Half-Life: Alyx, a virtual reality game developed and published by Valve Corporation, uses the Source 2 game engine.
Source 2 is a proprietary, in-house engine developed by Valve that's the successor to their original Source engine. The original Source engine was used for many of Valve's previous titles, including Half-Life 2, Team Fortress 2, and Portal.
The Source 2 engine offers significant improvements over its predecessor. It supports higher quality graphics and physics, more efficient rendering, and has better support for multi-core CPUs. This is particularly important for VR games like Half-Life: Alyx, which require high frame rates and low latency to ensure a smooth, comfortable experience for the player.
Note: While the engine is proprietary and not available for general use, Valve has provided a subset of the Source 2 tools to the community for creating user-generated content in games like Dota 2.