Multi-Asset Architecture

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.

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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%.

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Collateral Pools

Each collateral pool operates independently with its own assets, collateral ratio, risk parameters, and yield mechanism.

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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 and hyloSOL. 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, 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.

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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, 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. $$\text{Collateral Harvested} = \text{Pool Collateral} \cdot \text{Borrow Rate Per Epoch}$$

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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. $$\text{USDC TVL} = \text{vUSD}_{\text{USDC}}\text{ Supply} \cdot \text{USDC Price}$$ The USDC pool serves two roles:

1. Direct hyUSD access: Users can mint and redeem hyUSD with USDC at a flat configurable fee.
2. Rebalancing counterparty: The USDC pool is the other side of all collateral rebalancing routes, receiving USDC from deleveraging sales or deploying USDC to re-leverage volatile pools as their CR moves into extreme zones.

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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 and BTC, Hylo can support other volatile assets as well as yield-bearing tokens like JLP and RWAs.