Base and Bridge Assets

Silo categorizes assets as either bridge or base assets. Bridge assets are defined assets per deployment useable as collateral in any silo, while base assets are any asset other than bridge assets.

Bridge Asset

Bridge asset(s) are the same for each Silo Deployment by default.

The bridge asset for Silo Legacy is $ETH and $XAI, for Silo Llama it is $crvUSD, and for Silo Arbitrum it is $ETH and $USDC.

Bridge asset refer to predefined assets that may be used as collateral or deposited into any silo in a deployment.

Bridge Asset deposits are only ever exposed to the silo they are deposited into. For example, if $USDC is deposited into the $ARB silo, its exposure is limited to $ARB (the base asset) and $ETH (the secondary bridge asset) only. An exploit in the $PENDLE silo will not affect $USDC deposits in the $ARB silo since they are standalone markets.

Bridge Asset deposit rates are derived from the IRM configuration for that specific silo. More aggressive models may be applied to riskier silos (e.g. low on-chain liquidity), allowing counterparty lenders to receive more interest to reflect risk exposure.

Base Asset

Base assets refer to any non-bridge asset that has a lending market on silo. Base assets can theoretically be any token, including standard and esoteric tokens.

Base assets can only be used as collateral in their own market. For example, $ARB can only be used as collateral to borrow from bridge lenders in the $ARB silo - it cannot be used in the $PENDLE silo which only accepts $PENDLE as base asset collateral.

How does the Bridge-Base design isolate risk?

Let's look at a scenario where $OOPS experiences an oracle exploit that massively overvalues its borrowing power and see its impacts on a shared-pool platform versus Silo's bridge-based design.

$OOPS gets exploited on a Shared-Pool Platform

On a shared-pool platform, all deposits are collected into a single pool and any one collateral token can be used to borrow from the entire pool.

If $OOPS gets exploited, this will allow a malicious actor to drain the entire pool of funds.

$OOPS gets exploited on Silo

On Silo, a base asset can only be used as collateral in its specified Silo - for $OOPS, this would be the $OOPS silo.

Since $OOPS can only be used as collateral in the $OOPS silo, only the bridge asset depositors in the $OOPS silo are exposed to risk. All other depositors on Silo are protected as $OOPS cannot be used as collateral in any other market.

The nuance here is that depositors on Silo have chosen to lend against $OOPS while a shared-pool platform would have exposure by default. Thus, the bridge-base design transfers the control of risk-exposure to the lender rather than the protocol itself.