Silo Genesis Token Auction
We Are The Community
True decentralization is only achieved when the community is offered a fair chance to own significant control of this project. Therefore, we are proud to announce that we will be launching our Genesis Token Auction on December 6, 2021.
Funds raised in the token auction will be allocated to the Silo DAO and its development fund. The majority of the raised funds will be locked in Silo DAO as Protocol Owned Liquidity (POL) and controlled by the community through governance. Having enough liquidity in the DAO helps us build deep money markets to attract users and achieve sustainable growth of the protocol.
Genesis Token Auction
The Silo Protocol will offer 10% of its total token supply to the community through a public batch auction conducted on the Gnosis Auction. For the first 6 months, almost 100% of Silo’s circulating supply will come from the genesis event—See details of the allocation and distribution.
Gnosis Auction’s mechanism has major benefits over existing approaches available today like Balancer LBPs. In addition to ensuring fair pricing and eliminating the possibility of rug-pulling, auctioning tokens through Gnosis Auction offers the following benefits:
- The auction closes with a single clearing price for all tokens, regardless of how much each winning bidder bids. In other words, if you bid $5/token and the clearing price ends up being $1/token, you will only pay $1/token. This is the fairest way for the community to establish a single floor value for the token before any token enters circulation.
- It provides a user-friendly bidding process. Bidders have time to determine their best token price over the course of the auction.
- The problem of frontrunning is minimized. Bots can’t purchase tokens only to sell them for a higher price during the auction.
- Fair and relaxed distribution of tokens rather than building FOMO and speculation. Bidders can save on gas because they don’t have to rush into participating in the auction.
Prior to participating in the auction, we ask the community to complete a one-minute process to whitelist their wallet addresses on our website. You can find more information about the whitelisting process here.
Protocol Owned Liquidity (POL)
As a DeFi 2.0 protocol, we understand the importance of protocol owned liquidity (POL). Silo will initially need large liquidity (aka TVL) in its money markets to attract users and achieve sustainable growth of the protocol. Rather than rent our liquidity like traditional liquidity mining programs, Silo will own its liquidity to allow it to make markets and attract the most borrowers and lenders of long tail assets. POL ensures the protocol achieves fast growth, retains controls and flexibility, and lessens market volatility during the early days after protocol launch.
We chose not to launch with traditional mining programs because users eventually withdraw liquidity as soon as rewards stop or drop in value. This creates a negative feedback loop that impacts the long-term growth of a project. According to Nansen (1), “42% of yield farmers that enter a farm on the day it launches exit within 24 hours. Around 16% leave within 48 hours, and by the third day, 70% of these users would have withdrawn from the farm.”
Unlike ICOs of 2017, where raised funds went to the company developing the protocol, the Protocol Owned Liquidity raised by Silo is always in control of the community. The community, therefore, can direct the Protocol Owned Liquidity to seed liquidity in strategic Silos, strengthen the protocol’s security and more — including the possibility to dissolve the Protocol Owned Liquidity and return assets back to the Silo token holders.
With Silo’s Protocol Owned Liquidity, we can build the largest lending markets for stablecoins such as USDC, DAI, USDT, attracting risk-averse large depositors looking to earn high yield without having to share the risk with assets that could drain their deposits. There has never been a lower risk way for stablecoin holders to earn yield on their deposits. Protocol Owned Liquidity deposited in the Silos is not sitting idle but rather functions as operational capital, earning towards to the DAO’s treasury yield. For example, a billion dollars locked in certain Silos might yield around $5M a month for the treasury. The community then chooses how to use this yield, be it for further development of the project, providing new liquidity mining incentives, or other community-approved actions.
Funds raised in the auction will be allocated to two streams:
- Protocol Owned Liquidity: Up to 85% of the funds will be locked in the DAO’s treasury and controlled by the community through governance.
- Development fund to cover operational expenses of Silo protocol such as payments to contributors, security services, infrastructure services and many others. A minimum of $2.5M and maximum of 15% of total funds raised will go to the development of the protocol, giving Silo an ample runway to keep developing the protocol. The development fund is a Gnosis multi-sig controlled by multiple members of the core team.
Token Allocation and Release
Last week, we introduced the Silo DAO. Over the next 4 years, 1B $SIL tokens will be minted without the possibility of future inflation. Here is an overview of how the tokens are allocated along with the release schedule:
- Genesis Protocol-Owned Liquidity (10%) — Distributed in the public auction; claimable immediately after the auction
- Community Treasury (45%) — Linear vesting for 3 years; controlled by the community through governance
- Early Contributors (6.75%) — Linear vesting for 4 years with 6-month cliff starting after TGE
- Founding Contributors (21.75%) — Linear vesting for 3 years with 6-month cliff starting after Token Generation Event (TGE)
- Early Community Rewards (0.2%) — Airdropped to community members in January 2022
- Early Investors & Early Advisors (6.30%) — Linear vesting for 2 years with 6-month lock starting after TGE
- Future Contributors & Future Advisors (10%) — Linear vesting for 4 years with 1-year cliff starting after joining the DAO
Once the token auction is over, the initial circulating supply will consist only of the tokens sold in the public auction — which is 100 million tokens.
The Silo Team is pleased to announce that we recently closed a seed round from builders and angel investors in DeFi such as Joey Santoro from FEI Protocol, Sam Kazemian from Frax, Santiago R Santos, Ameen from Reflexer, Tyler Ward from BarnBridge, Regan Bozman from Lattice, Sherwin Lee and Keith from PSP Soteria, AiRTX from 0xVentures, Don Ho and Quantstamp, Emile from XDEFI, ShapeShift DAO, and others. We believe such important figures in Defi will offer guidance and support along the way that will prove beneficial to the growth and evolution of the Silo DAO.
by the author.