Silo Finance (SILO)

Dear @SiloFinance team,

Thank you for the detailed response.
I appreciate the clarifications on protocol design and legal actions taken. However, several critical concerns remain unaddressed:

1️⃣ DAO Governance vs. Unilateral Decisions

You state that Silo operates as a DAO where SILO token holders have voting power over treasury management and protocol decisions . Yet, the decision that "the DAO will not compensate lenders" (Point 7) appears to have been made unilaterally without community vote.

On behalf of the community, I request:

Formal DAO proposal on @SnapshotLabs presenting multiple options:
– Option A: No compensation (current stance)
– Option B: Partial treasury-funded compensation (e.g., 25-50% haircut)
– Option C: SILO token dilution to create compensation fund
– Option D: Revenue-sharing from future protocol fees until affected users are made whole

Let SILO token holders decide through governance, not the core team.

2️⃣ Reputation Damage ≠ Legal Liability

While I understand Silo's legal position, users will associate the Silo brand with this $60M loss regardless of ToS disclaimers.

This is already evident:

• TVL down 22% in 5 days ($143.7M → $111.7M)
• Affected users will never return without resolution
• New users will choose competitors (Aave, Morpho, Compound) with clean track records
• Every DeFi community discussion about Silo will mention "the $60M incident"

The question isn't "Are we legally liable?"
It's "Can Silo survive reputationally without proactive action?"

3️⃣ Weekly Legal Updates

You mention legal proceedings have been initiated, and it's very much appreciated. Transparency requires regular updates:

• Weekly or bi-weekly public updates on:
• Legal proceedings status (filings, responses, court dates)
• Negotiations with Stream Finance/Stable Labs
• Recovery timeline estimates
• Any settlements or repayments received

4️⃣ UI Transparency

Hiding affected markets while promoting new vaults creates perception of cover-up, regardless of intent.

I strongly advise to:

– Restore UI visibility with clear red warning banners:
"⚠️ This market is affected by the Stream Finance incident. Withdrawals are currently frozen. [Learn more]"

– Dedicated status page showing exact frozen amounts per market, recovery progress, legal action updates

5️⃣ The Permissionless Protocol Paradox

You correctly note that Silo's markets are permissionless and immutable.

However:

• Uniswap doesn't promote specific pools. Users create them independently
• Silo actively promoted Managed Vaults through official channels
• This creates implied endorsement, even if legally disclaimed

If Silo wants to maintain "neutral infrastructure" positioning, it must:

• Stop promoting specific vaults/markets
• Implement risk ratings (A/B/C/D) for all markets
• Require independent audits for any vault featured on official UI

***

The DeFi community values protocols that acknowledge mistakes and let governance decide on solutions. Hiding behind terms of service while promoting new products will permanently damage trust.

This is your chance to either build a strong community by proactively seeking ways to compensate users or risk destroying your reputation entirely.

Assisting affected users will provide long-term value, even if your compensation covers only a fraction of the loss - such as through vested or staked tokens, for example.

PS: Appreciate that you reply to my messages publicly, this is a green flag for the entire community.

Dear @SiloFinance team,

Thank you for the detailed response.
I appreciate the clarifications on protocol design and legal actions taken. However, several critical concerns remain unaddressed:

1️⃣ DAO Governance vs. Unilateral Decisions

You state that Silo operates as a DAO where SILO token holders have voting power over treasury management and protocol decisions . Yet, the decision that "the DAO will not compensate lenders" (Point 7) appears to have been made unilaterally without community vote.

On behalf of the community, I request:

Formal DAO proposal on @SnapshotLabs presenting multiple options:
– Option A: No compensation (current stance)
– Option B: Partial treasury-funded compensation (e.g., 25-50% haircut)
– Option C: SILO token dilution to create compensation fund
– Option D: Revenue-sharing from future protocol fees until affected users are made whole

Let SILO token holders decide through governance, not the core team.

2️⃣ Reputation Damage ≠ Legal Liability

While I understand Silo's legal position, users will associate the Silo brand with this $60M loss regardless of ToS disclaimers.

This is already evident:

• TVL down 22% in 5 days ($143.7M → $111.7M)
• Affected users will never return without resolution
• New users will choose competitors (Aave, Morpho, Compound) with clean track records
• Every DeFi community discussion about Silo will mention "the $60M incident"

The question isn't "Are we legally liable?"
It's "Can Silo survive reputationally without proactive action?"

3️⃣ Weekly Legal Updates

You mention legal proceedings have been initiated, and it's very much appreciated. Transparency requires regular updates:

• Weekly or bi-weekly public updates on:
• Legal proceedings status (filings, responses, court dates)
• Negotiations with Stream Finance/Stable Labs
• Recovery timeline estimates
• Any settlements or repayments received

4️⃣ UI Transparency

Hiding affected markets while promoting new vaults creates perception of cover-up, regardless of intent.

I strongly advise to:

– Restore UI visibility with clear red warning banners:
"⚠️ This market is affected by the Stream Finance incident. Withdrawals are currently frozen. [Learn more]"

– Dedicated status page showing exact frozen amounts per market, recovery progress, legal action updates

5️⃣ The Permissionless Protocol Paradox

You correctly note that Silo's markets are permissionless and immutable.

However:

• Uniswap doesn't promote specific pools. Users create them independently
• Silo actively promoted Managed Vaults through official channels
• This creates implied endorsement, even if legally disclaimed

If Silo wants to maintain "neutral infrastructure" positioning, it must:

• Stop promoting specific vaults/markets
• Implement risk ratings (A/B/C/D) for all markets
• Require independent audits for any vault featured on official UI

***

The DeFi community values protocols that acknowledge mistakes and let governance decide on solutions. Hiding behind terms of service while promoting new products will permanently damage trust.

This is your chance to either build a strong community by proactively seeking ways to compensate users or risk destroying your reputation entirely.

Assisting affected users will provide long-term value, even if your compensation covers only a fraction of the loss - such as through vested or staked tokens, for example.

PS: Appreciate that you reply to my messages publicly, this is a green flag for the entire community.