@Iong45 wrote: ...was wondering if LACP trunks can work in Layer 3 or Layer 4 policy, but could't find in documentation.
Layer 4 I doubt...Layer 3 for sure (with fallback into Layer 2 in absence of Layer 3 S/D related data).
Supposing your HPE 3500-24G-PoE yl Switch (J8692A) is running updated software K.16.02.0030 (released in May 2020) then have a look at its CLI to understand if it provides/supports a command like this one:
trunk-load-balance [L3-based|L4-based]
which, as example, is commonly supported on the bigger Aruba 5400R zl2 switch series (HP ProVision / HPE Aruba ArubaOS-Switch KB software branch).
The purpose of the above command is to let the administrator to chose between Layer 3 (default) and Layer 4 hashing calculations: when the L4-based option is configured, it enables load balancing based on Layer 4 information if it is present, if it is not present, Layer 3 information is used if present as a fallback; if Layer 3 information is not present, Layer2 information is used.
The configuration is executed in global configuration context and applies to the entire switch (for all Port Trunks).
Defaults: L3-based load balancing.
Edit: I was too curious...despite what I wrote above...it seems that the K software branch supports Layer 4 balancing...see here (this is the latest HPE ArubaOS-Switch Management and Configuration Guide for K/KA/KB.16.02 software branches published in November 2016, 3rd Edition)...L4-based looks available. I haven't an HP ProCurve 3500 yl to confirm (well...to be honest...I have two but they are piled among a lot other old switches...and it will be difficult to unpile one safely to just perform a test!).