Hylo Protocol: Building Solana's Native DeFi Dollar and Revolutionizing Tokenized Leverage

The Solana DeFi ecosystem continues to evolve at a rapid pace, with innovative protocols pushing the boundaries of what's possible in decentralized finance. Among the most exciting developments is Hylo, a protocol that has emerged as a groundbreaking primitive offering both Solana's highest-yielding stablecoin and a novel approach to tokenized leverage. In a recent episode of the Lightspeed podcast, Hylo CEO Narek (known as Plish) sat down with host Danny to discuss the protocol's origin story, its unique architecture, risk management strategies, and ambitious roadmap heading into 2026.

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Hylo represents a fundamental shift in how DeFi users can access stable value and leveraged exposure to Solana without the traditional risks associated with perpetual trading platforms. The protocol has achieved remarkable growth, with its total value locked (TVL) growing tenfold from approximately $10 million in the summer to around $100 million, demonstrating significant market validation for its innovative approach.

The Genesis of Hylo: From Enterprise Tech to DeFi Innovation

Narek's journey to founding Hylo reflects the broader migration of talented developers from traditional tech into the crypto space. His background as a long-time tech lead software engineer in Silicon Valley during the enterprise boom of the 2010s provided him with the technical foundation necessary to tackle complex DeFi challenges. The transition to Web3 began in a corporate context around 2019-2020, initially focusing on NFTs for major enterprise corporations on Ethereum and EVM chains.

However, Narek quickly realized the limitations of building Web3 solutions within corporate constraints. This realization prompted a search for a more open and supportive environment, which led directly to Solana. The ecosystem's relative youth in DeFi, combined with robust support infrastructure through hackathon funding via organizations like Colosseum and various incubators, made it an attractive destination for ambitious builders.

The Hylo team itself came together through the Lamport DAO Discord community during the late 2023 bear market period. It was within this community that the founding team discovered what Narek described as a "crazy white paper from the ETH world." This discovery sparked extensive discussions about how the concept could be implemented on Solana and transformed into an accessible product for users. The team's efforts culminated in winning one of the Colosseum hackathons, securing funding, and launching what has become one of Solana's most innovative DeFi protocols.

Understanding Hylo: The Inverted Basis Trade

Hylo functions as a new DeFi primitive on Solana that fundamentally inverts the basis trade concept popularized by protocols like Ethena. While delta-neutral stablecoin models typically involve holding a spot asset with yield and volatility while shorting it on an external venue to capture funding rates, Hylo takes an entirely different approach by creating a fully self-contained system for delta-neutralizing liquid staked Solana.

The protocol accepts liquid staked tokens (LSTs), primarily Jito SOL, and mints one of two tokens against these deposits. The first is high USD, the protocol's flagship stablecoin designed as a store of value that's fully one-to-one backed by Solana. The second is xSOL, a tokenized leverage position that absorbs all the volatility, effectively hedging it out of the stablecoin component.

"What Hylo essentially done is inverted this concept of neutralizing and splitting risk and stability into two things. It's all one protocol," Narek explained during the podcast. "At any time the market cap of xSOL and the market cap of the stablecoin high USD, they must add up to the entire TVL of the protocol. It's kind of a beautifully simple invariant that we enforce."

This architectural elegance distinguishes Hylo from delta-neutral competitors in several important ways. The protocol is truly decentralized—it operates as a program that can be audited, with all vaults and capital allocation visible on-chain. There is no trading desk involved, no trust barrier through which users must send their funds. This transparency and trustless operation represent a significant advancement over models that rely on centralized trading operations or custodial arrangements.

High USD: Targeting Solana's DeFi Native Dollar

High USD occupies a unique position in Solana's stablecoin landscape. Rather than competing directly with USDC or USDT as general-purpose stablecoins, Hylo is positioning high USD as Solana's DeFi native dollar—the default stable asset for traders, yield farmers, and all on-chain participants seeking to store value while earning competitive yields.

The stablecoin has delivered impressive returns since launch, with trailing yields around 15%. This performance makes high USD one of, if not the highest-yielding stablecoin options available on Solana. The yield generation mechanism is elegant in its simplicity: it derives from the staking rewards earned by the underlying LSTs, transformed into dollar value and distributed to high USD holders who stake their tokens in the stability pool.

