Creating permissionless and risk-isolated lending markets, enabling users to borrow any crypto asset with another, while setting a new security standard.
Decentralized lending markets are foundational in the DeFi space, providing unprecedented yield and trade possibilities. Massive borrower & lender networks, dealing in thousands of digital assets, aim to provide users with as many opportunities as possible. However, despite their popularity, these markets still expose users to undue risk. Most traditional lending pools consist of a variety of assets. If among them is a weak or vulnerable asset, it could jeopardize the entire pool, leaving its constituents and their assets open to exploits and manipulation.
To mitigate such risks, platforms began restricting certain assets. This trade-off constrains the flexibility of users by excluding certain tokens from being used as collateral. Today, many tokens are left without borrow & lend markets. Clearly, there has to be a better way.
Enter Silo: the first second-generation DeFi lending protocol that provides secure money markets not just for the most popular assets, but all assets.
Silo’s key innovation is the introduction of individualized token pools, which minimize the potential ripple effect of asset vulnerabilities. Whereas in a shared pool a single vulnerable asset can leave connected assets vulnerable, Silo’s isolated pools significantly enhances security.
A Unique Approach: isolated pools per token, with a bridge asset connecting multiple silos.
The bridge asset is a vital element in providing a robust new layer of security for users.
Let’s say you want to use Token 🅰️ as collateral to borrow Token 🅱️.
With isolated Silo pools, the bridge asset (be it ETH, crvUSD, or USDC.e) is moved between the two pools to facilitate borrowing & lending.
Now, the only risk in Pool 🅱️ is the bridge asset and not Token 🅰️. This design isolates the potential vulnerabilities of Token 🅰️.
Silo extends this concept even further by weaving individual pools into a cohesive, secure network. The risk of each pool is confined, preventing a domino effect in which one token’s volatility can affect others.
This new framework is a significant and innovative leap forward in safeguarding DeFi participants against the risks for traditional asset pools, setting a new security standard in the lending space.
Silo Finance is now integrated with Portals on Ethereum (incl. Llama Edition) and Arbitrum networks, allowing users to zap in or out of Silo deposit positions from, and into, any another token or DeFi protocol!
Silo Finance enabled a new weETH-ETH silo, detailing multiple yield strategies to put your weETH to work. Learn more here: https://twitter.com/SiloFinance/status/1755939918919139531
