Contango x Silo
Silo has isolated markets, which allow Contango traders to loop on interesting assets, like Pendle’s PTs.
Disclaimer: the information below is provided for informative purposes only. Rewards shown in APR terms on Contango’s interface as a result of its integration with money markets are not to be considered financial advice. Leverage trading carries significant risk. Do your own research.
Summary of the Silo integration
- Type of money market: variable rate, isolated markets.
- Audited: yes (ABDK, Certora, Quantstamp)
- Chains at launch: Arbitrum
- Available pairs at launch: 15
- Rewards offered: ARB
What is Silo?
Silo Finance is a lending protocol with isolated markets. This means that anyone with a connected wallet can create permissionless and risk-isolated lending markets. This is different from protocols like Aave or Compound that create a single pool lending market for all token assets, which share the risk.
Silo uses an isolated-pool approach where every token asset has its own lending market and is paired against the bridge assets (ETH and XAI on Ethereum or ETH and USDC on Arbitrum). Each market supports only 2 assets, the bridge token, and a unique token. This design concentrates liquidity in single pools and allows for a high degree of efficiency.
Thanks to this architecture, users can find more exotic assets to borrow and lend on Silo, and as a consequence Contango traders can lever up on the same exotic assets.
Given this design, the integration between Silo and Contango is achieved by offering only ETH and USDC as quote for each asset on Arbitrum. In order to offer the ETH/USDC pair, Contango uses the wstETH silo for better liquidity.
Interestingly, Silo already envisioned leverage trading through their Silos in a detailed page on their docs. Now it can easily be done on Contango in a seamless experience too!
Silo tokenomics
Silo governance token is SILO, which endows holders with full control over the SiloDAO and its lending protocol through voting and delegation rights. The SiloDAO will accrue value through several mechanisms including borrowing premiums, liquidation fees, SiloDollar Bribes (stablecoins can bribe to be included in SiloDollar basket) and SiloDollar redemption fees.
The team is launching a v2 (ETA Q1 2024) with plans for a veTokenomics model, where veSILO is central piece and makes token holders able to vote to direct rewards to specific markets.
The protocol offered SILO rewards in the past, but is now relying solely on ARB rewards, up until March 29th 2024.
Read more on Silo docs.
About Contango
Contango lets you loop anything on-chain. You can create leverage (re)staking positions, arb rates differentials, farm points, or simply go long or short like a perp at low funding. Ape in like a degen with 1-click Strategies, or trade like a pro on the sleek Trade interface.
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About Silo
Silo is building technology so you can borrow any token using another securely. It is a non-custodial lending protocol for permission-less money markets.
