Shared lending pools socialise the consequences of one bad listing — the mechanism behind Venus's 2021 failure and several others. Silo's answer is that every asset lives in its own silo, paired with a bridge asset, so risk cannot propagate between markets.
How isolation works in practice
Each silo contains one collateral asset plus bridge assets such as ETH or a stablecoin. A depositor in the ETH-USDC silo has no exposure to a silo containing a volatile long-tail token, regardless of what happens there. That means genuinely risky assets can be supported as collateral without threatening conservative depositors, which no shared pool can do.
The liquidity cost
Fragmentation is the direct trade-off. Each silo has its own depth, and thin silos are harder to liquidate: if a position goes underwater in a market with little liquidity, liquidators may not be able to clear it at the modelled price. The risk is contained, not eliminated.
Record
No protocol-level loss event since 2021, with audits in place and a design whose failure modes are enumerable — which is itself a security property.
Who should use it
Borrowers wanting to use collateral that shared-pool protocols will not accept, and depositors who want exposure limited to specific assets they have chosen. Users lending blue chips will find deeper liquidity and better rates at Aave or Morpho.