An important feature of the yield mechanism involves what Narek described as "yield discrimination or amplification." Not all high USD is staked in the stability pool, and this creates a multiplication effect on yields for those who do stake. If all high USD were staked, holders would only earn roughly the 6-7% base return from the underlying LST in dollar terms. However, because a significant portion remains unstaked, the yield gets concentrated among stakers, pushing returns into the double digits.

The target customer for high USD is deliberately broad. While the protocol recognizes that on-chain natives, traders, and yield farmers represent the core user base currently exploring Solana DeFi, the goal is to make high USD accessible and attractive to anyone seeking stable value storage with superior yield characteristics.

xSOL: Tokenized Leverage Without Liquidation Risk

The other half of Hylo's dual-token system is xSOL, which represents a fundamentally different approach to gaining leveraged exposure to Solana. Traditional leverage through perpetual futures or margin trading requires constant monitoring, carries liquidation risk, and demands significant trading expertise to manage effectively. xSOL inverts these dynamics entirely.

xSOL provides tokenized leverage that varies between approximately 2x to 4x, though it rarely exceeds 3.2x in practice. The leverage level fluctuates based on the supply of high USD in the system and the price of Solana itself. This stands in contrast to perpetual positions where users can precisely tune their leverage exposure but must actively manage their positions to avoid liquidation.

"The use case for xSOL is pretty much leverage trading without thinking about management," Narek explained. "If you've been in the position of opening a 10 or 20x perp, nobody's—you believe in God during that time, pretty much. I forget what that phrase was that people said: no one's an atheist at 20x leverage. We're trying to invert that UX."

The feedback from users has validated this approach, with many reporting that xSOL represents their first experience with leverage after hearing numerous stories about liquidation cascades, ADL events, and market maker manipulation of liquidation bands. xSOL is simply a token that users buy and hold in their wallets. The protocol cannot liquidate users, and there's no ongoing monitoring required beyond checking current leverage levels and profit/loss positions.

This design philosophy deliberately targets a different user segment than sophisticated perpetual traders. xSOL is meant to be "dead simple" for common traders who aren't highly skilled in perps but want some leveraged exposure to Solana's price movements. The comparison to leveraged ETFs is apt, though with important differences. While leveraged ETFs maintain a constant leverage ratio through regular rebalancing—which creates volatility decay that erodes returns over time—xSOL's leverage varies with market conditions, avoiding this constant rebalancing cost.

Risk Management: Stability Modes and the Stability Pool

Understanding Hylo's risk management system is crucial for any user considering participation in the protocol. The collateral ratio—how much Solana backs each dollar of high USD—serves as the primary health metric for the system. In crypto-backed stablecoin systems, maintaining overcollateralization is essential given the inherent volatility of cryptocurrency collateral.

Hylo operates with a normal threshold of 150% collateralization, meaning there's $1.50 worth of Solana backing each dollar of high USD under normal conditions. During the market volatility leading up to the podcast recording, when Solana's price was depressed near $125-166, the protocol reached a collateral ratio of approximately 145%. This triggered what Hylo calls "Stability Mode One."

In Stability Mode One, the protocol adjusts its fee structure to guide market behavior toward rebalancing. Specifically, it becomes cheaper to mint xSOL and cheaper to redeem high USD. This incentivizes users who feel the risk profile has increased to exit their positions while encouraging new speculators to take leveraged positions at attractive fee levels. The market is allowed to do its work naturally, with the protocol essentially greasing the wheels in the desired direction.

"Today, Solana price pumped. We're now at 160% because a lot of people were buying xSOL at the bottom. And all of that collateral came into the system. Solana price went up a few percent. And now the CR has jumped above 150 to the 160 range," Narek noted, illustrating how market forces combined with the fee structure work together to maintain system health.

The more serious intervention point occurs at 130% collateralization, which triggers Stability Mode Two and activates the stability pool. Users who stake their high USD in the stability pool to earn the elevated yields are effectively opting into a risk-reward tradeoff. If the protocol reaches this critical threshold, some of their high USD may be converted to xSOL to restore the collateral ratio above 130%.

