Hylo Protocol is a decentralized finance (DeFi) protocol built on the Solana blockchain that provides a stablecoin system without reliance on traditional financial infrastructure or real-world assets. The protocol features a symbiotic token model centered around a decentralized stablecoin, hyUSD, and a leveraged token providing exposure to SOL, xSOL, both of which are backed by a shared collateral pool of Solana Liquid Staking Tokens (LSTs). ^[1]

Overview

Hylo Protocol was founded in 2024 with the goal of creating a self-sufficient and decentralized financial system native to the Solana ecosystem. The protocol's design aims to address the "impossible trinity" of stablecoins by simultaneously achieving price stability, decentralization, and capital efficiency. It operates without external price oracles or centralized intermediaries, reducing common attack vectors and counterparty risks. The core of the protocol is a dual-token system where users can mint either the hyUSD stablecoin or the xSOL leveraged token from a single, shared collateral pool composed of various Solana LSTs. ^{[2] [3]}

The system is engineered to be capital-efficient by generating two distinct assets from one collateral base. Its architecture avoids traditional collateralized debt positions, which eliminates the risk of liquidations for users holding the xSOL leveraged asset. Instead, xSOL holders own the protocol's surplus collateral, absorbing the volatility of the underlying LSTs. The protocol generates endogenous yield from the staking rewards of its LST collateral, which is then directed to users who stake their hyUSD. This model is intended to provide both a stable, high-yield asset for risk-averse users and a liquidation-free leveraged instrument for traders. ^{[4] [5]}

History

Hylo Protocol was founded in 2024 and gained early recognition by winning second place in the payment track of the Solana Radar hackathon, which featured over 1,300 projects. The project was also selected for the second cohort of the Colosseum Accelerator, an incubation program for promising Solana-based startups, and received funding from the Solana Foundation. ^[3]

The protocol had its public launch around June 2025 and initiated a "Season 0" points program to incentivize early adoption, which was widely interpreted as a precursor to a future governance token airdrop. ^{[6] [3]}

On August 7-8, 2025, Hylo announced the completion of its seed funding round, raising between $1.5 million and $2 million. The round was led by Robot Ventures with participation from Colosseum, Solana Ventures, and YTWO Ventures. ^{[7] [8] [2]}

Following its launch and funding, the protocol experienced rapid growth. Key milestones in late 2025 include:

• September 15: On-chain fees and revenue tracking began on DefiLlama.
• September 18: Total Value Locked (TVL) surpassed $60 million.
• October 17: A token incentive program was launched with Jito, offering 5,000 JTO tokens monthly to liquidity providers in the hyUSD-JitoSOL pool on the Kamino platform.
• October 24: Price feeds for Hylo assets went live on the Pyth Network, enabling broader ecosystem integrations.
• October 27: The protocol's TVL surpassed $100 million, achieved within four months of its public launch.
• November 12: Protocol revenue was reported to have surpassed $1 million.

These events marked the protocol's increasing adoption and integration within the broader Solana DeFi landscape. ^{[2] [6]}

Technology

Hylo Protocol is built on a set of core principles designed to ensure its autonomy and security within the Solana ecosystem. Its architecture is centered around an LST-backed collateral system that supports its multi-token product suite.

Core Principles

The protocol's development is guided by four main principles:

1. Solana Native: The system is built specifically for the Solana blockchain to leverage its high performance, low transaction fees, and composability with other DeFi protocols.
2. Decentralized: It exclusively uses on-chain LSTs as collateral, deliberately avoiding Real-World Assets (RWAs) or fiat-backed stablecoins to mitigate counterparty and regulatory risks.
3. Permissionless: The protocol operates via immutable smart contracts without the need for intermediaries, fund managers, or Know Your Customer (KYC) procedures.
4. Secure: Stability is maintained through financially incentivized risk management mechanisms, guaranteed liquidity, and a design that avoids external dependencies like price oracles. The protocol's smart contracts have been audited by the security firm OtterSec.

These principles are intended to create a self-contained and resilient financial system. ^{[1] [3]}

Architecture

Hylo's architecture is designed to be fully on-chain, non-custodial, and oracle-free. The central component is a collateral pool composed entirely of various Solana LSTs, such as JitoSOL, mSOL, and bSOL. When users deposit assets like USDC, USDT, or SOL, the protocol automatically converts them into these LSTs. This collateral pool serves as the backing for all of the protocol's minted assets. ^{[4] [3]}

The total value of the LSTs in the collateral pool always equals the combined value of the circulating hyUSD and xSOL. This creates a self-balancing system where the value is split between a stable component (hyUSD) and a volatile, leveraged component (xSOL). This structure allows the protocol to offer slippage-free liquidity for swaps between its native assets and avoids the need for external price feeds to manage its internal state. The protocol's codebase is open-source and available on GitHub, and the team has provided a Rust SDK and other tools for developers. ^{[9] [3]}

Products and Tokens

Hylo features a multi-token ecosystem designed to serve different financial objectives, including stability, yield generation, and leveraged speculation.

hyUSD (Stablecoin)

hyUSD is a decentralized stablecoin designed to maintain a 1:1 peg with the U.S. dollar. It is fully collateralized by the protocol's pool of Solana LSTs. The peg is maintained through two primary mechanisms:

• Over-collateralization: Each hyUSD is backed by LST collateral valued at more than $1. As of November 2025, the protocol's overall collateralization ratio was reported to be over 160%.
• Arbitrage: Users can redeem 1 hyUSD for exactly $1 worth of the underlying LST collateral at any time. This creates a permanent arbitrage opportunity that incentivizes market participants to restore the peg if the price deviates.

