hyUSD holders can earn outsized yields while securing the Hylo ecosystem through the Stability Pool. This key earning feature offers users high rewards in exchange for a calculated risk. Technical details about the Stability Pool can be found in risk-management.

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Introducing Staked hyUSD

Staked hyUSD is a tokenized, yield-bearing version of hyUSD that represents a user’s deposit in the Stability Pool. It’s designed to maximize returns from Hylo’s underlying assets (LSTs) through an effortless user experience.

When users deposit hyUSD into Hylo’s Stability Pool, they receive Staked hyUSD tokens representing their pro rata share of the pool. These tokens automatically compound yield at the end of each network epoch—no lockups, no additional actions required. Users benefit from:

  • Full liquidity
  • Composability with other DeFi protocols
  • Seamless, built-in yield
  • Direct wallet accessibility

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Yield Generation

Every epoch, LST yields generated by Hylo’s collateral are “harvested” as newly minted hyUSD and automatically compounded into the stability pool. This mechanism causes the Staked hyUSD to continuously appreciate in value.

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Stability Pool APY

Yields for the stability pool are generally multiple times higher than the 7-10% base rate generated by LSTs. The minimum rate when the protocol is healthily collateralized is 15% and can go as high as 30%.

Staked hyUSD holders collect rewards from the entirety of Hylo’s TVL, because xSOL and unstaked hyUSD holders do not benefit from the yield on their respective collateral by design. As such, the yields generated by the protocol are shared only among those who stake hyUSD, which is a relatively smaller group. The below chart reflects the “effective yield” on hyUSD compared to what percent of its supply is staked.

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Risk Considerations

While the Stability Pool offers attractive earning potential, it also serves a crucial role in Hylo’s risk management strategy. Under specific and transparently defined market conditions, deposited hyUSD may be converted to xSOL.

Participants are encouraged to thoroughly review the risk-management documentation to gain a comprehensive understanding of the system and its associated risks.