This conversion mechanism serves as the final backstop for maintaining system solvency. Once the collateral ratio recovers above 150%, the xSOL converted from stability pool participants gets returned to high USD. Notably, in the two instances where the stability pool has been activated in Hylo's history, the process has actually been profitable for stakers—though Narek was careful to note this won't necessarily always be the case.

The October 10th Test: Proving Protocol Resilience

The crypto market experienced significant turbulence on October 10th, which served as an unintentional stress test for many DeFi protocols. The event, which involved ADL (automatic deleveraging) situations on Binance and widespread liquidation cascades, highlighted the vulnerabilities in traditional leveraged trading systems.

Hylo emerged from this period without any stability pool activations, with market forces alone being sufficient to maintain system health. This stands as a notable achievement when, as Danny observed during the podcast, "you'd struggle to find maybe a list of protocols that didn't at least encounter some sort of issues" during that period.

The protocol's resilience stems from its fundamental design, which works with market forces rather than against them. By allowing leverage to fluctuate and adjusting fee structures to incentivize stabilizing behavior, Hylo can weather significant volatility without requiring emergency interventions or suffering from cascading failures.

Distribution Through Integration: Hylo's Go-To-Market Strategy

Rather than building user acquisition through direct marketing alone, Hylo has pursued a distribution-first strategy centered on integrations with other Solana DeFi protocols. The protocol operated independently for only a few months after launch in July-August before aggressively pursuing integration partnerships with platforms like Radix, Exponent, LoopScale, and Titan.

This strategy has proven remarkably effective, enabling creative use cases that leverage the unique properties of both high USD and xSOL. With yield-splitting protocols like Radix and Exponent, users can strip the rewards from their xSOL holdings to gain additional exposure to Hylo's XP points system. Speculators on the other side of these trades can acquire more xSOL by forfeiting the associated points, creating a functioning market for point speculation.

The looping integrations with protocols like LoopScale have enabled even more sophisticated strategies. Users can lever up their xSOL exposure or gain shorting capability with the same leverage characteristics. Perhaps most significantly, the ability to loop staked high USD yield—borrowing more stablecoins against existing positions to mint additional high USD and stake again—has allowed users to multiply the baseline 13-15% APY by four to six times.

The integration with Titan, a high-performance DEX aggregator on Solana, has been particularly valuable for improving user experience. Previously, users needed to acquire Jito SOL before entering the protocol, which involved multiple trades with potential slippage and leftover dust. Now, users can seamlessly swap from USDC directly to high USD and back, dramatically simplifying the onboarding process.

"Getting into Titan system has been amazing for the UX. Users are just seamlessly going from stable to stable and back," Narek noted, highlighting how these integrations serve both distribution and user experience goals simultaneously.

The Points System: Season Zero and the Road to Season One

Like many emerging DeFi protocols, Hylo has implemented a points system to reward early users and drive engagement. Season Zero, which had been running for approximately three months at the time of the podcast, represented the "ground floor" opportunity for early adopters. Users who committed capital from the beginning and brought referrals have accumulated multipliers and boosts that compound their earning rate over time.

The points system operates on a straightforward risk-reward basis. xSOL, as the riskier asset, earns 20 points per dollar per day—the highest rate in the system. The stablecoin high USD and HyloSOL Plus both earn approximately 5x points per dollar per day, while the baseline HyloSOL LST earns one point per dollar per day. This structure naturally incentivizes capital allocation toward the assets that most benefit protocol health.

Parallel to the XP points, users also accumulate "crowns" as they reach different levels in the points game and bring in referrals. These crowns will convert to something important in Season One that relates to earning more points, though Narek kept specific details confidential to avoid running afoul of his CMO.

Season One was expected to launch around the time of the podcast's air date (after Breakpoint), with points earned in this season having "a very different utility" from Season Zero points. While specific details remained under wraps, the implication was clear that Season One represents a particularly important phase for users interested in Hylo's eventual tokenization.

For those interested in gauging market expectations around the points system, Narek suggested examining how point/no-point token pairs are being priced on platforms like Radix and Exponent, where the YT (yield token) pricing provides insight into the market's valuation of Hylo's future token distribution.

