Silo will attempt to secure a reactor on Tokemak to improve liquidity in our trading pairs if/when the next C.o.R.E. (collateralization of reactor event) takes place.
TOKE received from the swap will be used to direct liquidity to the Silo reactor as well as generate returns in TOKE for participating in liquidity directing on Tokemak.
If Tokemak expands to providing liquidity to lending platforms, this service can be integrated with Silo’s vision of permission-less lending markets for any Token.
Tokemak Docs: https://docs.tokemak.xyz/
Overview of C.o.R.E.: C.o.R.E. — Collateralization of Reactors Event | by Tokemak | Tokemak | Medium
Tokemak is a liquidity directing protocol that allows users to deposit Token A into a Token A reactor. Funds within these reactors can be directed to decentralized exchanges to provide liquidity for the underlying Token. A Silo reactor on Tokemak will vastly improve our trading pair liquidity situation and will enable trading of large volumes with low slippage.
If we are successful in acquiring a reactor, we plan on conducting a DAO-DAO swap to acquire TOKE that can be used to direct liquidity to the venue of our choosing. As opposed to other forms of liquidity provision, using Tokemak does not have a fixed emission rate and the protocol has inbuilt mechanisms to protect against impermanent loss (Guardrails & Impermanent Loss Mitigation - Tokemak: The Utility for Sustainable Liquidity).
This will ultimately improve our liquidity situation which has been a topic of discussion by many members of the Silo DAO and will also diversify our treasury holdings, provide an additional revenue stream to our treasury through staking and directing liquidity, and increase utility for SILO as it can single side staked in the reactor and earn rewards in TOKE. The Silo project will also have greater visibility among other projects that are involved or interested in the upcoming Toke Wars (The Liquidity Wars: Arrival of the Tokemechs).
Going forward, if Tokemak chooses to expand their services to providing liquidity to lending platforms this can be seamlessly integrated with Silo’s vision of providing isolated lending markets for any token in a permission-less way. Having our own reactor and conducting a DAO-DAO swap will allow our teams to establish common ground to encourage this. We believe that this partnership is highly synergistic and would appreciate any community feedback.
Increased liquidity in SILO trading pairs allowing lower slippage when entering or exiting positions
Exposure to more projects and DAOs
Additional additional revenue streams in $TOKE for $SILO that is staked and $TOKE that is used to direct liquidity.
$SILO holders will all be able to stake $SILO on Tokemak to earn $TOKE returns
Possibility of future integrations if Tokemak offers liquidity direction to lending platforms
Smart contract risk in the event that Tokemak experiences an exploit
Our treasury will now be holding an asset other than ETH, Stables, or SILO
YES - You are in favor of Silo attempting to secure a reactor on Tokemak.
NO - You are not in favor of this proposal
I am in favour of attempting to secure a reactor. Tokemak is a very good project.
Is there an approx timeline on when the next round of C.o.R.E will take place?
I assume ideally this would take place prior to Silos Beta launching?
Another Risk worth highlighting and explaining in more detail is impermanent loss (IL) (I know you have attached docs but not everyone will read/understand them).
Given Silo current status/progress and low MC compared to other defi lending and borrowing protocols, its room for growth is fairly large IMO and therefore IL could potentially be an issue. I am not technical enough to understand Tokemak guardrails system and need to do more research on this.
Is there a POA on what happens if Slio secures a spot?
IE how will we get enough TOKE to active the reactor? Bribes? Relie on partners? Will Silo need to do deals with other projects/ppl to get them to vote for us?
I am also generally in favour of acquiring other reputable protocols gov token but I think this will require further discussions and analysis in order to get the best deal for SILO.
Therefore at this moment I am not in favour of the 10m DAO-DAO swap part of this proposal.
Thanks for taking the time to write it up
Thank you for your input. All the points you brought up are valid and I think we can have a discussion around them in the server.
In my Opininon, this is a good news for SILO holders cause now they have more change to collect interest from the SILo they are holding so I’m totally agree Silo to secure a reactor on tokemak
Thank you for the detailed proposal.
- How many SILO tokens would the DAO need to allocate? A bracket number would be good.
- How can we align with the Tokemak community? Do we need to propose Silo Reactor to their community?
I imagine a Snapshot will likely follow the proposal.
Definitely in favour of this and Silo have a very strong backbone and advantages to capture a reactor. I didn’t see any drawback.
Forwarded from Discord for readers that may not be on it:
"Tokemak’s IL protection is established using a series of mitigation mechanics. Let us pretend that IL has resulted in $SILO funds in Silo Reactor being lower than the quantity originally deposited. The reserves that are drawn from will follow this order:
- $SILO in Asset Reserves: LPs will be repaid from $SILO in Tokemak’s asset reserves
- Assets in Surplus/System Revenue: LPs will be repaid from system-wide asset surpluses and system revenue (surpluses/revenue will be liquidated for $SILO)
- $TOKE Staked: LPs will be repaid from $TOKE that was used to direct $SILO ($TOKE will be liquidated for $SILO)
- Protocol Controlled Assets: LPs will be repaid from other asset reserves including ETH, Stablecoins, other highly liquid tokens (ETH/stables/liquid tokens will be liquidated for $SILO)
Step 4. Protocol Controlled Assets disregards net effect on reserve values – this means that $SILO stakers will always be able to withdraw full amount of their deposit at the expense of other reserves. Establishing initial $SILO Asset Reserve on Tokemak will require a DAO-DAO swap if/when a SILO reactor is successfully made."
Forwarded from Discord for readers that may not be on it:
“Tokemak has said that they would feel comfortable with up to $3m USD worth (~10m $SILO), which is the amount ALCX committed during their reactor event. The amount of SILO tokens held by Tokemak places an upper limit on the amount of liquidity that can be deployed in their reactors since a reactor can deploy at most 3 times Tokemak’s asset reserves from a reactor i.e. if we DAO-DAO swap 1m $SILO into their Silo reserves they can deploy at most 3m $SILO from a Silo reactor - recall that asset reserves are the first pool drawn upon to compensate LPs during IL mitigation.”
seems like great for liquidity problems .
when I focus on the risks. if an exploit situation , I’m thinking that $SILO might be affected as a negative , even so I 'm going to vote Yes . the reactor is so useful for liquidity of $SILO.