Silo Enters the Curve Wars
Building liquidity for $SILO
You may recall last week we presented the community with options to build deep market liquidity for $SILO in order to facilitate trading at small slippage.
One of the viable options we discussed was starting a pool on Curve V2 and using $CRV emissions to attract liquidity to the pool instead of incentivizing with $SILO.
This is how the plan would work:
1- Start SILO-X Pool on Curve V2.
2- Market-buy CVX (Convex finance token) — that would give us voting power in the Curve DAO.
3- Use the voting power to vote for CRV emissions to our pool. CRV emissions serve as incentives for liquidity providers to add liquidity — mainly to farm CRV tokens.
Read this post to understand how Curve v2 (+Convex) builds liquidity for $SILO.
In brief, for the plan to work, we would need a large amount of CVX that would ideally be purchased at a point when the token has dropped in price.
On Friday, community members brought to our attention that CVX price experienced significant price decline due to an unexpected unlocking, offering a good entry price to begin building a position.
Our community member afirebrand#3128 prepared a proposal that Aiham#9108 later posted on Silo’s governance forum to inform the community about the plan. In the proposal, we estimated we would need around $5M worth of CVX (assuming CVX stayed at $16) to have enough voting power that would translate to a good amount of CRV incentives for future LPs in the SILO pool.
However, buying CVX with Silo treasury’s funds would need to go through the governance process: Proposal > Snapshot> On-Chain governance — and that would take 10–14 days.
To seize the opportunity, we decided to do the following:
1- Core team would buy CVX using the development fund and later submit an on-chain proposal to reimburse the development fund from the treasury.
2- We would only buy CVX with the development funds if prominent token holders in the community would support the move.
The core team then presented the plan to large token holders that agreed that it would be a good option to exchange ETH for CVX.
Then we sprung to action. Between the time afirebrand#3128 suggested buying CVX and the time we prepared to buy CVX, the price experienced some volatility, increasing from $16.5 to $18 and then going back to ~$16.5.
Multisig started buying CVX from the market in separate orders to reduce slippage impact. You can find transaction hashes below:
- Transaction 1
- Transaction 2
- Transaction 3
- Transaction 5
- Transaction 6
- Transaction 7
- Transaction 8
- Transaction 9
- Transaction 10
As of today, Silo DAO has exchanged 4.41M USDC for ~250,000 CVX at different price points.
The amount will be held in the development fund before it’s put to use (see below).
CVX at work
We are working with community members to whitelist SILO-FRAX (50/50) pool on Curve V2.
We will lock CVX for vlCVX (Convex’s governance token). Convex Finance voting power is derived from the power of its maximum time-locked veCRV. At present, 1 CVX controls the voting power of 5.66 veCRV.
We will use our vote-locked CVX (vlCVX) to direct CRV/CVX emissions to a SILO LP to incentivize liquidity. We will also seek help from projects and community members to amplify CRV emissions to our pool.
Stay tuned for updates.