Every epoch, yield generated by all collateral pools is "harvested" via a permissionless crank:
1. **SOL Pool:** LST yield accrues automatically as LST prices appreciate
2. **BTC and HYPE Pools:** A borrow rate is charged on the **xASSET** market cap, at a rate set by the [borrow rate curve](./multi-asset-architecture#borrow-rate-curve)
3. **Distribution:** Yield is converted into newly minted **hyUSD**
4. **Compounding:** **hyUSD** added to the Earn Pool increases **eHYUSD** NAV
This mechanism causes **eHYUSD** to continuously appreciate against **hyUSD**.
# Multi-Asset Architecture
Source: https://docs.hylo.so/protocol-overview/multi-asset-architecture
Scaling hyUSD across multiple collateral assets.
Hylo V1 supported only SOL with **xSOL** and **hyUSD** as synthetic tokens built on top of the protocol's LST pool. Hylo V2 introduces a more scalable, multi-asset approach. The protocol now supports independent collateral pools for each supported asset.
Each collateral pool is split into an **xASSET** and its respective **vUSD**, with the virtual stablecoin acting as a leverage accounting mechanism for the specific pair. The flagship stablecoin **hyUSD** is backed by the combined value of all virtual stablecoins.
![Each collateral pool's virtual stablecoin backs the hyUSD supply]()
## hyUSD Master Equation
Given the set **C** of supported collateral assets, the **hyUSD** supply is defined as:
$$
\text{hyUSD Supply} = \sum_{i \in C}(\text{vUSD}_i \text{ Supply} \cdot \text{vUSD}_i \text{ NAV})
$$
In simpler terms, **hyUSD is backed 1:1 by the sum of all virtual stablecoins** when individual collateral ratios are healthy above **100%**.
## Collateral Pools
Each collateral pool operates independently with its own assets, collateral ratio, risk parameters, and yield mechanism.
| Aspect | Benefit |
| --------------------------- | -------------------------------------------------------------------------- |
| **Separate CR** | Each pool maintains its own collateral ratio |
| **Risk Isolation** | One pool's collateral ratio doesn't affect the others |
| **Independent Rebalancing** | Each pool has its own rebalancing strategy tailored to its collateral type |
| **Yield Mechanism** | Yield-bearing assets pay with yield; others pay a borrow rate |
### SOL Pool
$$
\text{SOL TVL} = \text{vUSD}_{\text{SOL}}\text{ Supply} \cdot \$1 + \text{xSOL Supply} \cdot \text{xSOL Price}
$$
The SOL collateral pool consists of Liquid Staking Tokens (LSTs) supported in Hylo's LST registry, currently consisting of [jitoSOL](https://solscan.io/token/J1toso1uCk3RLmjorhTtrVwY9HJ7X8V9yYac6Y7kGCPn) and [hyloSOL](https://solscan.io/token/hy1oXYgrBW6PVcJ4s6s2FKavRdwgWTXdfE69AxT7kPT).
The total SOL in the pool at any given time is defined as the sum across the set of supported LSTs **L**:
$$
\text{SOL TVL} = \sum_{l \in L} \text{LST}_l\text{ Balance} \cdot \text{LST}_l\text{ Redemption Price}
$$
**Pricing:** Hylo uses true LST pricing via [Sanctum](https://sanctum.so), calculating LST value based on actual SOL in each stake pool. The Pyth SOL/USD oracle then converts SOL to USD.
**Yield:** LSTs generate native staking yield from validator rewards. This yield flows to **hyUSD** stakers and protocol revenue, making leverage effectively free for **xSOL** holders while the pool's CR is in the Neutral zone. Above **165%** CR, the [borrow rate curve](#borrow-rate-curve) scales the harvested yield, and **xSOL** holders pay the excess.
### BTC Pool
$$
\text{BTC TVL} = \text{vUSD}_{\text{BTC}}\text{ Supply} \cdot \$1 + \text{xBTC Supply} \cdot \text{xBTC Price}
$$
The BTC collateral pool consists of [cbBTC](https://solscan.io/token/cbbtcf3aa214zXHbiAZQwf4122FBYbraNdFqgw4iMij), backed 1:1 by real Bitcoin in Coinbase's institutional grade custody.
**Pricing:** Pyth BTC/USD price oracle.
**Yield:** BTC doesn't generate native yield. The protocol charges a configurable **borrow rate** on the BTC pool, paid by **xBTC** holders through gradual NAV reduction. The borrow rate is harvested once per epoch and distributed to Earn Pool depositors and protocol revenue.
$$
\text{Value Harvested} = \text{xBTC Market Cap} \cdot \text{Borrow Rate Per Epoch}(\text{CR})
$$
The charge is based on the **xBTC** market cap, so the effective rate on a holder's leveraged exposure rises as effective leverage falls. The rate also moves with the pool's CR, as described in the [borrow rate curve](#borrow-rate-curve).
### HYPE Pool
$$
\text{HYPE TVL} = \text{vUSD}_{\text{HYPE}}\text{ Supply} \cdot \$1 + \text{xHYPE Supply} \cdot \text{xHYPE Price}
$$
The HYPE collateral pool consists of [HYPE](https://solscan.io/token/98sMhvDwXj1RQi5c5Mndm3vPe9cBqPrbLaufMXFNMh5g) on Solana.
**Pricing:** Pyth HYPE/USD price oracle.
**Yield:** Like BTC, HYPE doesn't generate native yield in the pool. **xHYPE** holders pay a **borrow rate** with the same mechanism as **xBTC**.