HyloSOL: Vertical Integration Through Native LST

Hylo's architecture was designed from the outset to support multiple LSTs in a basket configuration. While Jito SOL remains the primary and most established LST on the platform, the protocol has introduced its own HyloSOL and HyloSOL Plus tokens as the "guinea pig" for the second LST onboarding.

HyloSOL operates as a single-validator LST running on the multi-validator LST program, with the validator operated by Fhase Labs (the team behind Hylo). This vertical integration enables the protocol to capture additional value from the validator operation while offering competitive yields to stakers.

The HyloSOL and HyloSOL Plus pairing mirrors the yield amplification mechanism used with high USD. HyloSOL Plus holders are essentially holding SOL one-to-one that's staked on the validator and earning the base 6% or so annual return. However, all of that yield is redirected to the smaller group of HyloSOL holders, pushing their returns significantly higher than other LSTs on the market.

The breakdown between the two tokens sits at roughly 10 million in HyloSOL Plus versus 50 million in HyloSOL, reflecting that a minority of users are pursuing the pure points-farming strategy. This ratio ensures meaningful yield amplification for HyloSOL holders while still accommodating those who want maximum exposure to the points system.

The strategic value of HyloSOL extends beyond immediate yield. By incorporating a higher-yielding native LST into the protocol's basket, Hylo can lift the overall yield on high USD. The validator also attracts stakers who may never interact with the core protocol but whose yield generation ultimately flows into the system.

Revenue Model and Sustainability

Hylo's primary revenue driver is volatility in Solana's price. When prices move up and down, users enter and exit xSOL positions, each time paying a flat 1% fee to the protocol. This straightforward fee structure has proven sufficient to generate a multi-million dollar annual run rate from xSOL trading alone.

Secondary revenue streams include a small percentage taken from the epoch-to-epoch yield emissions as LSTs earn their staking rewards, and more recently, revenue from the HyloSOL validator operation. While the validator represents the smaller portion of current revenue, it provides diversification and opportunities for deeper vertical integration.

The question of scalability—whether this model can sustain growth from $100 million TVL to $500 million or $1 billion—remains important. Narek expressed confidence that the current framework could scale, particularly with the planned expansion to new asset classes. The introduction of xBTC and potentially other X assets will open entirely new revenue streams while maintaining the same fundamental fee structure.

Hylo V2: Expanding to Non-Yielding Assets

The most significant expansion on Hylo's roadmap is the introduction of support for non-yielding assets, with Bitcoin as the primary target. This represents a meaningful architectural evolution, as the current system relies on yield from underlying LSTs to fund stablecoin returns.

For non-yielding assets like Bitcoin, Hylo will charge a funding rate that evolves with the market (or potentially remains flat). The key qualification for inclusion is that the asset must be "stable enough" in the sense of exhibiting lower volatility than Solana. Bitcoin and gold share more volatility characteristics with each other than either does with Solana, making Bitcoin an appropriate candidate.

The open interest on Bitcoin perpetuals on Solana ranks second only to Solana itself, representing a substantial market opportunity. By capturing some of this speculative interest into the Hylo framework, the protocol can significantly expand its TVL and revenue while simultaneously strengthening the stability behind high USD through exposure to a less volatile asset.

Beyond asset expansion, Hylo V2 will incorporate numerous quality-of-life improvements based on user and investor feedback. The goal is to evolve the X asset trading experience into something comparable to world-class perpetual trading platforms like Hyperliquid, while maintaining the fundamental advantages of tokenized leverage over traditional perps.

Importantly, high USD will remain singular throughout this expansion. Narek explicitly rejected the approach of creating multiple stablecoins for different backing assets, describing such designs as "a little maybe last cycle of UX." High USD will continue to be high USD, with staking and yield unchanged, while the backend diversifies across multiple X assets.

The door remains open for additional X assets beyond Bitcoin, including potentially xZcash, xETH (with ETH yield), or xHYPE. Each would expand Hylo's reach while contributing to the central goal of becoming "the home of tokenized leverage" on Solana.

