Hylo Protocol In-Depth Research Report TL;DR @hylo_so Hylo is a native DeFi protocol launched on Solana in August 2025, focusing on the decentralized stablecoin hyUSD supported by liquid-staking tokens (LST) and the leveraged SOL token xSOL with no liquidation risk. As of October 16, 2025, the protocol's TVL reached $81.34 million, with a hyUSD supply of $23.48 million and an annualized income of $4.15 million. Key advantages include an over-collateralization ratio of 216.59%, sHYUSD staking yields of up to 20.81% APY, and resilience with zero liquidations during the market crash on October 11. The protocol has secured $1.75 million in funding, supported by top VCs such as Robot Ventures and Solana Ventures. Core Analysis Protocol Mechanism and Products Hylo adopts a dual-token architecture, ensuring the $1 peg of hyUSD through an invariant equation: Collateral TVL = hyUSD supply × $1 + xSOL supply × xSOL price. All SOL price fluctuations are transferred to xSOL holders, protecting the stability of hyUSD. Collateral Composition: 100% consists of LST, primarily JitoSOL (about 70%), mSOL (20%), and bSOL (10%). The current collateral ratio is 216.59%, requiring a 30.7% drop in SOL to trigger a 150% fee adjustment mode. Risk Management Framework The protocol employs a three-tier risk management: 1. Normal Mode (>150% CR): Normal fees and functions 2. Fee Adjustment Mode (130-150% CR): Dynamic fee adjustments incentivize rebalancing 3. Stability Pool Activation Mode (<130% CR): Part of sHYUSD is converted to xSOL to restore 140% CR VaR analysis based on data from 2020-2024 shows a 1-day 99.9% VaR of -32.95% and a 31-day adjusted VaR of -56.82%, validating the reasonableness of the current threshold design. On-Chain Analysis TVL Growth Trend The protocol's TVL has grown from $8.97 million in August to the current $81.34 million, with a monthly growth rate exceeding 140%. Revenue and Fee Structure The protocol's revenue primarily comes from LST yields and minting/redeeming fees, with an annualized income of $4.15 million. User Adoption Metrics 1. Total Users: Approximately 7,000 (in early beta stage) 2. hyUSD Holders: 4,625 (weekly growth of 5%) 3. Daily Active Users: About 123 traders Average User TVL: Approximately $11,600 ($81.34 million TVL / 7,000 users) Technical Analysis and Competitive Positioning Technical Architecture Based on Solana's high TPS (about 5,000), Hylo achieves real-time NAV adjustments and zero slippage trading. The core smart contracts are developed in Rust using the Anchor framework, obtaining SOL/USD prices through the Pyth oracle, with Sanctum providing real pricing for LST. Competitive Advantage Analysis Market Share: Accounts for about 1% of stablecoins on Solana but holds a position of over 10% in the LSDfi yield space. Team Background and Funding Team Information The team is relatively small (3 core members, expanding), mainly composed of veterans from the Solana ecosystem. The team maintains a relatively low profile, which is common in early Solana DeFi projects. They are hiring Rust/Solana developers to support expansion. Funding Details Investors primarily focus on the Solana ecosystem, with participation from Robot Ventures and Solana Ventures indicating strong support. Conclusion The Hylo protocol, as an innovative DeFi primitive on Solana, addresses key pain points of traditional DeFi through LST-supported stablecoins and a no-liquidation leverage mechanism. The protocol has achieved significant growth in a short period (TVL growth of over 1000%) and revenue performance, particularly its resilience demonstrated during market stress tests is noteworthy. Investment Highlights: Innovative no-liquidation leverage mechanism, well-validated in the market Strong financial performance and user growth Top VC support and integration within the Solana ecosystem Upcoming token launch and governance initiation Risk Factors: Early-stage protocol, has not undergone a complete bear market cycle test LST concentration risk (JitoSOL is dominant) Relatively small user base and team size Based on current data and market performance, Hylo shows strong potential as a Solana DeFi infrastructure, suitable for investors with a higher risk tolerance to consider participating in early ecosystem building and potential airdrop opportunities.