### USDC Pool
Hylo V1 intentionally limited its **hyUSD** minting capacity so as to not over-leverage the **xSOL** trade. In Hylo V2, **hyUSD** becomes infinitely scalable with the introduction of a **USDC** pool. **USDC** does not have a leveraged component and is simply defined as a virtual stablecoin.
$$
\text{USDC TVL} = \text{vUSD}_{\text{USDC}}\text{ Supply} \cdot \$1
$$
The protocol values USDC at \$1, so USDC and **hyUSD** convert one for one. USDC routes are only available while the Pyth USDC/USD price stays within a small configured tolerance of \$1.
The USDC pool serves two roles:
1. **Direct hyUSD access:** Users can mint and redeem hyUSD with USDC at flat fees. The mint fee and the redeem fee are configured separately, currently **0%** to mint and **0.2%** to redeem.
2. **Rebalancing counterparty:** The USDC pool is the other side of all [collateral rebalancing](./collateral-rebalancing) routes, receiving USDC from deleveraging sales or deploying USDC to re-leverage volatile pools as their CR moves into extreme zones.
## Borrow Rate Curve
The borrow rate is not fixed. Each pool's rate follows a curve driven by that pool's CR, using the same [rebalance zones](./risk-management) as the rest of the protocol.
| Pool CR | Zone | Borrow Rate |
| ----------- | --------------------------- | ------------------------------------------------------- |
| \< 135% | Sell zones and Destabilized | Paused, no borrow rate is charged |
| 135% – 165% | Neutral | Base rate (1×) |
| 165% – 175% | Buy Zone 1 | Rises linearly from the base rate to the ceiling rate |
| ≥ 175% | Buy Zone 2 | Capped at the ceiling rate (currently 2× the base rate) |
The base and ceiling rates are configurable per pool.
**What about xSOL?** xSOL has no base borrow rate. Instead, the same CR multiplier applies to the LST yield harvested each epoch. In the Neutral zone the multiplier is 1×, so the harvest equals the staking yield and **xSOL** leverage stays free. Above **165%** CR the multiplier rises toward its ceiling, and the amount above 1× comes out of **xSOL** equity as a borrow rate.
**Why this helps:** When leverage demand is high, current yields may not attract enough **eHYUSD** deposits. This liquidity shortage raises the pool's CR and leaves **xASSETs** with lower leverage than intended. Higher borrow rates increase **eHYUSD** yields, which encourages deposits when liquidity is most needed. More deposits restore leverage and bring the rate back down. These increases are expected to be occasional and short-lived for most **xASSETs**, depending on deposit activity and market conditions.
## Extensibility
Hylo's V2 architecture supports an infinite frontier of collateral pools. Each new pool creates an **xASSET-vUSD** pair which automatically contributes to the **hyUSD** backing. Beyond SOL, BTC and HYPE, Hylo can support other volatile assets as well as yield-bearing tokens like JLP and RWAs.
# Protocol Revenue
Source: https://docs.hylo.so/protocol-overview/protocol-revenue
Understanding Hylo's multi-pool revenue streams.
Hylo generates revenue through minting and redemption fees, as well as a percentage of the yield earned by underlying LSTs and borrow rates charged on non-yielding assets.
## Revenue Sources
Native staking yield from yield-bearing assets (SOL LSTs).
Charged on non-yield assets (e.g. BTC).
Dynamic minting and redemption fees.
Mode-adjusted minting and redemption fees.
## Revenue Distribution
| Source | Distribution |
| -------------------- | ----------------------------------------------- |
| Yield & borrow rates | Split between Earn Pool depositors and treasury |
| Mint/redeem fees | Treasury |
The yield allocation and treasury fee percentages are configurable protocol parameters, adjusted to balance depositor rewards with protocol sustainability.
## Revenue Scaling
Revenue grows with:
* **Additional pools:** Each new collateral pool contributes yield or borrow rate
* **Trading volume:** Increased **hyUSD** and **xASSET** usage drives fee revenue
* **TVL:** The protocol earns more as deposited assets grow
# Risk Management
Source: https://docs.hylo.so/protocol-overview/risk-management
Multi-tiered stability mechanisms employed by Hylo to ensure peg safety.
Hylo manages risk at the individual pool level. Each collateral pool (e.g. SOL, BTC) has its own **collateral ratio (CR)**, the backing strength of its virtual stablecoin, and its own independent stability mechanisms. This page is the map; each mechanism links to its full treatment.
$$
\text{vASSET CR} = \frac{\text{ASSET TVL}}{\text{vASSET Supply}}
$$
## Rebalance Zones
A pool's CR places it in one of six **rebalance zones**. The protocol targets a CR around **150%**, the center of the healthy Neutral band; the further CR drifts from it, the more aggressively the protocol intervenes.
| CR Range | Zone | Pool Status |
| ----------- | ------------ | --------------------------------- |
| ≥ 175% | Buy Zone 2 | Buying collateral (max premium) |
| 165% – 175% | Buy Zone 1 | Buying collateral |
| 135% – 165% | Neutral | Healthy (target \~150%) |
| 120% – 135% | Sell Zone 1 | Selling collateral |
| 100% – 120% | Sell Zone 2 | Selling collateral (max discount) |
| \< 100% | Destabilized | Loss absorption |
The boundary rationale is derived in [Value at Risk Analysis](/technical-addendum/value-at-risk-analysis); the canonical zone definitions live in [Hylo Equations](/technical-addendum/hylo-equations#rebalance-zones).