The Solana Inflation Debate: SIMD 228 vs. SIMD 441

The question of Solana's inflation rate has significant implications for protocols like Hylo that depend on staking yields. The original SIMD 228 proposal, which would have implemented a market-oriented mechanism for adjusting inflation based on stake concentration, did not pass. Narek expressed relief about this outcome, as the proposal would have made yields "pretty much unpredictable and subject to market forces," creating challenges for maintaining the high USD APY above 10%.

The current proposal under consideration, SIMD 441, represents a much more moderate approach to inflation reduction. Rather than introducing market-based fluctuations, it proposes incremental reductions over time. Narek characterized this as "a lot more reasonable" and expressed significantly less concern about its potential impact.

"If the upside of this thing passing is while SOL price go up, I don't think we'll be complaining," Narek noted. The net effect of reduced inflation combined with potentially higher SOL prices might actually be neutral or positive for the protocol, while representing a healthier long-term economic model for Solana.

This pragmatic approach to macro factors affecting the protocol reflects Hylo's broader strategy of designing systems that work with market forces rather than fighting them. The expansion to non-yielding assets further reduces dependency on any single source of yield.

Product Philosophy: Web Application Focus with Ubiquitous Access

Hylo's product development prioritizes the web application experience while maintaining a solid mobile presence and pursuing broad integration across the Solana ecosystem. Data shows that most users access the protocol through traditional web browsers, making desktop the primary optimization target.

The integration with wallets like Phantom and Solflare through aggregators like Titan and Jupiter means that users can already trade xSOL and high USD directly within their wallet interfaces. However, the Hylo team wants the primary home for managing trades and positions to remain the Hylo app itself, offering the best possible experience for active users while maintaining ubiquitous availability for minting across different platforms and entry points.

Mobile continues to be a priority, with the current React-based implementation providing a solid foundation. The team plans to continue improving the mobile experience while recognizing that the web remains the primary interface for most power users engaging with complex DeFi operations.

The Bigger Picture: Solana DeFi Growth and Opportunity

Perhaps the most striking observation from the conversation came in Narek's assessment of Solana DeFi's current scale relative to its potential. "Athena dwarfs the entire TVL of Solana DeFi. Just one protocol. There's probably multiple protocols in the top 10 of Ethereum that dwarf the entire space here. We have a long way to go."

This observation isn't pessimistic—quite the opposite. It highlights the enormous growth potential for Solana DeFi protocols that can capture even a fraction of the capital currently deployed on other chains. Hylo's 10x TVL growth from summer to winter demonstrates that capital is finding its way to compelling products.

The stablecoin transition represents one of the clearest opportunities. Current stablecoin usage on Solana—estimated at around $20 billion between Circle and Tether products—represents largely unproductive capital outside of lending market deployments. The shift from unproductive to productive stablecoins, where assets like high USD generate intrinsic yield while maintaining stability, should naturally drive more capital into DeFi as users seek returns on their stable holdings.

Narek also emphasized the importance of the "internet capital markets thesis" unique to Solana—the potential for new types of assets like stocks, mortgages, and credit markets to come on-chain. While experimental, clear interest from Wall Street (evidenced by ETF inflows into SOL) suggests institutional validation for the broader vision.

The Perpetual Trading Question

A recurring theme throughout the conversation touched on the need for a Solana-native answer to Hyperliquid's dominance in perpetual trading. While not directly Hylo's focus, this gap in the ecosystem affects the broader health of Solana DeFi by limiting trading flow on-chain.

Narek expressed optimism about emerging solutions, mentioning Bulk and other projects building Solana's answer to high-performance perpetual trading. The architectural decisions these teams are making—using sidecar configurations rather than fully integrating with existing validator sets—will be crucial to watch.

The importance of increased flow extends beyond direct trading profits. As Narek explained, "If you get caught by the bug of trading, then you may want to take your winnings and go do something else with them and it'll flow capital back into DeFi just the same." A thriving perpetual market creates flywheel effects that benefit the entire ecosystem, including protocols like Hylo.

Looking Ahead: 2026 and Beyond

Season One was expected to launch around the time of the podcast's air date following Breakpoint, marking the next major milestone for users engaged with the points system. The more substantial development target is Hylo V2, scheduled for early 2026, which will introduce the framework for non-yielding assets and significant user experience improvements.

