Silo v3 introduces a new class of money markets on Injective that don't rely on instant liquidity to protect lenders. This new lending market design ensures lenders are protected from bad debt via Collateral Debt Swap (CDS), a solvency guarantee that repays lenders even when DEX liquidity disappears.
Each market on Silo is risk-isolated by design, containing each asset in a market to a singular vault, with its own oracle, interest rate model (IRM), and custom liquidation parameters. This risk isolated design is meant to protect lenders and mitigate the cross-market liquidity contagion risk that is present in pooled lending models like aave and morpho.
Currently, the yINJ/INJ market is live with many other pairs coming soon!
How Silo Works
Most lending protocols combine all assets into one pool. A single bad collateral asset can drain the system. In 2022 and 2023, exploits and depeg events cascaded through shared pools. Lenders who had zero exposure to the failing asset lost funds anyway.
Silo isolates every market. Each one pairs exactly two assets. One vault holds the collateral. The other holds the loan asset. If you're supplying INJ in an yINJ/INJ market, your risk exposure is INJ. That's it.
Markets are permissionless to deploy. The team reviews smart contract configuration before listing a market on the app. Once listed, parameters lock and cannot be changed.
The Collateral-debt Swap
This is the mechanism that separates Silo v3 from the rest of DeFi lending.
Standard lending protocols assume a liquidator will sell underwater collateral on a DEX to repay lenders. That works when order books are deep and markets are calm. It fails when liquidity evaporates and spreads blow out.
Silo v3 adds a second path called the internal collateral-debt swap. When DEX liquidations can't clear a position efficiently, the protocol writes off the borrower's debt and distributes the collateral itself to lenders.
Lenders receive collateral tokens pro rata. The liquidation fees go to lenders.Liquidation events become yield for lenders on top of standard interest.
Two immutable thresholds govern when each path activates. The DEX liquidation threshold triggers standard liquidations. The higher collateral-debt swap threshold triggers the internal path. Both can run in the same market depending on conditions.
What Injective Users Get
Injective's DeFi stack now has an isolated lending layer built by one of the only protocols to maintain zero bad debt through the worst market conditions of recent years.
For Injective, Silo v3 means lending infrastructure that is inherently safer at the protocol level and borrowing conditions that hold up during volatility. Credit markets on Silo scale with asset fundamentals, not liquidity depth.
Lend INJ on Silo and your exposure stays limited to the single collateral asset in your market. The collateral-debt swap acts as a protocol-level backstop that other lending architectures simply don't have.
Liquidation fees flow to lenders. During volatile markets, those fees become a second source of yield on deposits.
Borrow against your holdings with interest rates that adjust based on utilization. Rates stay attractive when demand is balanced and climb sharply as utilization approaches capacity. Partial liquidations mean a temporary price dip can reduce your position without wiping it entirely.
Builders on Injective can deploy a lending market for any two-asset pair through Silo's permissionless factory. Anything onchain can become collateral in a Silo market with risk parameters configured for that specific asset. Silo uses the ERC-4626 vault standard, so yield aggregators and composable strategies integrate seamlessly.
Together, Silo and Injective expand the network's capacity to support sophisticated, capital-efficient onchain credit markets. Lending infrastructure that remains solvent without relying on external liquidity opens the door for new asset types and more complex financial products to be built on Injective.
Risk You Can Read Before You Deposit
Every market on the Silo app shows risk scoring, liquidation paths, oracle sources, and collateral behavior under stress.
Most lending protocols bury this in governance forums and contract code. Silo surfaces it directly. When new markets launch on Injective, you evaluate risk yourself instead of relying on someone else's assessment.
Start Using Silo on Injective
yINJ/INJmarket is live. Start lending and borrowing on Injective at app.silo.finance.
About Injective
Injective is a lightning fast interoperable layer one blockchain optimized for building premier Web3 finance applications. Injective provides developers with powerful plug-and-play modules for creating unmatched dApps. INJ is the native asset that powers Injective and its rapidly growing ecosystem. Injective is incubated by Binance and is backed by prominent investors such as Jump Crypto, Pantera and Mark Cuban.
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About Silo Finance
Silo is a risk-isolated lending protocol designed to protect lenders and borrowers, deliver higher yield, and provide transparent, real-time risk reporting.
As an earlier pioneer DeFi lending, Silo was the first protocol to introduce “risk isolation” at the protocol level, ensuring each market operates independently of the next, preventing cross-asset risk.
Live across multiple networks, Silo provides universal support to all onchain assets, enabling secure and transparent access to onchain credit.