## Multi-Tiered Stability
As CR leaves the Neutral band, Hylo escalates through complementary mechanisms, with market-incentivized rebalancing first, then protective fees, and finally the Earn Pool backstop:
| Mechanism | Active In | Purpose |
| ----------------------------------------------------------------------------------------------------------- | ---------------------- | ------------------------------------------------------------------------------------------ |
| [Dynamic collateral routing](./dynamic-collateral-routing) | Around the 150% target | Fee curves direct **hyUSD** mints to pools above 150% CR and redemptions to pools below it |
| [Collateral rebalancing](./collateral-rebalancing) | Sell & Buy zones | Subsidized swap routes pull CR back toward Neutral |
| [xASSET fee controls](/technical-addendum/additional-risk-management#anti-destabilization-fees) | Sell zones | Deter destabilizing redemptions; reward restorative mints |
| hyUSD minting block | Below 150% | Blocks mints that would push CR below the target |
| [Earn Pool loss absorption](/technical-addendum/additional-risk-management#earn-pool-as-first-loss-capital) | Destabilized | Burns Earn Pool hyUSD to retire unbacked supply and restore CR to 100% |
## Risk Isolation
Because every pool has its own CR, zones, and fees, stress stays local: a shock to one collateral asset is worked out by that pool alone, without dragging healthy pools into protective mode. **hyUSD stays backed** because its collateral is the aggregate of all pools: a healthy pool offsets a stressed one. See [Multi-Pool Risk Isolation](/technical-addendum/additional-risk-management#multi-pool-risk-isolation) for detail.
## Aggregate System Health
While each pool operates independently, **hyUSD**'s overall health depends on the aggregate:
$$
\text{System CR} = \frac{\sum(\text{Pool TVLs})}{\sum(\text{vASSET Supplies})}
$$
**hyUSD** remains fully backed as long as total backing exceeds total vASSET supply.
# xASSETs
Source: https://docs.hylo.so/protocol-overview/xassets
Pricing, leverage dynamics, and risk characteristics of Hylo's leverage tokens.
**xASSETs** are Hylo's liquidation-resistant leverage tokens. Each **xASSET** absorbs the full price exposure of its underlying collateral pool, allowing the paired **vUSD** to maintain its \$1 peg. By holding an **xASSET**, you get amplified exposure with the protocol handling all mechanics automatically.
## Pricing
The price of any **xASSET** is calculated from the variable reserve, the excess value not backing the virtual stablecoin:
$$
\text{xASSET Price} = \frac{\text{ASSET TVL} - \text{vUSD Supply}}{\text{xASSET Supply}}
$$
As the underlying asset appreciates, the **xASSET** price increases with effective leverage. If the asset price drops, the **xASSET** absorbs the loss, maintaining the **vUSD** peg.
1. **Initial Scenario**
1 SOL worth \$100 in the reserve. This backs 50 vUSDSOL (worth \$50). The remaining \$50 is allocated to 50 xSOL tokens, each worth \$1.
2. **SOL Price Increases**
SOL doubles to \$200. The 50 vUSDSOL still represent \$50. This leaves \$150 for xSOL. Each token's value increases to \$3, a 3x gain absorbing SOL's positive movement.
3. **SOL Price Drops**
SOL falls to \$75. The 50 vUSDSOL still represent \$50. This leaves \$25 for xSOL. Each token drops to \$0.50, absorbing the negative movement.
This mechanism applies identically to xBTC/vUSDBTC and any future asset pairs.
![Collateral Volatility Absorption Schema]()
## Effective Leverage
Effective leverage reflects an **xASSET** token's amplified exposure to its underlying asset at a point in time:
$$
\text{xASSET Leverage} = \frac{\text{ASSET TVL}}{\text{xASSET Market Cap}}
$$
Leverage fluctuates dynamically with protocol activity:
* **Increases** when **vUSD** is minted or **xASSET** is redeemed
* **Decreases** when **vUSD** is burned or **xASSET** is minted
Each **xASSET-vUSD** pair targets a collateral ratio of **150%**, implying structural leverage at **3x** in normal conditions. As leverage diverges from the target, the protocol uses [dynamic routing](./dynamic-collateral-routing) and [collateral rebalancing](./collateral-rebalancing) to guide it back.
1. **Initial Scenario**
1 SOL worth \$100 in the reserve backs \$50 of vUSDSOL and \$50 of xSOL. Effective leverage is 2x.
2. **After vUSDSOL Minting**
An additional \$50 of vUSDSOL is minted (adding 0.5 SOL). Total reserve is \$150, xSOL market cap remains \$50. Effective leverage increases to 3x.
3. **After vUSDSOL Redemption**
\$25 of vUSDSOL is redeemed. Total reserve decreases to \$75, xSOL market cap still \$50. Effective leverage reduces to 1.5x.
The same dynamics apply to xBTC and any future **xASSET** tokens.
![Effective Leverage vs Fraction of TVL in xASSET]()
## xSOL: Free Leverage
xSOL benefits from the SOL pool's staking yield. Since LSTs generate native staking rewards, this yield flows to the protocol and no cost is charged to xSOL holders. Leverage is effectively free from ongoing costs besides the forfeited yield.
The one exception is a high collateral ratio. Above **165%** CR, the protocol harvests a multiple of the LST yield, and xSOL holders pay the amount above 1×. See the [borrow rate curve](/protocol-overview/multi-asset-architecture#borrow-rate-curve).
