Hylo Cracks $100M in TVL Weeks After Shrugging Off Black Friday Flash Crash

Hylo, an emerging DeFi application offering liquidation-free leverage and an algorithmic stablecoin, has established itself as one of Solana’s fastest-growing DeFi protocols.

Since launching four months ago, Hylo has amassed over $100M in TVL, whilst surviving a seismic liquidation event that decimated leverage-based applications across the industry.

What’s driving Hylo’s growth, and what do Solana’s “tokenized leverage” enthusiasts want to see next?

Hylo Secures $100M in TVL

Hylo is steadily climbing Solana DeFi’s TVL rankings, and shows no sign of slowing down. After launching quietly in private beta in June, the application has consistently attracted deposits from Solana DeFi users seeking liquidation-free leverage and generous stablecoin yield. 

On October 27, Hylo celebrated reaching over $100M in TVL, with $jitoSOL deposits making up the bulk of Hylo’s protocol assets. Hylo also sits on the cusp of recording its first $1M in protocol revenue.

Currently, Hylo’s algorithmic stablecoin, $hyUSD, is arguably the application’s most popular product, boasting the highest market cap among Hylo tokens.

However, while $hyUSD and $xSOL, Hylo’s liquidation-free leverage token, represent the app’s flagship product, the introduction of its LST $hyloSOL has been a key driver for growing TVL. 

Since Hylo officially launched $hyloSOL on September 9, the platform’s TVL has soared 257%.

Hylo “Leverage” Users Safe During Historic Liquidation Event

Ever since 2022’s Terra Luna disaster, even the most devout DeFi users have remained deeply skeptical of algorithmic stablecoins. Black swan events have exposed structural fragilities in decentralized stablecoins in the past, making it difficult for users to trust they’ll hold their peg in times of extreme volatility.

Fortunately for Hylo users, October 10’s devastating $19B liquidation left $xSOL and $hyUSD holders completely unscathed. While perps markets battled with auto-deleveraging and traders had their positions obliterated by cascading liquidations, Hylo’s risk engine performed admirably.

In times of volatility and a dropping $SOL price, and consequently Hylo’s collateral, the protocol adjusts mint and redemption fees to encourage system stabilization. Under a certain collateralization ratio, Hylo’s stability pool, or staked $hyUSD is deployed to rebalance the protocol’s collateral.

Despite the greatest liquidation event in crypto history, Hylo demonstrated a remarkable proof-of-concept. TVL has only grown since October 10, highlighting growing confidence in the protocol.

Where to Next for Tokenized Leverage?

Hylo’s recent success has led many Solana DeFi participants to question where else the “tokenized leverage” model could be applied. While the team has yet to confirm any plans to expand beyond $SOL, Solana co-founder Anatoly Yakovenko has suggested Hylo introduce leverage for assets like $BTC and $ZEC.

For the time being, all eyes are on Hylo’s ongoing points program, which has seen the app partner with other Solana DeFi protocols, including Kamino, Loopscale, Exponent, and RateX.

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