A 1% fee is charged for both minting and redeeming hyUSD. The stablecoin can be used across the Solana DeFi ecosystem for activities such as providing liquidity, lending, and borrowing. ^{[3] [2]}

xSOL (Leveraged Token)

xSOL is a synthetic token that provides users with long-term, leveraged exposure to the price of SOL. A key feature of xSOL is that it carries no risk of liquidation and does not require funding rate payments, which are common in traditional perpetual futures contracts. Instead of being debtors, xSOL holders are effectively the owners of the protocol's surplus collateral. ^[4]

The leverage is created because the protocol's total collateral value supports both the stable hyUSD liabilities and the variable xSOL assets. Any appreciation or depreciation in the value of the LST collateral pool (which tracks the price of SOL) is absorbed entirely by the xSOL supply. This makes xSOL's value inherently more volatile than SOL. The leverage ratio is dynamic and depends on the protocol's collateralization ratio; at one point, it was calculated to be approximately 2.2x. ^[3]

sHYUSD and Yield Generation

sHYUSD is an interest-bearing token that users receive when they stake their hyUSD in the protocol. The yield for sHYUSD is generated from the native staking rewards of the entire LST collateral pool. All of this yield is directed to sHYUSD holders, which can result in a high Annual Percentage Yield (APY), reported to be between 15% and 19% in late 2025. This is described as a sustainable "real yield" as it is derived from the productive activity of the underlying assets. In addition to generating yield, the sHYUSD pool serves as the protocol's "last line of defense." In a severe market downturn where the xSOL buffer is depleted, the protocol can convert sHYUSD into xSOL to protect the hyUSD peg. ^{[2] [3]}

Liquid Staking Tokens (hyloSOL, hyloSOL+)

In addition to using LSTs from other protocols as collateral, Hylo has its own liquid staking derivatives, hyloSOL and hyloSOL+. These tokens represent staked SOL and accrue staking rewards. In late 2025, hyloSOL was reported to have an APY of 11%, while hyloSOL+ offered yields up to 18.53%. ^[2]

XP Points System

To incentivize early participation, Hylo launched a "Season 0" points program that rewards users with Experience Points (XP). This system is widely expected to lead to a future airdrop of a governance token. Users can earn XP through various activities:

• Holding hyUSD: 5 XP per dollar, per day.
• Holding sHYUSD: 1 XP per dollar, per day.
• Holding xSOL.
• Referring new users, which earns 10% of the XP generated by the referee.

This gamified system is designed to bootstrap liquidity and build a user base ahead of a potential transition to decentralized governance. ^{[1] [3]}

Funding

In August 2025, Hylo Protocol announced the completion of a seed funding round, raising between $1.5 million and $2 million. The round was led by Robot Ventures. Other participating investors included Colosseum, Solana Ventures, and YTWO Ventures. The project has also received an undisclosed amount of funding directly from the Solana Foundation. ^{[7] [8] [2] [3]}

Team

As of late 2025, the key team members publicly associated with Hylo Protocol include:

• Plish - CEO
• Sape - Head of Growth
• Shoom - Team Member

The team's mission statement is to build "DeFi Native Money on Solana." ^{[2] [7]}

Ecosystem and Integrations

Hylo Protocol has established several integrations and partnerships across the Solana ecosystem to enhance its functionality and adoption.

• Data and Oracle Providers: The protocol integrated with the Pyth Network to provide on-chain price feeds for its assets, enabling other DeFi applications to safely integrate them. Its on-chain revenue and fees are tracked by DefiLlama.
• DeFi Protocols: Hylo assets are integrated with various platforms. Kamino hosts a hyUSD-JitoSOL liquidity vault with JTO token incentives. Loopscale and Project 0 have also integrated Hylo's products.
• Trading Platforms: An integration with the Titan trading platform was announced to improve the user experience for trading Hylo assets.
• LST Protocols: The protocol is a major holder of JitoSOL, making it a significant participant in the Jito ecosystem.

These integrations demonstrate the protocol's composability and growing presence within Solana DeFi. ^{[2] [6]}

Risks and Criticisms

As a complex DeFi protocol, Hylo is subject to several risks and has faced certain criticisms, particularly during its early stages.

• Smart Contract Risk: Although the protocol's code was audited by OtterSec, the risk of undiscovered vulnerabilities remains, as with any complex smart contract system.
• Economic Model Stress: The protocol's multi-token economic model had not been tested in a "black swan" market event as of late 2025. An extreme market crash could potentially trigger a "death spiral" if a bank run on hyUSD were to coincide with a rapid collapse in the value of its LST collateral.
• Systemic Dependency Risk: The protocol's solvency is deeply reliant on the security and stability of the external LST protocols it uses for collateral, such as Jito, Marinade Finance, and BlazeStake. A security incident or de-pegging event in a major LST would directly threaten Hylo's stability.
• Centralization: In its initial phase, the protocol is controlled by the core development team. While the points program suggests a future transition to a decentralized autonomous organization (DAO), the timeline and specifics of this transition were not yet defined.
• Early-Stage Challenges: An analysis from August 2025 noted that the protocol had a relatively small user base and that its community-building and official documentation needed improvement to foster wider adoption.

These risks are inherent to many early-stage DeFi projects aiming for high degrees of decentralization and innovation. ^[3]