## xBTC: Borrow Rate Leverage
BTC doesn't generate native yield. As such the protocol exacts a configurable **borrow rate** on the BTC pool, paid by xBTC holders through gradual NAV reduction. The charge is based on the xBTC market cap, so the effective rate on leveraged exposure rises as leverage falls.
The rate also follows the pool's CR. It stays at the base rate in the Neutral zone, rises linearly above **165%** CR to a capped 2× the base rate at **175%** CR, and pauses below **135%** CR. See the [borrow rate curve](/protocol-overview/multi-asset-architecture#borrow-rate-curve) for details.
## Fee Structure
**xASSET** minting and redemption are each subject to a flat, configurable fee per pool. In extreme market conditions, fees may be temporarily adjusted for risk management purposes to incentivize healthy protocol behavior. See [risk-management](/protocol-overview/risk-management) for details.
## Risk: Volatility Decay
Volatility decay causes leveraged tokens to lose value over time in sideways markets. When holding an **xASSET** through multiple rebalancing cycles, the break-even price of a user's position may increase.
**xASSET** value is path-dependent. Large price swings in both directions erode value because leverage amplifies both gains and losses.
**Example:**
1. SOL is at \$100, xSOL is at \$100 with 2x leverage
2. SOL drops 20% to \$80; xSOL drops 40% to \$60
3. SOL recovers back to \$100, but xSOL only recovers to \$90, not \$100
SOL returned to its starting price, yet xSOL lost \$10. This is volatility decay: each rebalancing cycle chips away at the token's value, even if the underlying asset ends up where it started.
# Audits
Source: https://docs.hylo.so/security/audits
Audit reports for Hylo Solana programs
Hylo's core team prioritizes security and depositor safety. As such, every major release of our programs is audited by multiple researchers at top tier security firms.
## V1 Audits
### Hylo v1.1, Exchange & Stability Pool
* [OtterSec, Feb 2025](https://hylo-audits.s3.us-east-2.amazonaws.com/OtterSec-Exchange-Stability-Pool-20250513.pdf)
### Hylo v1.2, Exchange & Stability Pool
* [Accretion, Dec 2025](https://hylo-audits.s3.us-east-2.amazonaws.com/Accretion-Hylo-Dec2025.pdf)
## V2 Audits
### Hylo v2, Exchange, Earn Pool & Router
* [Accretion, Jul 2026](https://hylo-audits.s3.us-east-2.amazonaws.com/Accretion-HyloV2-July2026.pdf)
# Onchain Addresses
Source: https://docs.hylo.so/security/onchain-addresses
Solana mainnet addresses for Hylo programs and mints
## V1 Programs
| Program | Address |
| ------------------- | ----------------------------------------------------------------------------------------------------------------------- |
| Exchange v0.1 | [HYEXCHtHkBagdStcJCp3xbbb9B7sdMdWXFNj6mdsG4hn](https://solscan.io/account/HYEXCHtHkBagdStcJCp3xbbb9B7sdMdWXFNj6mdsG4hn) |
| Stability Pool v0.1 | [HysTabVUfmQBFcmzu1ctRd1Y1fxd66RBpboy1bmtDSQQ](https://solscan.io/account/HysTabVUfmQBFcmzu1ctRd1Y1fxd66RBpboy1bmtDSQQ) |
## Core Token Mints
| Token Mint | Address |
| ------------------------ | ----------------------------------------------------------------------------------------------------------------------- |
| hyUSD | [5YMkXAYccHSGnHn9nob9xEvv6Pvka9DZWH7nTbotTu9E](https://solscan.io/account/5YMkXAYccHSGnHn9nob9xEvv6Pvka9DZWH7nTbotTu9E) |
| eHYUSD (formerly sHYUSD) | [HnnGv3HrSqjRpgdFmx7vQGjntNEoex1SU4e9Lxcxuihz](https://solscan.io/account/HnnGv3HrSqjRpgdFmx7vQGjntNEoex1SU4e9Lxcxuihz) |
| xSOL | [4sWNB8zGWHkh6UnmwiEtzNxL4XrN7uK9tosbESbJFfVs](https://solscan.io/account/4sWNB8zGWHkh6UnmwiEtzNxL4XrN7uK9tosbESbJFfVs) |
## V2 Token Mints
| Token Mint | Address | Description |
| ---------- | ------- | ------------------- |
| xBTC | `[TBD]` | Leveraged BTC token |
## Liquid Staking Tokens (LSTs)
| Token | Address |
| -------- | --------------------------------------------------------------------------------------------------------------------- |
| hyloSOL | [hy1oXYgrBW6PVcJ4s6s2FKavRdwgWTXdfE69AxT7kPT](https://solscan.io/account/hy1oXYgrBW6PVcJ4s6s2FKavRdwgWTXdfE69AxT7kPT) |
| hyloSOL+ | [hy1opf2bqRDwAxoktyWAj6f3UpeHcLydzEdKjMYGs2u](https://solscan.io/account/hy1opf2bqRDwAxoktyWAj6f3UpeHcLydzEdKjMYGs2u) |
## Exogenous Collateral Assets
| Asset | Address | Description |
| ----- | ------------------------------------------------------------------------------------------------------------------- | -------------------- |
| cbBTC | [cbbtcf3aa214zXHbiAZQwf4122FBYbraNdFqgw4iMij](https://solscan.io/token/cbbtcf3aa214zXHbiAZQwf4122FBYbraNdFqgw4iMij) | Coinbase Wrapped BTC |
# Additional Risk Management
Source: https://docs.hylo.so/technical-addendum/additional-risk-management
Understanding Hylo V2's additional risk management mechanisms and metrics
Autonomous [collateral rebalancing](/protocol-overview/collateral-rebalancing) is Hylo's first line of defense: as a pool's CR drifts out of the Neutral band, the protocol opens subsidized swap routes that pull it back. The mechanisms below are the additional layers that protect the peg when rebalancing alone is not enough, for example during a sharp, sustained drawdown.
