Lulo Says Boost Deposits Face 6.4% Drawdown From Neutrl Exposure

Lulo said on Oct. 20 that its higher-risk Boost deposits face an approximately 6.4% drawdown from exposure to Neutrl Finance, an Ethereum synthetic dollar protocol used in Boost's yield strategy.

“The impact is isolated to Boost,” the yield platform said. “Protected capital is unaffected.” Lulo attributed Neutrl's impaired reserve liquidity to losses on strategy positions and said the incident was not a hack or smart contract exploit.

Lulo's protection dashboard displayed $10.16 million in Boost deposits and $13.45 million in Protected deposits when read on Oct. 20. Applying 6.4% to that displayed Boost balance gives about $650,000, according to The Defiant's calculation.

That calculation indicates scale rather than a confirmed loss tally. The dashboard does not specify whether its balance includes the drawdown, and Lulo's announcement did not say whether it had completed redemptions or finalized the dollar loss.

Under Lulo's documented structure, Boost is first-loss capital: depositors receive base lending yield plus a share of Protected depositors' interest in exchange for absorbing losses before Protected depositors.

Lulo's protection documentation says smart contracts execute compensation automatically, without a claims process. Protected capital remains insulated only as long as the coverage pool is sufficient to absorb the loss.

Neutrl's 51-Cent Exit

Neutrl's Ethereum redemption contract showed an unpaused status and a rate of 0.51 $USDC per NUSD on Oct. 20. The redemption program opened in September, as The Defiant previously reported.

Neutrl said on Aug. 28 that it held about $27 million in available liquid assets, while other strategy positions and their associated profit or loss were illiquid. At the time, it could not confirm the timing, amount or recovery value of those positions.

Under Neutrl's redemption announcement, holders receive $USDC and redeemed tokens are burned. The program is expected to remain open until Nov. 14, subject to its terms and conditions.