Lulo’s yield platform reported a drawdown of approximately 6.4% on its Boost deposits, tied to its exposure to Neutrl Finance. Protected deposits were not affected by this incident. Neutrl Finance, a synthetic dollar protocol built on Ethereum, suffered losses on its delta-neutral strategies, which impaired its liquidity and led to the suspension of minting and redemption functions. The protocol now offers a redemption contract at 0.51 USDC per NUSD, its synthetic dollar token that once peaked at around $230 million in assets under management. The drawdown reflects Neutrl’s share of Lulo’s overall allocation rather than the full 49% NUSD haircut. This episode confirms the effectiveness of Lulo’s risk compartmentalization model, where higher-yielding capital absorbs losses first.
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