The yield platform Lulo reported a 6.4% drawdown on its Boost deposit product. This loss stems from exposure to the synthetic dollar protocol Neutrl Finance, which experienced liquidity issues after its delta-neutral trading strategies failed.
Lulo offers two products for USDC deposits: Protected and Boost. Boost depositors receive a higher yield of 6.5% to 7.88% APY, while Protected depositors earn approximately 4%. Under the platform design, Boost capital acts as first-loss capital to shield the Protected tier.
Neutrl Finance, built on Ethereum, has suspended minting and redemptions. It currently offers a redemption contract at 0.51 USDC per NUSD token. Previously, NUSD reached a peak of $230 million in assets under management.
Lulo historically holds over $100 million in Protected deposits, which remained unaffected by the Neutrl incident. The 6.4% drawdown on Boost deposits reflects the specific allocation share of Neutrl within the Lulo portfolio.
