Silo Finance Launches V2 Protocol on Sonic, Introducing Risk-Isolated Lending Pools
2min read Silo Finance has launched its V2 protocol on sonic, a high-performance Layer 1 blockchain, introducing risk-isolated lending pools designed to minimize systemic risk in decentralized finance (DeFi) markets. This upgrade allows for full customization of loan-to-value ratios, liquidation models, and interest structures for ERC-20 token markets, providing a fresh approach to decentralized borrowing and lending.
With over $400 million in total value locked (TVL) and a proven track record of handling loans worth hundreds of millions, silo has established itself as a trusted DeFi lending protocol. The V2 upgrade enhances security, efficiency, and customization for lending markets, making it easier for users to deploy new financial products tailored to their specific needs. Following its launch on Sonic, Silo V2 is set to expand to Ethereum Mainnet, Arbitrum, Base, and other EVM-compatible chains, making its isolated lending model more accessible across DeFi.
Unlike traditional lending pools that expose users to shared risks, Silo V2 enables developers to create independent twin-asset lending markets, each isolated from potential failures in other pools. This risk-contained approach ensures that if one market faces instability, the rest of the system remains unaffected. The protocol introduces modular lending mechanisms, allowing market creators to adjust loan-to-value (LTV) ratios and liquidation thresholds for specific assets, implement custom interest rate models, and utilize a dual-oracle system that separates LTV calculations from liquidation triggers, reducing bad debt risk. Additionally, the upgrade supports ERC-4626 integration, ensuring seamless compatibility with third-party DeFi applications.
Silo V2 introduces a new revenue-sharing model for market deployers, allowing them to earn fees in the form of an ERC-721 token. This provides long-term incentives for the creation of sustainable, high-performing lending markets. The protocol also includes “hooks”—programmable extensions that allow developers to deploy idle liquidity into other DeFi protocols, enable cross-market interactions within clusters of lending pools, and create fixed-term lending or permissioned markets for regulated assets. With Sonic’s scalable infrastructure and Silo’s risk-isolated lending model, the protocol is poised to redefine how DeFi users approach lending, borrowing, and capital efficiency.
Silo V2’s launch on Sonic signals a shift toward safer, more customizable decentralized lending. By prioritizing risk isolation, modular lending options, and developer incentives, the protocol is setting a new standard for secure and scalable DeFi lending. As the lending market expands across Ethereum and other chains, Silo V2 could pave the way for the next generation of programmable, risk-managed financial solutions in crypto. The combination of programmable markets and network scalability unlocks new possibilities for decentralized lending while maintaining security and flexibility. With the launch of Silo V2 on Sonic, decentralized lending is entering a new phase of risk-isolated markets and customizable borrowing solutions. By offering flexible lending pools, enhanced security, and developer incentives, Silo V2 is positioned to reshape DeFi lending across multiple blockchain ecosystems.
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