Allocation of Excess Tokens

I don’t have much deep input to give, but I agree with what @0xSpooky says. People use ETH knowing the infamous gas cost (I myself use other chains for that reason, and still was tempted by SILO, my first ETH stuff). I think $SILO allocation could have better uses than refund. I know most people here participated in the auction and would always like to get more token for free, me included, but let’s not let simple greed guide the way of the community.

I also agree about an eventual marketing allocation to be reviewed by the community before execution. I’ve also seen much waste in marketing funds elsewhere.


So do you mean is it better to refund with silo token of equal gas value?

The goal is to grow the protocol. With that in mind, I think three streams will generate the most value to Silo DAO overall:

1- Community grants program

My role at Silo is to engineer growth with the rest of the team - growth hacking is different from marketing. I will be expanding on this part in a later post.

Any dollar that goes to promoting Silo should meet the following criteria:

  • Move our success metric(s). e.g. Token price is NOT a success metric and therefore paying for tweets to pump the token price is not justified. On the other hand, developing a scrappy liquidity migration tool and promoting to increase TVL is an initiative worth experimenting with.
  • Measurable: e.g. if TVL/Utilization are our success metrics at the time, paying for a series of educational videos should be evaluated against those metrics.
  • Fast/Iterable: Ideate > Build > Test > Learn - this is our growth cycle that should take ~ 1-4 weeks, depending on the complexity of the initiative. For example, if we think educational videos lead to larger TVL, we put together a few videos as fast as we can to validate the assumption. Once proven, we scale up in terms of numbers and quality.

The community grants program is a concept worth testing. For the experiment to work out, we will need the following:

  • Funds: I think 25% of the 1.5M tokens should be sufficient. If we validate that the program works, we can ask for more funds from the DAO to scale it up.
  • Active management: We determine the goals each initiative should achieve and how we will track success, and let the community come up with initiatives. We will vote on initiatives and provide resources to help implement them.
  • Evaluation: Evaluate each initiative transparently and learn from it.
  • Collaboration: I suggest we spin a different discord server for contributors with active grants, who are actively implementing initiatives.

2- Insurance

Having an insurance policy will motivate capital to flow into our Silos during the beta phase. We can use the tokens to pay off the monthly premium. For example, a $25M insurance policy will cost around $80K / month. Since the development funds are better spent on developing the protocol, allocating ~50% of the tokens will help secure a decent insurance policy that motivates LPs in the early days. Granted, insurance is something users should buy themselves but we can do it ourselves in the beginning. Generally speaking, insurance premiums tend to decrease with time as trust in protocol increases.

3- Bug bounty program

Having a bug bounty program strengthens the security of our protocol. The cost of running the program will likely range between $100K-$500K a year. I think allocating 25% of the tokens to the bounty program should be sufficient to run a successful program. If more is needed, we can use our development fund.


I’ll choose the “Reward Auction Participants” and “Marketing” options. Allocate %50 of the tokens to those who participated in the auction and allocate %50 for marketing.

  • $SILO Liquidity: Add the tokens to our Uniswap pool to reduce slippage and encourage price stability. We cannot add ETH, but we can sell 750K $SILO tokens for ETH and add the amounts to the pool.

Even the potential rewards are effective in promoting community growth and keeping the community active. Rather than releasing the rewards at one time, I think we may distribute part of that on demand during a long period to reward productive community members, holding events, etc.

Retroactive rewards for auction seems a nice idea, however I suggest only rewarding those who didn’t sell until now (or at least didn’t make profit) - because not all of them are strong believers, there are also quick speculators and paper hands.

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I participated in both the first and second promotional activities. If the address that participated in the promotion for the second time shows that it also participated in the first time. This should be listed separately, obviously they are true propagandists

I would agree with the idea from NewOrder to reward active participation in community.

I am a big fan of the community grants program. One of the big positives of Silo is that we have a simple solution to a very big problem of defi lending 1.0, we just need a push to attract recognition and TVL for the platform to take off. The 25% allocated (375,000 $SILO) is really not a large amount and will give us the opportunity to test our growth approach and make changes in the future as necessary. Not too familiar with how the grant system will function in a decentralised manner, but the allocation is small and a good way to test the waters - If it works, we can allocate more funds, if it doesn’t we can change things up. Most important thing would be choosing appropriate success metrics.

Insurance I am supportive of - the biggest risk for early-stage defi projects is smart-contract risk and could be a turn-off for TVL migration. Risk of bad debt could be adjusted for in our choice of tokens listed on beta release.

Bug bounty program I am supportive of - pretty self-explanatory.

  1. I would make allocation towards community grants bigger. Granted, you say ‘let’s test’, but surely community engagement/development is super key.
  2. Really like the idea on insurance, but it would be good to understand how you arrived at 50% figure.
  3. If you do decide to reward early participants, please include those who bought outside of action (and didn’t sell since). I bought at the price higher the action because I really love the project.

Great explanation and clear write up.

My opinion is NOT to sell SILO for ETH to bolster more liquidity: This will naturally happen as more believers buy SILO and trade their ETH into the pool - increasing liquidity.

I would like to see:

  • A small percentage reward to early believers who forfeited gas.
  • A reasonable marketing budget: reward content creators + community members spreading the word about Silo
  • Reward Testnet participant // otherwise partnership incentives.

Love your work!

I support the above proposal

haha very good! This is a very good proposal and I will follow it all the way!

50% pays for 3-4 months of insurance, assuming ~$30M policy, which is enough to cover beta. I am personally against sending tokens to users as it adds zero value to the project.

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I agree with you.People who got $Silo from auction have got unrealized profit already,they would gain higher ROI with the Silo growth. so I’d like to allocate: 50% for CM grants, 30% for insurance and 20% for bug bounty

@0xKZ We will determine allocations based on actual insurance cost. This should be available to us once the audit is done and smart contracts have been deployed. Let’s keep the conversation going :).

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Agree with this allocation. At Fei Protocol we have a decently successful grants program with similar allocation, and insurance can definitely help users of a new protocol feel more secure.

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