Silo Finance — Weekly Risk Report (Week 1)
This report provides a structured weekly risk review of lending markets on Silo Finance. The objective is to identify pools with elevated liquidation, oracle, and liquidity risk under stressed market conditions.
For Week 1, markets are divided into two segments:
Section A: Core Pools (> $100K collateral deposits)
Section B: Long-Tail Pools (< $100K collateral deposits)
Risk labeling excludes smart contract exploit risk and focuses on market structure, liquidity depth, oracle design, and liquidation viability.
Section A (>$100K Collateral)
Section B (<$100K Collateral)
High Risk Methodology & Rationale
In this section, we provide a pool by pool breakdown of all Section A markets labeled High Risk, explaining the specific failure modes and risk drivers for each pool (excluding smart contract exploit risk).
Our risk classification is based on a multi factor framework that includes:
- Oracle design and price feed freshness
- On chain liquidity depth and exit capacity
- Market size and effective TVL concentration
- Borrow utilization and available liquidity buffers
- Collateral volatility and correlation risk
- Parameter sensitivity (mLTV / liquidation thresholds)
- Structural and market specific constraints
We also run forward looking scenario analysis using our internal monitoring and stress testing tools to evaluate how each pool behaves under adverse market conditions.
High Risk Pools — Detailed Breakdown
Pool 181 — siUSD / USDC
Key Observations
Total siUSD DEX liquidity: ~$4M
Total siUSD used as collateral: ~$5.9M
Documented siUSD depeg history
Collateral size exceeds reliable exit liquidity
Primary Risk Drivers
Liquidation cascade risk under stress conditions
siUSD depeg → liquidation failure → bad debt formation
Potential death spiral scenario if:
price deviates,
liquidation incentives are insufficient,
gas costs spike simultaneously
Failure Mode
If siUSD depegs and liquidators cannot exit positions profitably due to shallow liquidity and execution costs, liquidations stall and protocol bad debt accumulates.
Suggested Actions
Increase siUSD DEX liquidity depth
Reduce siUSD deposit cap
Temporarily reduce mLTV to ~80% until liquidity and stability metrics improve
Pool 168 — siUSD / USDC
Key Observations
siUSD collateral exposure remains elevated
Known historical depeg behavior
Primary Risk Drivers
Same structural exposure as Pool 181
Liquidation cascade and death spiral dynamics
Liquidity vs collateral imbalance risk
Suggested Actions
Increase siUSD liquidity depth
Reduce deposit caps
Lower mLTV to ~80% until stabilization
Pool 162 — weETH / ETH
Key Observations
weETH DEX liquidity on Arbitrum: ~$3M
weETH collateral deposited: ~$3.8M
Oracle-dependent pricing
Primary Risk Drivers
Oracle freshness / update lag risk
Liquidity thinner than collateral base
LST derivative pricing sensitivity
Failure Mode
Oracle lag or stale price combined with thin exit liquidity can produce under-liquidation and bad debt.
Suggested Actions
Reduce mLTV to ~85%
Strengthen oracle freshness guarantees
Add oracle redundancy if possible
Pool 141 — reUSD / USDC
Key Observations
reUSD DEX liquidity (Avalanche): ~$1.4M
reUSD collateral deposited: ~$2.5M
Oracle-dependent valuation
Primary Risk Drivers
Oracle freshness dependency
Liquidity depth insufficient vs collateral
Stablecoin-style peg fragility risk
Failure Mode
Oracle lag + liquidity gap → liquidation slippage → bad debt risk.
Suggested Actions
Reduce mLTV to ~85%
Improve oracle update guarantees
Monitor peg deviation thresholds
Pool 121 — savBTC / BTC.b
Key Observations
savBTC DEX liquidity: < $100K
savBTC collateral deposited: ~$2M
Custom oracle pricing
Primary Risk Drivers
Extremely low exit liquidity
Custom oracle trust assumptions
Depeg and death spiral risk profile
Failure Mode
Collateral cannot be liquidated at scale → liquidations fail → systemic bad debt.
Suggested Actions
Freeze market temporarily
Reopen only after:
liquidity depth improves materially
oracle robustness is validated
Pool 161 — PGOLD / PUSD
Key Observations
Chainlink oracle tracks XAU forex price
Collateral asset = PGOLD token
Oracle tracks reference asset, not token market price
Primary Risk Drivers
Oracle/reference mismatch risk
Peg trust assumption between PGOLD and XAU
Token-specific deviation risk not captured by oracle
Failure Mode
If PGOLD deviates from gold price while oracle tracks XAU, protocol may overvalue collateral → bad debt risk.
Suggested Actions
Validate peg mechanism transparency
Add token-specific pricing safeguards
Consider haircut or reduced mLTV
Pool 184 — hgETH / ETH
Key Observations
Vault-based asset used as collateral
Oracle relies on NAV valuation
NAV potentially manipulable depending on vault mechanics
Primary Risk Drivers
NAV manipulation risk
Oracle reliability concerns
Valuation attack surface
Failure Mode
Inflated NAV → overvalued collateral → under-liquidated positions → protocol bad debt.
Suggested Actions
Freeze market until valuation methodology is fully verified
Require hardened oracle design
Add conservative valuation buffers