Deploy ETH from Community Treasury to bootstrap silos (Lending Markets)

Proposal Discussion
1

Proposal

We propose deploying 897 ETH from SiloDAO’s treasury to bootstrap liquidity in silos.

For ease of deployment and rebalancing, we recommend moving ETH to the development fund that is controlled by the core team. The amount of ETH to be deployed as well as silos that would receive liquidity can be determined by token holders via snapshot voting. Unused ETH can remain in the development fund for future uses following the governance process.

Rationale

As a newly deployed lending protocol, silos need liquidity to generate traction and build trust. Without initial liquidity, there are no borrowers. Liquidity is especially important when we create silos for token assets that do not have markets elsewhere as it serves as a proof-of-concept for the effectiveness of Silo’s design. With some ETH in new silos, we can collaborate with other communities to bring more eyes to our project.

ETH in our treasury is also currently sitting idle. By deploying to our own markets we will be able to earn interest on our borrowings. This will allow us to grow our treasury in a sustainable manner.

Benefits

  • Accelerate usage of our protocol by bootstrapping initial liquidity.
  • Co-marketing opportunities with communities/DAOs that can make use of our isolated lending markets.
  • Revenue to the treasury from interest income.

Drawbacks

  • In the event of smart contract or oracle exploits, the treasury would bear the loss which would shorten the runway of the protocol.

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1 Like
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That’s a good proposal I agree on this. The question is how to distribute this liquidity.
It can be interesting to do something like attribute 5% of the ETH at each silo firstly, then distribute the rest of the liquidity to silos based on votes weight so we can accumulate more data on the utilisation rate of the silos with more liquidity.
I think we need to have a threshold of ETH liquidity on all silos for building the trust like you said. So at their first usage of silo, new users will see that liquidity is globally here and their first impression will be better.