Silo, a decentralized finance marketplace that operates without custody, announced on Friday morning the launch of its V2 protocol on Sonic, a next-generation Layer 1 network.
This signifies that users on Sonic can now access lending markets where risks are compartmentalized. Consequently, if one market encounters difficulties, it won’t negatively impact the others. After successfully completing multiple security audits, Silo V2 is now operational and has already attracted $400 million in locked assets.
Silo V1 made a significant impression in the DeFi landscape by facilitating loans amounting to hundreds of millions of dollars across more than 50 markets—managing to do so without any major failures or solvency concerns.
Users can create a lending market for virtually any ERC-20 token and adjust parameters like loan-to-value ratios, liquidation thresholds, and interest rates. This offers enhanced flexibility for both lenders and borrowers, enabling users to tailor strategies according to specific assets and market dynamics.
Empowering users
One of the major enhancements in V2 is that users no longer need approval to set up a market; it’s open to all.
Silo has also rolled out a feature termed “hooks,” allowing users to incorporate new functionalities such as linking diverse markets, reallocating idle funds to other platforms for additional yield, or arranging fixed-term loans.
By utilizing the ERC-4626 standard, Silo V2 can more easily interact with other DeFi applications, facilitating smoother fund transfers and engagement across various platforms.
Enhanced risk management
In terms of security, Silo V2 employs a dual-oracle system that differentiates LTV from liquidation threshold calculations, enhancing the accuracy of risk assessments and lowering the likelihood of bad debt.
Additionally, market creators have the opportunity to earn fees from interest and incentives via an ERC-721 token. This opens a new revenue stream for market builders while fostering a more diverse and competitive array of lending options.
Future developments
Following its launch on Sonic, Silo aims to extend V2 to Ethereum, Arbitrum, and Base, broadening its reach and solidifying its position in the DeFi arena. With its blend of flexibility, security, and scalability, Silo V2 is set to make decentralized lending more accessible and user-friendly than ever before.