The team's confidence in Solana's trajectory is evident in their ambitious roadmap. Rather than hedging bets across multiple chains, Hylo has committed fully to building on Solana, leveraging the ecosystem's unique advantages in speed, cost, and community support.

The protocol's success over its first year—from hackathon winner to $100 million in TVL with a reputation as Solana's highest-yielding stablecoin—provides a strong foundation for the next phase of growth. The expansion to Bitcoin and potentially other assets, combined with improved user experience and deeper ecosystem integration, positions Hylo to capture an increasing share of capital flowing into Solana DeFi.

For users interested in participating, the current period represents an opportunity window as Season One begins and protocol improvements roll out ahead of V2. The risk-reward dynamics have been clearly articulated, and the protocol's track record through market volatility provides some evidence of system resilience.

As Solana DeFi continues its maturation, protocols like Hylo that introduce genuine innovation while maintaining practical utility will play a crucial role in closing the gap with more established ecosystems. The dual-token system enabling both high-yield stable storage and accessible leverage trading addresses real user needs in ways that existing solutions do not, creating the foundation for sustainable growth in the years ahead.

Facts + Figures

• Hylo's TVL has grown approximately 10x from around $10 million in summer 2024 to approximately $100 million at the time of recording

• High USD has delivered trailing yields of approximately 15% since launch, described as "the highest on this chain" for stablecoins

• xSOL provides tokenized leverage varying between 2x to 4x, rarely exceeding 3.2x in practice

• The protocol's normal collateralization threshold is 150%, with Stability Mode One activating below this level

• The Stability Pool is activated when collateralization drops below 130%

• During recent market volatility, Hylo's collateral ratio dropped to 145% before recovering to 160% as SOL price rebounded

• Hylo charges a flat 1% fee on xSOL transactions, generating a multi-million dollar annual run rate

• xSOL earns 20 points per dollar per day in the points system—the highest rate available

• High USD and HyloSOL Plus earn approximately 5 points per dollar per day

• Base HyloSOL earns 1 point per dollar per day

• HyloSOL Plus has approximately $10 million in deposits versus $50 million for HyloSOL

• The protocol had zero stability pool activations during the October 10th market crash

• Season One was expected to launch around Breakpoint (late 2024)

• Hylo V2 is targeted for early 2026

• xBTC will be the first non-yielding asset to be added to the protocol

• Bitcoin perpetual open interest on Solana ranks second only to Solana itself

• Ethena alone dwarfs the entire TVL of Solana DeFi according to the podcast discussion

• Approximately $20 billion in USDC and USDT sits on Solana as "unproductive capital"

Questions Answered

What is Hylo and how does it work?

Hylo is a DeFi primitive on Solana that inverts the traditional basis trade concept to create a fully self-contained system for delta-neutralizing liquid staked Solana. The protocol accepts LSTs like Jito SOL and mints one of two tokens against them: high USD (a yield-bearing stablecoin) or xSOL (a tokenized leverage position). The key invariant is that the market cap of xSOL plus the market cap of high USD must always equal the total TVL of the protocol. This creates a mathematically elegant system where volatility is stripped from the stablecoin component and concentrated in xSOL, enabling high USD to offer yields around 15% while providing leverage traders with accessible 2-4x exposure to SOL without liquidation risk.

How is Hylo different from Ethena and other delta-neutral stablecoins?

While Ethena and similar protocols achieve delta neutrality by holding spot assets and shorting them on external venues through trading desks, Hylo is fully self-contained as an on-chain program with no centralized trading operations. Users can audit the program, see all vaults, and verify where capital is allocated at any time. There is no "magical trust barrier" that users must pass their money through—it's simply a program executing deterministic operations. This architectural difference means Hylo is truly decentralized rather than relying on centralized counterparties to execute delta-neutral strategies, representing what the team considers a "very pure architecture."

What happens during market crashes—can users get liquidated on xSOL?

Users holding xSOL cannot be liquidated by the protocol, which represents a fundamental departure from traditional perpetual trading. During market downturns, the protocol enters different stability modes based on collateralization ratios. Below 150%, Stability Mode One activates and adjusts fee structures to encourage rebalancing. If collateralization drops below 130%, the Stability Pool activates, which may convert some staked high USD to xSOL to restore the ratio. Notably, during the October 10th market crash that caused widespread liquidations across DeFi, Hylo had zero stability pool activations—the market naturally rebalanced without requiring intervention.

