Overview of Silo Vaults
Silo Vaults represent an innovative adaptation of Morpho Vaults, tailored with minimal modifications to integrate seamlessly with the Silo ecosystem. Key features include:
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Integration with Silo v2 markets: Silo Vaults are built atop Silo v2 ERC-4626-compliant markets, ensuring compatibility and interoperability within the Silo lending baselayer.
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Governance Compatibility: The vaults are designed to align with the forthcoming veSILO governance system.
As ERC-4626-compatible contracts, Silo Vaults offer flexibility in capital allocation, enabling funds to be directed toward a diverse range of ERC-4626-compliant protocols. These include Silo v2 markets, Morpho vaults, Euler markets, Yearn vaults, and additional platforms, broadening the scope of investment opportunities for vault managers and users.
To streamline management, Silo Vaults will feature a dedicated Manager UI, providing an intuitive interface for vault deployment and fund administration. This web application is designed to simplify operational processes for vault managers while maintaining robust functionality.
Technical Support for Risk Managers
No additional technical effort is required from vault managers, as Silo provides comprehensive support:
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Vault Deployment Assistance: While vaults are permissionless and deployable via the UI in a matter of moments, the Silo team will assist managers with deployment and conduct post-deployment reviews to ensure optimal performance and alignment with intended functionality.
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Custom Lending Market Deployment: Like vaults, lending markets are permissionless. However, upon request, the Silo team can deploy lending markets with tailored configurations (e.g., oracle settings, interest rate curves, collateral factors, and liquidation fees) and verify their seamless operation.
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Event Monitoring: Silo will provide real-time monitoring of vault and market events through partnerships with Hypernative, enhancing transparency and security for all stakeholders.
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Guardian Role: The Silo team is prepared to step in as a vault guardian to help in situations such as emergencies or operational disruptions—This role ensures the protection of user funds and the stability of the vaults, offering managers and the community an added layer of confidence in the managed vaults. The Silo team will not be legally responsible for any actions, no actions, taken in this capacity.
Vault Manager Incentive Program
The Vault Manager Incentive Program is designed to encourage active participation and reward vault managers based on measurable contributions to the Silo ecosystem. Below are the detailed terms and structure of the program:
Program Terms
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Rewards shall be cumulative and granted based on TVL or revenue performance metrics. Excluded from the program: deposits made through minting/issuing assets into the vaults.
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Performance metrics will be evaluated using a 60-day median to ensure fair and consistent assessment, mitigating short-term volatility.
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Rewards will be distributed quarterly, subject to a one-year linear vesting period to align manager incentives with long-term ecosystem growth.
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The initiative will operate for one year or until the total allocation of 72 million $SILO tokens is exhausted, whichever occurs first.
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If a manager’s achieved TVL or revenue falls between two predefined tiers, rewards will be granted at the lower tier’s rate.
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SiloDAO reserves the right to withhold incentives in cases of abuse, including inflating a vault’s Total Value Locked (TVL), operating vaults on suspicious markets, acting in ways detrimental to SiloDAO, or engaging in suspicious activities.
Incentive Tiers
The following table outlines the performance thresholds and corresponding $SILO token grants:
| Total Value Locked | DAO Revenue (Annualized) | Cumulative Grant ($SILO) |
|---|---|---|
| $3,125,000 | $9,141 | 357,143 |
| $6,250,000 | $18,281 | 714,286 |
| $12,500,000 | $36,563 | 1,428,571 |
| $18,750,000 | $54,844 | 2,142,857 |
| $25,000,000 | $73,125 | 2,857,143 |
| $31,250,000 | $91,406 | 3,571,429 |
| $37,500,000 | $109,688 | 4,285,714 |
| $50,000,000 | $146,250 | 5,714,286 |
| $62,500,000 | $182,813 | 7,142,857 |
| $93,750,000 | $274,219 | 10,714,286 |
| $125,000,000 | $365,625 | 14,285,714 |
| $156,250,000 | $457,031 | 17,857,143 |
| $187,500,000 | $548,438 | 21,428,571 |
| $250,000,000 | $731,250 | 28,571,429 |
| $312,500,000 | $914,063 | 35,714,286 |
| $625,000,000 | $1,828,125 | 71,428,571 |
This tiered structure incentivizes vault managers to maximize borrowing activity and revenue generation, aligning their efforts with the broader goals of the SiloDAO ecosystem.
Applying to Manage Silo Vaults
Silo Vaults are inherently permissionless, allowing anyone to deploy them without prior approval. However, to ensure a trusted and user-friendly experience, the Silo lending UI will exclusively feature vaults managed by teams recognized and endorsed by the community. Deployers who prefer not to seek community recognition may still create and operate their own custom UI for their vaults.
To apply for listing on the Silo lending UI, prospective vault managers are encouraged to submit the following information via the Silo governance forum to familiarize the community with their project and establish credibility:
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Project and Team Introduction: A detailed overview of the project, its mission, and the team’s qualifications and experience.
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Vault Types: A description of the specific vault strategies or types the team intends to manage, including their intended use cases or target markets.
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Security and Risk Management: A concise explanation of operational security practices and the measures to protect user funds, such as multi-signature wallets or other safeguards.
By providing this information, managers can build trust with the Silo community, increasing the likelihood of their vaults being featured on the official lending UI.
Proposed DAO Actions
To implement this proposal effectively, we ask the SiloDAO members to deliberate on the following actions:
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Authorize the official launch of the Silo Vaults protocol as an integral component of the Silo ecosystem.
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Extend the Safe Harbor agreement to encompass Silo Vaults, ensuring legal and operational protections for participants.
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Approve the TVL- and revenue-based Vault Manager Incentive Program, allocating up to 72 million $SILO tokens to reward vault managers and drive ecosystem growth.