## Layered Protection
Each pool carries the same independent stack of protections. Layers engage progressively as a pool's [rebalance zone](/technical-addendum/hylo-equations#rebalance-zones) deteriorates.
| Layer | Mechanism | Engages |
| ----- | ---------------------------------------------- | ----------------------------------------------- |
| 1 | Autonomous rebalancing routes | Outside the Neutral band (CR \< 135% or > 165%) |
| 2 | Zone-based xASSET fee schedule | Sell zones (CR \< 135%) |
| 3 | Stablecoin mint gating | Whenever a mint would leave the Neutral band |
| 4 | Earn Pool loss absorption (burn to restore CR) | Destabilized (CR \< 100%) |
On top of these CR-driven layers, two always-on invariants (a per-pool virtual stablecoin floor and a levercoin market-cap limiter) bound how far any pool can be pushed.
## Anti-Destabilization Fees
xASSET (levercoin) mint and redeem fees are tiered by rebalance zone. In normal operation they are flat and low; as CR falls into the sell zones, **redeem fees rise steeply while mint fees fall**:
| Zone | Mint / Redeem (example) |
| ----------------------- | ---------------------------- |
| Neutral & buy zones | 100 / 100 bps |
| Sell Zone 1 (120%–135%) | 50 / 400 bps |
| Sell Zone 2 (100%–120%) | 0 / 800 bps |
| Destabilized (\< 100%) | minting & redemption blocked |
This schedule is an **anti-destabilization backstop, not a routine cost**. It makes it prohibitively expensive for a single large redemption to abruptly drag a pool's CR down, while the discounted mint fee rewards restorative flow. In normal conditions, autonomous rebalancing keeps CR inside the Neutral band, so these elevated fees almost never apply.
## Earn Pool as First-Loss Capital
The Earn Pool plays two distinct roles.
**During rebalancing**, it settles the profit or subsidy of each swap: profitable rebalances mint hyUSD into the pool, subsidized ones burn hyUSD from it (see [Profit and Loss Settlement](/protocol-overview/collateral-rebalancing#profit-and-loss-settlement)).
**In the Destabilized zone (CR \< 100%)**, the pool can no longer fully back its virtual stablecoin. The protocol burns Earn Pool hyUSD to retire the unbacked virtual-stablecoin **overhang**, lowering supply and lifting CR back toward 100%. The burn is capped at the Earn Pool's balance, and the amount retired is recorded as debt on a **pool drawdown ledger**.
This is a last-resort backstop, not part of normal operation. The protocol is designed so that [collateral rebalancing](/protocol-overview/collateral-rebalancing) keeps each pool balanced long before CR ever approaches 100%. The Earn Pool burn exists only to absorb an extreme event that rebalancing could not contain.
While a drawdown is outstanding:
1. **Stablecoin minting is frozen** for that pool until the debt is fully repaid.
2. **Yield harvesting pauses**: in the sell zones and the Destabilized zone, the epoch harvest is a no-op, so the protocol does not distribute yield out of a stressed pool.
3. Once CR recovers, **future harvested yield repays the drawdown first**, before Earn Pool depositors resume compounding.
This makes Earn Pool depositors the protocol's first-loss capital: they earn the system's aggregate yield in calm conditions and have their hyUSD burned to recollateralize a pool when one falls below 100% backing.
## Multi-Pool Risk Isolation
V2's independent pools mean stress is contained:
* Each pool has its own CR, rebalance zone, fee schedule, and drawdown ledger.
* A broad market selloff can stress all pools at once, but an asset-specific shock stays isolated to its pool.
* hyUSD remains backed by the healthy pools while a stressed pool works through its own protection layers.
# Hylo Equations
Source: https://docs.hylo.so/technical-addendum/hylo-equations
Technical breakdown of the key equations powering Hylo V2 protocol
## Master Equation
The fundamental equation governing hyUSD's backing in Hylo V2:
$$
\text{hyUSD Supply} \times \text{hyUSD NAV} = \sum_{i}(\text{vUSD}_i \text{ Supply} \times \text{vUSD}_i \text{ NAV})
$$
This means hyUSD is backed 1:1 by the sum of all virtual stablecoins across collateral pools when collateral ratios are healthy (CR > 100%).
## Per-Asset Invariant
Each collateral pool maintains its own invariant:
$$
\text{ASSET TVL} = \text{vUSD Supply} \times \text{vUSD Price} + \text{xASSET Supply} \times \text{xASSET Price}
$$
Where vUSD is always worth \$1.
### SOL Pool
$$
\text{SOL TVL} = \text{vUSD}_{\text{SOL}}\text{ Supply} \times \$1 + \text{xSOL Supply} \times \text{xSOL Price}
$$
### BTC Pool
$$
\text{BTC TVL} = \text{vUSD}_{\text{BTC}}\text{ Supply} \times \$1 + \text{xBTC Supply} \times \text{xBTC Price}
$$
### HYPE Pool
$$
\text{HYPE TVL} = \text{vUSD}_{\text{HYPE}}\text{ Supply} \times \$1 + \text{xHYPE Supply} \times \text{xHYPE Price}
$$
## True Asset Value
### SOL LST Pricing
For SOL LSTs, we use the **Sanctum SOL value calculator program** to determine the true LST price based on the amount of SOL held in each stake pool, avoiding market manipulation risks:
$$
\text{True LST Price} = \frac{\text{Amount of SOL in Stake Pool}}{\text{Total LST Supply}}
$$
### BTC Pricing
For wrapped BTC, we use price oracles to determine the true BTC value in USD.