How does the yield amplification work for high USD staking?

The high USD staking yield is amplified through what Hylo calls "yield discrimination." Not all high USD in circulation is staked in the stability pool—some is held unstaked or deployed in other DeFi protocols. The staking rewards from the underlying LSTs get distributed only to the high USD that is staked, concentrating the yield among a smaller pool. If all high USD were staked, the yield would roughly match the underlying LST return of 6-7% in dollar terms. Because only a portion stakes, those who do participate receive amplified returns reaching into the double digits, currently trailing around 15%.

What is the points system and why should users care about Season One?

Hylo's points system operates in seasons, with Season Zero representing the "ground floor" opportunity for early adopters who accumulated boosts and multipliers through early participation and referrals. Points are earned at different rates based on asset risk: xSOL earns 20 points per dollar per day, high USD and HyloSOL Plus earn approximately 5 points, and HyloSOL earns 1 point. Parallel to XP points, users also earn "crowns" that will convert to something important in Season One. While specific utility wasn't disclosed, the implication was clear that Season One points will have different and particularly important utility compared to Season Zero, likely relating to future token distribution.

What is HyloSOL and how does it differ from other LSTs?

HyloSOL is Hylo's native liquid staking token, operating as a single-validator LST run by the Hylo team (Fhase Labs). It's designed to integrate with Hylo's protocol as the second LST in the basket after Jito SOL. HyloSOL achieves higher yields than most LSTs through the HyloSOL Plus mechanism—users who hold HyloSOL Plus forfeit their staking yield in exchange for enhanced points earning, and that forfeited yield flows to regular HyloSOL holders. This creates a two-sided market where points speculators effectively subsidize yield for traditional stakers, resulting in above-market returns for HyloSOL holders.

How does Hylo plan to expand beyond Solana-based assets?

Hylo V2, targeted for early 2026, will introduce support for non-yielding assets with Bitcoin as the first target. For assets without native yield like Bitcoin, the protocol will charge a funding rate to leverage traders (xBTC holders), which funds the stablecoin yield. Bitcoin qualifies because its volatility profile is lower and more similar to gold than to Solana. The open interest on Bitcoin perpetuals on Solana ranks second only to SOL itself, representing significant market opportunity. The framework leaves room for additional assets like xZcash, xETH, or xHYPE, positioning Hylo as "the home of tokenized leverage" across multiple assets.

How does Hylo generate revenue?

Hylo's primary revenue driver is volatility—when SOL prices move up or down, users enter and exit xSOL positions, each paying a flat 1% fee. This has proven sufficient to generate a multi-million dollar annual run rate from xSOL trading alone. Secondary revenue comes from a small percentage of epoch-to-epoch yield emissions as LSTs earn staking rewards, plus more recently from the HyloSOL validator operation. While the validator currently represents the smaller portion of revenue, it provides diversification and enables deeper vertical integration of Hylo's infrastructure.

How might Solana inflation changes affect Hylo?

The current SIMD 441 proposal represents a much milder approach to inflation reduction than the previous SIMD 228, which would have introduced market-based yield fluctuations that could have made yields unpredictable and challenged Hylo's ability to maintain consistent high USD returns. SIMD 441 proposes incremental reductions over time, which Narek characterized as "a lot more reasonable" and less concerning for the protocol. If reduced inflation leads to SOL price appreciation, the net effect could actually be positive for Hylo. The expansion to non-yielding assets like Bitcoin further reduces dependency on Solana staking yield.

What is Hylo's product development philosophy?

Hylo prioritizes the web application experience while maintaining solid mobile functionality and pursuing broad ecosystem integration. Data shows most users access via traditional web browsers, making desktop the primary optimization target. The team wants the Hylo app to remain the home for managing trades with the best possible experience, while maintaining ubiquitous availability through integrations with wallets like Phantom and Solflare via aggregators like Titan and Jupiter. Hylo V2 will include numerous quality-of-life improvements based on community feedback, with the goal of evolving the X asset experience to be comparable to world-class perpetual trading platforms.