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Silo Finance has launched its onchain credit markets on Injective using its v3 lending architecture, which introduces risk-isolated markets and a solvency guarantee mechanism called Collateral Debt Swap (CDS).
Unlike traditional lending protocols that pool assets into a single pool, Silo v3 isolates each market into two separate vaults: one for collateral and one for the borrowed asset. The protocol says this structure helps prevent the collapse of one asset from contaminating positions in other markets—a problem it links to depegging events in 2022 and 2023 that affected protocols such as Aave and Morpho.
CDS is presented as the central mechanism distinguishing Silo v3 from other parts of the DeFi ecosystem. The protocol states that when liquidity on decentralized exchanges (DEXs) disappears and standard liquidations cannot close positions efficiently, Silo cancels the borrower’s debt and distributes the collateral directly to lenders on a proportional basis.
The protocol also notes that liquidation fees flow to lenders, creating an additional source of yield during periods of high volatility.
According to the announcement, the yINJ/INJ market is already live, with additional pairs expected to be announced shortly.
Silo v3 states that the parameters of each market are locked after listing and cannot be modified, aiming to eliminate the risk of discretionary changes to protocol conditions.
Builders on Injective can deploy markets for any asset pair through Silo’s permissionless factory, which is compatible with the ERC-4626 standard.