## Price Oracles
To calculate USD values and maintain pegs, we use price oracles:
* **SOL/USD:** Pyth SOL/USD price oracle
* **BTC/USD:** Pyth BTC/USD price oracle
* **HYPE/USD:** Pyth HYPE/USD price oracle
* **USDC/USD:** Pyth USDC/USD price oracle, used as a par check only
USDC settles at face value (\$1). USDC routes require $|1 - \text{USDC Spot}| \le \text{Par Tolerance}$, where the tolerance is configurable up to \$0.001.
## Net Asset Value (NAV) Calculations
### vUSD NAV
Virtual stablecoins maintain a \$1 NAV in healthy conditions:
$$
\text{vUSD NAV}_{\text{USD}} = \$1
$$
In terms of the underlying asset:
$$
\text{vUSD NAV}_{\text{ASSET}} = \frac{1}{\text{ASSET Price (USD)}}
$$
### xASSET NAV
The NAV of leverage tokens uses the excess collateral value beyond vUSD backing:
$$
\text{xASSET NAV}_{\text{USD}} = \frac{\text{ASSET TVL (USD)} - \text{vUSD Supply}}{\text{xASSET Supply}}
$$
If xASSET supply is zero, NAV defaults to \$1.
### hyUSD NAV
$$
\text{hyUSD NAV}_{\text{USD}} = \$1
$$
## Collateral Ratio Calculations
### Per-Asset Collateral Ratio
Each asset pool has its own collateral ratio:
$$
\text{CR} = \frac{\text{Total Collateral} \times \text{Collateral Price}}{\text{vUSD Supply}}
$$
### Max Mintable Stablecoin
The protocol caps stablecoin minting to prevent CR from dropping below a safety threshold:
$$
\text{Max Mintable} = \frac{\text{TVL} - \text{Target CR} \times \text{Current vUSD Supply}}{\text{Target CR} - 1}
$$
Where **Target CR** is the configured stablecoin mint threshold, which is constrained on-chain to lie within the mint fee curve domain (**150% – 170%**). Minting is blocked if the projected CR would fall below this threshold.
### Max Swappable Stablecoin
When converting xASSET to hyUSD within a pool (no TVL change):
$$
\text{Max Swappable} = \frac{\text{TVL}}{\text{Target CR}} - \text{vUSD Supply}
$$
### Rebalance Zones
Each pool's CR maps to one of six **rebalance zones**. The zone determines which rebalancing route is open, how rebalance pricing behaves, and which fee schedule applies. (These zones replace the former "stability mode" thresholds.)
| CR Range | Zone | Behavior |
| ----------- | ------------ | --------------------------------------------------------------- |
| \< 100% | Destabilized | xASSET NAV → 0; rebalancing, P\&L settlement, and minting halt |
| 100% – 120% | Sell Zone 2 | Sell route active; rebalance price clamped flat at max discount |
| 120% – 135% | Sell Zone 1 | Sell route active; rebalance price interpolates |
| 135% – 165% | Neutral | Target band; no rebalancing routes |
| 165% – 175% | Buy Zone 1 | Buy route active; rebalance price interpolates |
| ≥ 175% | Buy Zone 2 | Buy route active; rebalance price clamped flat at max premium |
Zone boundaries are half-open: the lower bound is inclusive, the upper exclusive.
## xASSET Effective Leverage
The effective leverage for any xASSET:
$$
\text{xASSET Effective Leverage} = \frac{\text{ASSET TVL}}{\text{xASSET Market Cap}}
$$
Where:
$$
\text{xASSET Market Cap} = \text{xASSET NAV} \times \text{xASSET Supply}
$$
The effective leverage approaches infinity as CR approaches 100%, and approaches 1 as CR increases.
## Dynamic Collateral Routing
### Piecewise-Linear Fee Curves
Hylo uses two independent fee curves for hyUSD minting and redemption. Each curve is defined as a set of (CR, fee) control points with linear interpolation between them.
**Mint fee curve:**
* Domain: CR range from the **150%** target up to **170%**
* Shape: non-increasing; fee is highest at the lower CR bound, falling to its minimum at the upper bound
* Below domain: minting is blocked (no valid fee). A pool's configured mint threshold can sit above the lower bound and block mints earlier
* Above domain: fee clamps to the minimum
**Redeem fee curve:**
* Domain: CR range from **130%** up to the **150%** target
* Shape: monotonically increasing; fee is zero at the lower CR bound, rising to maximum at the upper bound
* Below domain: fee clamps to zero
* Above domain: redemption is rejected (no valid fee)
### Projected CR for Fee Computation
Fees are evaluated at the **projected CR**, the CR after the operation:
**Mint projected CR:**
$$
\text{CR}_{\text{projected}} = \frac{(\text{Total Collateral} + \text{Deposit}) \times \text{Price}}{\text{vUSD Supply} + \text{New vUSD}}
$$
**Redeem projected CR:**
$$
\text{CR}_{\text{projected}} = \frac{(\text{Total Collateral} - \text{Withdrawal}) \times \text{Price}}{\text{vUSD Supply} - \text{Burned vUSD}}
$$
### xASSET Fees
xASSET (levercoin) fees use a discrete table indexed by **rebalance zone**, with separate mint / redeem rates per zone:
| Zone | Mint / Redeem (bps, example) |
| ------------------------------ | ---------------------------- |
| `normal` (Neutral & buy zones) | 100 / 100 |
| `sell_zone_1` | 50 / 400 |
| `sell_zone_2` | 0 / 800 |
| Destabilized | minting & redemption blocked |
See [Anti-Destabilization Fees](/technical-addendum/additional-risk-management#anti-destabilization-fees) for why this schedule rarely binds in normal operation.
