Silo Finance

What is Silo Finance?

Silo is a non-custodial lending protocol designed for borrowing any crypto asset with another. The protocol, known as Silo Finance, operates by creating permissionless and risk-isolated lending markets. In a traditional finance setting, banks typically play the role of facilitating lending and borrowing. However, decentralized finance (DeFi) protocols like Silo enable users to perform these functions without relying on a centralized entity.

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Recent Video Interview

Main points of the interview:

• Silo Finance introduces isolated lending markets on Ethereum and Arbitrum.
• Users deposit assets into specific markets to avoid cross-collateral risks and potentially earning higher rates in riskier markets.
• The protocol was designed to enhance risk management and yield optimization compared to traditional shared pool lending systems.
• Silo's V2 will address limitations of previous versions, such as the restriction to pairing assets with ETH.

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Why Silo?

Silo distinguishes itself from shared-pool lending protocols like Aave and Compound. While these protocols create a single pool lending market for all token assets, Silo employs an isolated-pool approach. Each token asset has its own lending market paired with bridge assets ETH and Silo's over-collateralized stablecoin XAI. This approach ensures that lenders are only exposed to the risk of ETH and XAI at any given time, promoting security and scalability.

How Silo Works

Silo's lending app allows users to borrow bridge assets ($ETH and $XAI on Ethereum or $ETH and $USDC on Arbitrum) by depositing collateral of any supported token asset. Each asset operates in its risk-isolated lending market or silo, providing a secure and efficient borrowing experience. The design concentrates liquidity in single pools, preventing fractured liquidity and enhancing protocol efficiency.

Silo Llama

Silo Llama is a fork of the original Silo Finance protocol, utilizing $crvUSD as its sole bridge asset. With security features inherited from the legacy Silo Finance app, Silo Llama provides a dedicated isolated lending protocol for $crvUSD, isolating users from contagion risks. Silo Finance now has three deployments:

• Silo Finance - Llama (Ethereum)
• Silo Finance - Legacy (Ethereum)
• Silo Finance (Arbitrum).

Use Case for $SILO

$SILO can be used as collateral to borrow USDC/ETH on Silo Finance. Additionally, users can provide liquidity on Camelot (Arbitrum) and Balancer/Aura (Ethereum), earning approximately 50% APR. The introduction of veSILO later in the year will provide additional utility to token holders.

SiloDAO

Silo's lending protocol is owned and operated by the SiloDAO. Token holders have full control over the DAO through voting and delegation rights. The delegated governance model allows token holders to vote on various aspects, including deploying new markets, adjusting market settings, adding/removing bridge assets, and more. SiloDAO serves as a community-driven space where proposals are broadcasted and voted upon, ensuring collective decision-making.

XAI - Over-collateralized Stablecoin

Pronounced /zī/, XAI is an over-collateralized stablecoin with a soft peg to the US Dollar. Controlled solely by SiloDAO, XAI's backing is determined through executive proposals. The DAO can mint or burn XAI, changing its backing based on market conditions.

Security

Silo Finance puts a big emphasis on security, and the protocol is audited by ABDK, Quantstamp, Certora, and ImmuneFi.

Team Background

The Silo Finance project boasts a skilled and diverse team dedicated to its success. Led by Shadowy Edd as the Smart Contracts Lead, the team comprises experts such as Ihor and Neo Racer, both Senior Smart Contracts Engineers, ensuring the robust development of the protocol. Tyko, a Senior Frontend Engineer, collaborates with Siros Ena, the Frontend Lead, to deliver a seamless user experience.

Andrew, as the Product Design Lead, focuses on creating an intuitive interface. Augustus, the Ops Lead, ensures smooth operational processes. The team is further strengthened by Aiham Jaabari, the Growth Lead, and Yoshua Urioste, the Business Development Manager, driving the project's expansion and strategic partnerships.

Project Development

In 2024, Silo Finance unfolds an ambitious roadmap, striving to establish itself as the premier lending protocol through the introduction of Silo v2 lending markets and interconnected protocols. SiloDAO, the governing body, faces crucial decisions, including the release of Silo v2 lending markets, transitioning governance to the veSILO framework, burning 300 million SILO tokens, initiating a multi-year emission program, and expanding into new ecosystems.

The roadmap introduces Silo Liquidity Vaults, incorporating essential features like permissionless and immutable lending markets with customizable factors, optional hooks for expanded capabilities, modular liquidations, interest rate models, dual oracles for risk mitigation, easy integrations via the ERC-4626 standard, and gauge-enabled markets for internal or external incentives.

To enhance governance, SiloDAO proposes veSILO, a non-transferrable ERC-20 token with diverse utility. Users mint veSILO through a Balancer pool, locking LP tokens for varying durations. veSILO holders gain advantages such as increased yields, emissions from incentive programs, a share of SiloDAO's revenues, and voting power for cross-chain governance. The proposed veSILO governance framework facilitates seamless interaction between Mainnet and Layer 2 solutions, fostering a unified ecosystem through Chainlink CCIP.

Silo Finance Price Analysis

As of December 25 2024 Silo Finance has a marketcap of $13M. This is {{percentagefromath}} from its all time high of $0.908248. In terms of its tokenomics, there's a total supply of 1B with 35% currently outstanding. Keep in mind Silo Finance has a fully diluted value of $37M which many investors might interpret as overvalued.

Of course, don’t trust price predictions alone, always check the Coinrotator token screener to follow the trending market.