The Silo lending application is now available in beta on Ethereum mainnet. You can access it by visiting https://app.silo.finance/.
Silo beta
At launch, the web application has 9 silos that are each capped at 500 ETH in TVL. For example, users in the CRV Silo can deposit up to 250 ETH worth of the base asset CRV, and up to 250 ETH of the bridge asset ETH. We will progressively increase deposit caps in the coming weeks until we eventually remove them. Increasing or removing caps will not require an on-chain vote.
Silos can be added to the protocol at any time. However, we encourage the community to wait for 4 weeks before adding new markets. This gives the core team room to continue improving the web application for better user experience while whitehats in the community test the security of the protocol.
Once the lending application has been live for 4 weeks, barring unforeseen circumstances, we recommend that the community start adding new markets following a process that we propose later in this post.
Accessing the Silo lending application is restricted for users visiting from certain jurisdictions. Find out more here. We also recommend users read the applications’ Terms of Use and Privacy Policy.
Using the lending application
The lending web application is now ready for you to use. Right now 9 base token assets are accepted as collateral, with each asset having its own silo. ETH is accepted as collateral across all silos, hence the name the “bridge asset”.
You can deposit ETH in any silo to borrow USDC, WTBC, FRAX, FXS, APE, wstETH, CVX, CRV, or BAL. If you don’t have ETH to deposit, you can borrow it by depositing any of the aforementioned token assets.
When you use the application, all your positions are isolated and as such if an exploit takes place in one silo, depositors and borrowers in other silos remain unaffected.
Refer to this explainer for more information.
Governing the protocol
The Silo protocol is owned and operated by token holders. Read this guide for complete overview of system roles.
The DAO, through its token holders, can:
- Add and remove bridge assets.
- Add, freeze, deprecate silos.
- Adjust risk parameters for silos.
- Integrate new price providers (oracles).
- Change price oracles for existing silos.
- Upgrade the protocol.
- Enable protocol fees.
Creating silos
The community is responsible for voting on token assets that should have silos. The community can deploy silos.
We propose the following process in monthly cycles:
To request silos, we propose the following process in monthly cycles:
- Request silos by filling out this form.
- Core team gather request and post in the governance form under a monthly thread that will update continuously. Community can discuss requested markets in the Discord and governance forum.
- Community runs a snapshot vote on requested markets. Votes must include collateral parameters and price oracle for each Silo.
- Core team carefully screens voted markets and shares recommendations on collateral parameters, price oracles, and interest model configuration for each token asset.
- The Core team, or the community, creates on-chain votes to deploy silos based on vote results.
We believe the above process is the best approach to rolling out markets. However, the Silo lending protocol is permissionless and therefore anyone can configure new silos. The configuration process of new silos is highly technical. If you consider configuring silos directly without going through the aforementioned process, follow steps detailed in this guide.
Security & risk
Security
The core contributors team followed rigorous processes to develop and secure the Silo protocol, including:
- Writing comprehensive unit tests
- Conducting Formal Verification of all smart contracts
- Conducting extensive internal code reviews
- Completing two smart contracts audits.
It is important to mention that the deployed smart contracts version differs from the audited one. You can read more about the audit here.
Risk
Users of the Silo lending application assume a variety of risks originating from insolvency events, liquidations, soaring interest rates and more. We advise all users to read this guide to develop a deep understanding of all risks assumed when you are using the lending application.
If you have any questions, contact the team. The fastest way to get a response is by asking community members in our Discord server.
Given the decentralization of the protocol, the core team cannot prevent potential exploits nor fix them as they happen. One particular exploit that the team cannot prevent is price oracle manipulation.
Silos use price oracles to calculate the values of collaterals and loans at all times. The price oracle is a critical piece of lending infrastructure that is not in control of the Silo protocol or the SiloDAO.
At the time of creating a silo, the core team’s responsibility only extends to confirming that the community has chosen the best price oracle it can find. The core team cannot guarantee that the price oracle will not be manipulated in the future.
If there is an incident where a price oracle is manipulated, the SiloDAO can vote to switch the price oracle to a different one and deploy a new silo replacing the exploited one. The SiloDAO can also freeze activities in any silo at any time.
What can the SiloDAO and core team do in the event of price oracle manipulation?
- Encourage users to withdraw deposits and repay loans.
- Governance can run a vote to replace the price oracle.
- If needed, the DAO can freeze the exploited Silo.
- If replacing the oracle with another is not a viable solution, the exploited Silo can be deprecated and a new Silo can be deployed. Read more about deprecated Silos.
Freeze exploited Silos exposes borrowers in the Silo to significant risk of getting liquidated when the Silo is active again with the updated price oracle. The liquidation risk comes from the fact that during the freeze a user’s collateral might have dropped significantly or a user’s loan (debt) has grown in value to the liquidation point. Consequently, the moment the vote is executed and the Silo unfreezes, all undercollateralized loans will likely be liquidated immediately to prevent depositors in the Silo from experiencing bad debt.
Using Silo’s licensed codebase
Silo’s core smart contracts and interest rate algorithm are published under BUSL-1.1. Under the license, projects are NOT allowed to copy, modify, create derivative works, redistribute, and make production use of the Licensed Work. If you would a license to use part of the codebase, contact the team at business@silo.finance.
Getting in touch
- For security matters, email us at security@silo.finance.
- Partners: Silo is looking to collaborate with other projects in DeFi. Drop us a line at Twitter or email us at business@silo.finance.
- Liquidators: We have open-sourced Silo’s own liquidator bot to make it easier for liquidators to plug into Silo’s lending protocol.
Resources for liquidators:
https://github.com/silo-finance/liquidation
https://github.com/silo-finance/silo-core-v1/tree/master/contracts/liquidation
For technical support, you can contact the team here.