## Collateral Rebalancing
### Max Sellable Collateral (Low CR)
When a pool's CR drops into the sell zone, the maximum collateral available for sale targets the sell zone inner bound (**135%** CR):
$$
\text{Max Sellable} = \frac{\text{Sell Zone CR} \cdot \text{vUSD Supply} - \text{Price} \cdot \text{Total Collateral}}{\text{Price} \cdot (\text{Sell Zone CR} - 1)}
$$
### Max Buyable Collateral (High CR)
When a pool's CR rises into the buy zone, the maximum buyable collateral targets the buy zone inner bound (**165%** CR):
$$
\text{Max Buyable} = \frac{\text{Price} \cdot \text{Total Collateral} - \text{Buy Zone CR} \cdot \text{vUSD Supply}}{\text{Price} \cdot (\text{Buy Zone CR} - 1)}
$$
### Rebalance Pricing
Rebalance prices apply a signed percentage spread to the oracle spot price:
$$
\text{Rebalance Price} = \text{Spot} \times (1 + \delta(\text{CR}))
$$
Where $\delta(\text{CR})$ interpolates linearly between two per-asset configured spreads of **opposite sign** (one at the inner bound, one at the outer bound), so it crosses zero (the unadjusted oracle price) partway through the zone. See [Rebalance Pricing](/protocol-overview/collateral-rebalancing#rebalance-pricing) for which side each bound favors and why.
Both endpoint percentages are configurable per asset, determining how aggressively the protocol prices rebalancing activity for each pool. The schedule is a fixed set of percentages rather than a function of live market data, so prices are deterministic across the zone.
## Borrow Rate for Non-Yield Assets
For collateral pools without native yield (e.g., BTC), a per-epoch borrow rate is harvested against the xASSET market cap:
$$
\text{Value Harvested} = \text{xASSET Market Cap} \times r(\text{CR})
$$
No collateral leaves the pool. The protocol mints the harvested value as new hyUSD against the pool, which lowers the xASSET NAV. This hyUSD is distributed between the Earn Pool and treasury according to configurable allocation parameters.
### Borrow Rate Curve
The per-epoch rate $r$ is a function of the pool's CR. It uses the [rebalance zone](#rebalance-zones) boundaries as knots, with a configurable floor rate $r_f$ and ceiling rate $r_c$ per pool ($0 < r_f \le r_c$):
$$
r(\text{CR}) =
\begin{cases}
0 & \text{CR} < 135\% \\
r_f & 135\% \le \text{CR} < 165\% \\
r_f + (r_c - r_f) \cdot \dfrac{\text{CR} - 165\%}{175\% - 165\%} & 165\% \le \text{CR} < 175\% \\
r_c & \text{CR} \ge 175\%
\end{cases}
$$
Below Neutral the harvest is skipped, so no borrow rate is charged. The ceiling rate is currently 2× the floor rate. The protocol bounds $r_c$ at about **30%** annualized, and the treasury fee taken from the harvest at **10%**.
Because the rate applies to the xASSET market cap, the rate relative to notional exposure is:
$$
\text{Rate on Exposure} = \frac{r(\text{CR})}{\text{Effective Leverage}}
$$
### LST Yield Multiplier (SOL Pool)
The SOL pool has no floor rate. The same curve applies as a multiplier $m$ on the LST yield harvested each epoch, with a configurable ceiling $m_c$ ($1 \le m_c \le 5$, currently 2):
$$
m(\text{CR}) =
\begin{cases}
0 & \text{CR} < 135\% \\
1 & 135\% \le \text{CR} < 165\% \\
1 + (m_c - 1) \cdot \dfrac{\text{CR} - 165\%}{175\% - 165\%} & 165\% \le \text{CR} < 175\% \\
m_c & \text{CR} \ge 175\%
\end{cases}
$$
$$
\text{hyUSD Minted} = \text{LST Yield} \times m(\text{CR})
$$
The 1× part is the collateral's own staking yield. The excess over 1× comes out of xSOL equity, which is the xSOL borrow rate:
$$
\text{xSOL Rate on Exposure} = (m(\text{CR}) - 1) \times \text{LST Yield Rate Per Epoch}
$$
## Yield Sources by Asset Type
| Asset Type | Yield Source | Mechanism |
| ------------- | -------------------- | ----------------------------------------------------------------------- |
| SOL LSTs | Native staking yield | LST price appreciation harvested per epoch, scaled by the CR multiplier |
| Wrapped BTC | Borrow rate | CR-driven per-epoch rate charged on the xBTC market cap |
| HYPE | Borrow rate | CR-driven per-epoch rate charged on the xHYPE market cap |
| Future assets | Variable | Either native yield or borrow rate |
## Earn Pool
### LP Token NAV
$$
\text{eHYUSD NAV} = \frac{\text{hyUSD in Pool}}{\text{eHYUSD Supply}}
$$
Returns \$1 if eHYUSD supply is zero.
