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Hylo runs a CDP-style stablecoin (hyUSD) collateralized by a basket of Solana LSTs (hyloSOL, hyloSOL+). Unlike USDC, hyUSD doesn’t claim to be backed 1:1 by a dollar in a bank. It claims to be backed by SOL collateral worth more than the hyUSD outstanding. The exact ratio — how much collateral per dollar of hyUSD — is the collateral ratio, or CR. The peg holds because if hyUSD trades below 1,anarbitrageurcanbuyhyUSDonthemarket,redeemitfor1, an arbitrageur can buy hyUSD on the market, redeem it for 1 of LST collateral, and pocket the difference. If hyUSD trades above $1, they can mint by depositing collateral and sell. Either side closes the gap. But only when CR is healthy.

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What CR actually measures

CR = total_collateral_value_usd / hyUSD_supply
If Hylo holds 500,000 SOL worth 80Mand50MhyUSDareoutstanding,CR=160dollarofhyUSDisbackedby80M and 50M hyUSD are outstanding, CR = 160%. Every dollar of hyUSD is backed by 1.60 of collateral. That cushion is what lets the system absorb a SOL price drop without becoming undercollateralized. Hylo’s protocol parameters define the floor:
  • CR < 130% → Stability Mode: minting is paused, redemptions are throttled, and the Stability Pool (sHYUSD) starts absorbing liquidations of the riskiest positions
  • CR < 110% → critical
  • CR < 100% → BLACK_SWAN: the system is genuinely undercollateralized and recovery depends on collateral recovery, not arbitrage

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Why market price is the wrong signal here

For USDC, watching market price is sufficient — a sub-1printisthealert.ForhyUSD,∗∗marketpricecanstayat1 print is the alert. For hyUSD, **market price can stay at 1.000 for hours while CR quietly grinds down from 160% to 135%**. By the time market price reacts, you’re already inside Stability Mode and the protocol is making forced unwind decisions. CR is the leading indicator. Market price is the lagging indicator. If you’re watching the wrong one, you’ll get to the alert too late.

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How Pegana reads CR

There’s no API for this — you have to decode it from on-chain state. Hylo publishes an IDL for its Exchange program. Pegana’s indexer-rs reads Hylo’s root Exchange PDA every 30s and decodes the protocol’s own canonical total_sol_cache.total_sol — the same field Hylo’s own app uses for pricing. Multiply by Pyth’s SOL/USD live, divide by hyUSD supply, and you get CR with no source-of-truth lag. Per-asset thresholds for hyUSD use CR (not spread %). Pegana treats Stability Mode 1 (130-150% CR) as routine operation under SOL volatility and only alerts when Hylo crosses into Mode 2:
StateCR band
PEGGEDCR ≥ 150%
DRIFT130% ≤ CR < 150%
DEPEG115% ≤ CR < 130%
CRITICAL105% ≤ CR < 115%
BLACK_SWANCR < 105%
The /explain hyUSD command on @PeganaWatchBot walks through each transition’s meaning in plain English.

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The IDL drift risk

Reading on-chain state via a hardcoded IDL has a known failure mode: the protocol upgrades, the account layout changes, and your decoder silently produces garbage. We pin the IDL and check it against the on-chain canonical IDL every hour. On divergence, Pegana flips hyUSD to UNKNOWN state and emits a Sentry alert. Better to admit ignorance loudly than report a confidently-wrong CR.

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Adjacent assets in the Hylo system

  • hyloSOL — the LST that backs hyUSD. Behaves like any other LST (drift in SOL terms).
  • hyloSOL+ — yield-amplified Hylo LST that captures CDP-mint fees. Grows faster than hyloSOL when the system is healthy.
  • sHYUSD — staked hyUSD in the Stability Pool. NAV grows when liquidations earn yield; can drop sharply during black-swan absorption events.
  • xSOL — the leveraged-SOL synthetic that absorbs the volatility hyUSD sheds. Intentionally volatile; “peg” here means the design-intended leverage ratio.
Pegana tracks all five (hyUSD, hyloSOL, hyloSOL+, sHYUSD, xSOL) and emits class-appropriate alerts for each. The Hylo design is interlocking: stress on hyUSD shows up first in CR, then in xSOL repricing, then in sHYUSD’s absorption mechanic.

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What this means for builders

If your protocol accepts hyUSD as collateral, you want to know the moment CR breaches 130% — when Hylo enters Mode 2 and redemptions get re-prioritised. Pegana’s /v1/assets/hyUSD/extra endpoint exposes CR directly with timestamp; the WebSocket /v1/ws pushes a hyUSD update every 30s and a transition alert the moment CR crosses a threshold.

hyUSD live

Current CR, history, threshold visualization.

DAI / SVB contagion

What can happen when CDP collateral itself depegs.

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Sources