### Deposit
$$
\text{eHYUSD Out} = \frac{\text{hyUSD In}}{\text{eHYUSD NAV}}
$$
### Withdrawal
Pro-rata share of both hyUSD and any xASSET in the pool, with a configurable withdrawal fee applied to the hyUSD portion.
## Average Reserve Yield (SOL Pool)
$$
\text{Average SOL Reserve Yield} = \frac{\sum_{j=1}^{n} (\text{Supply}_{\text{LST}_j} \times \text{Price}_{\text{LST}_j} \times \text{APY}_{\text{LST}_j})}{\text{Total SOL In Reserve}}
$$
# Value-at-Risk Analysis
Source: https://docs.hylo.so/technical-addendum/value-at-risk-analysis
Understanding how Hylo V2 uses VaR analysis to set per-asset risk thresholds
Hylo employs [**Value at Risk (VaR)**](https://www.investopedia.com/terms/v/var.asp) analysis to set appropriate thresholds for its risk management metrics. VaR is a statistical technique used to measure and quantify the level of financial risk within each collateral pool over a specific time frame.
In V2, VaR analysis is performed independently for each asset type, enabling tailored risk parameters.
## Multi-Asset VaR Framework
Each collateral pool has its own VaR profile based on the underlying asset's volatility characteristics:
| Asset | Historical Volatility | 1-Day 99.9% VaR | CR Target |
| ----- | --------------------- | --------------- | --------- |
| SOL | Higher | -32.95% | 150% |
| BTC | Lower | \~-25% | 150% |
## SOL Pool VaR Analysis
### Data and Parameters
* **Data range:** April 10, 2020, to 2026
* **Confidence level:** 99.9% (representing a 0.1% probability event)
* **Time frame:** 1 day
### Results
The analysis reveals a **99.9% VaR of -32.95%** for a one-day price drop in SOL. Based on this, Hylo sets the vUSDSOL CR target at **150%**. This target ensures the SOL pool can withstand a price drop corresponding to the 0.1% worst day in SOL's history without requiring emergency action.
### SOL VaR Trend
The analysis shows decreasing VaR for SOL over time:
| Period | 99.9% 1-Day VaR |
| ------------------------ | --------------- |
| Full dataset (2020-2026) | -32.95% |
| Last 2 years | -28.18% |
| Last year | -27.55% |
This trend suggests a maturing market with potentially lower risk. However, Hylo maintains the 150% target based on full historical data for comprehensive risk coverage.
## BTC Pool VaR Analysis
### Data and Parameters
* **Data range:** Historical BTC price data
* **Confidence level:** 99.9%
* **Time frame:** 1 day
### Results
BTC historically exhibits lower daily volatility than SOL:
| Metric | SOL | BTC |
| --------------- | ------- | ------ |
| 99.9% 1-Day VaR | -32.95% | \~-25% |
### BTC CR Target
Despite BTC's lower volatility profile, V2 uses the same **150% CR target** for the BTC pool. This provides:
1. **Consistent user experience** across all pools
2. **Conservative risk management** for the new pool
3. **Buffer for wrapped BTC risks** (custody, bridging)
## Per-Pool Target Rationale
### Why 150% for All Pools?
The 150% target aims to:
1. **Safeguard against rare events** where destabilization probability exceeds 0.1%
2. **Provide reaction time** before reaching dangerously low collateralization
3. **Maintain conservative stance** given observed market behavior
4. **Keep CR within the Neutral band**, so rebalancing routes engage well before hyUSD backing is affected
5. **Hold xASSET leverage in a reasonable range**: CR and xASSET leverage move inversely, so a lower CR target would push the baseline leverage carried by **xASSET** holders higher than is ideal for the product
### Asset-Specific Considerations
| Asset | Unique Risk Factors |
| ----- | ---------------------------------------------------------- |
| SOL | Network-specific events, validator risks, MEV dynamics |
| BTC | Wrapped asset custody, bridge security, oracle reliability |
## Independent Pool Risk
V2's multi-pool architecture means:
1. **Isolated VaR** - Each pool assessed independently
2. **No contagion** - SOL crash doesn't affect BTC pool CR
3. **Diversified backing** - hyUSD benefits from uncorrelated assets
### Correlation Considerations
SOL and BTC are partially correlated but not perfectly:
* During broad crypto selloffs, both may decline
* Asset-specific events affect only one pool
* Diversification provides some protection
## Rebalance Zone Thresholds
VaR analysis informs where each pool's **rebalance zones** sit around the 150% target: as CR leaves the Neutral band, the protocol escalates from autonomous rebalancing to zone-based fees and, in the worst case, the Earn Pool backstop. These thresholds apply independently to each pool (vUSDSOL CR, vUSDBTC CR). See [Rebalance Zones](/technical-addendum/hylo-equations#rebalance-zones) for the full zone table.
## Future Asset Evaluation
When adding new collateral pools, the VaR framework is applied:
1. **Gather historical data** - Minimum 2 years preferred
2. **Calculate VaR metrics** - 1-day at 99.9%
3. **Set CR target** - Based on VaR results
4. **Monitor and adjust** - Regular target reviews
### Evaluation Criteria
| Metric | Requirement |
| ------------------ | ------------------------------- |
| 1-Day 99.9% VaR | \< -40% (manageable volatility) |
| Data availability | Sufficient historical record |
| Liquidity | Adequate for operations |
| Oracle reliability | Multiple sources available |