Silo
Silo vaults use supply caps to control allocations across lending markets
Silo managed vaults use supply caps to limit new allocations to individual lending markets. Compare each active cap with the vault’s existing balance in that market, then consider deposit routing and pending changes. A cap describes permitted allocation, while holdings reveal exposure already taken. An idle market may accept overflow when lending markets fill, if the vault enables it with sufficient capacity. Withdrawal liquidity and performance fees remain separate parts of the comparison.
Bottom line: A vault’s active caps bound new allocations, while existing holdings, idle capacity and withdrawal liquidity explain different parts of its exposure.
Caps link market selection with deposit routing
Market selection determines where a vault may lend, and supply caps bound the amounts managers can direct into those destinations. A whitelisted market is an approved destination. Its allocation is the amount the vault currently holds there. The supply queue, also called the deposit queue, orders the markets receiving fresh deposits. Managers can adjust holdings within permitted limits, so the approved market list and current allocation describe different aspects of exposure.
Vaults using the same deposit asset can have different approved markets, caps and queue priorities. Matching deposit tokens do not establish equivalent exposure.
What does a vault’s supply cap actually limit?
Each market supply cap governs how much a particular vault can supply into that market, independently of other vaults. It does not set a universal borrowing ceiling for the market. A cap also differs from an allocation target: managers can keep holdings below the limit without filling every approved destination.
Underlying assets and vault shares
Caps use amounts of the underlying deposit token, not the number of vault shares. Shares represent a claim on pooled assets and have their own conversion relationship. Comparing a cap with a share balance mixes different units. The meaningful comparison uses the market allocation expressed in the same underlying asset as the cap.
Interest and lower caps
Interest can increase a supplied balance beyond its active cap. Managers can also reduce a cap below funds already allocated. Both states can leave holdings above the limit without a new deposit breaching it. A lower cap restricts further supply; changing the parameter does not automatically withdraw existing assets from the market.
Deposit headroom depends on queue capacity
New deposits follow the supply queue and use available room below the active caps. The vault can split a deposit among successive markets as earlier destinations fill. Underlying markets can impose their own acceptance limits, so subtracting holdings from caps gives only part of the capacity calculation.
Lending markets with available room
A lending market can receive additional assets when its cap and its own deposit limit allow them. The vault’s balance checks can further constrain supply. If the queue cannot place the full deposit, the deposit transaction reverts. Unused headroom outside the deposit queue does not automatically become a destination for fresh deposits.
An idle market as a fallback
The idle market holds the deposit asset without lending it to borrowers. When included in the supply queue with available capacity, it can receive deposits the lending markets cannot take. Its inclusion and cap remain vault-specific, and managers can remove it or reduce its capacity. Assets held there do not earn borrower interest from that allocation.
Does a smaller supply cap make a vault safer?
A smaller cap constrains new exposure to one market, but it cannot establish the safety of an entire vault. A meaningful limit reflects the collateral’s economic risk and the liquidity available for selling it during liquidation. A token-denominated cap also represents a changing fraction of the vault as total assets rise or fall. Actual allocations may sit well below those permitted limits. Market isolation separates individual lending exposures; a managed vault combines the exposures it actually holds. Similar collateral across several destinations can therefore leave concentration even when every individual market stays within its cap.
How do pending cap changes become active?
The owner or curator submits cap changes, and an increase becomes active only when an acceptance transaction succeeds after the vault’s timelock elapses.
Increasing a market’s supply cap requires the vault’s timelock to elapse before the new limit can take effect. Expiry of that waiting period makes acceptance possible. The change still requires an acceptance transaction, so a pending proposal does not supply usable headroom. The guardian can revoke a pending increase, and the owner or curator can cancel it too. Until acceptance updates the active cap, the earlier limit continues to govern allocations. Separate the active value from any proposal and its earliest acceptance time.
Cap decreases take effect when the authorized change executes, without the increase’s waiting period. Allocators can move liquidity within permitted caps and adjust queues, so portfolio changes can occur without a new cap proposal.
Withdrawal liquidity and performance fees depend on different inputs
Liquidity available for withdrawals
A full supply cap does not reveal how much the vault can withdraw from that market. Withdrawals use a separate queue and depend on underlying markets’ available liquidity. Borrowed assets may remain unavailable until repayment or other liquidity returns. Changing a cap does not settle those loans. Reallocation also requires liquidity in the market supplying the assets, which can restrict how quickly managers reduce an existing exposure.
Performance fees on earned interest
The performance fee takes a configured portion of interest the vault earns. The cap amount does not set that fee. Actual allocations determine which lending yields contribute to the pool, and an idle allocation contributes no borrower interest. A smaller cap can change the mix of earning assets without promising a fixed net return. Compare the configured fee with the allocation mix supporting the displayed yield.
Choosing between lending headroom and idle capacity
A lending-only deposit queue and a queue with an idle fallback offer different responses when market caps fill. Compare whether the intended deposit fits within their active queue capacity. Available lending headroom permits further supply into interest-bearing markets. If lending capacity runs out, an enabled idle fallback with room can preserve deposit acceptance while leaving capital unlent. The choice turns on whether continued acceptance or keeping funds in lending markets takes priority. The performance fee follows earned interest, so idle and lending allocations can produce different fee amounts.
- Match the intended deposit asset and compare caps in underlying-token units.
- Use active caps and existing allocations; exclude headroom from an unaccepted increase.
- Check the deposit queue for lending capacity and an enabled idle fallback where present.
- Record the performance-fee setting and the allocation producing borrower interest.
- Keep available withdrawal liquidity separate from unused supply-cap headroom.
The successful deposit transaction confirms acceptance, with the accepted asset amount and issued shares recorded in the ERC-4626 Deposit event.
Silo: quick answers
Can an allocator use a market outside the vault’s deposit queue?
An allocator can reallocate funds into an approved market outside the deposit queue, subject to its active supply cap. The queue governs automatic allocation of fresh deposits; reallocation uses a separate authorized function. Removing a queue entry alone therefore does not block every future allocation to that market.
Does setting a cap to zero remove the market from the vault?
A zero cap blocks further supply without automatically removing the market from the withdrawal queue. Existing holdings continue to count toward vault assets. With the cap already zero and no cap change pending, the owner or curator can propose forced removal. After the removal timelock elapses, an allocator can remove the funded market from the withdrawal queue, excluding its balance from vault valuation.
Why can the displayed deposit limit overstate usable capacity?
Repeated entries for the same market can make the vault’s reported deposit capacity exceed usable cap headroom. The capacity calculation can count that market more than once, while deposit execution still enforces its single cap. A displayed limit therefore does not authorize additional exposure or ensure acceptance of the full amount.
Are managers restricted to Silo lending markets when assigning caps?
The vault contract can accept an external ERC-4626 market using the same underlying asset. It does not establish that every approved contract is a Silo lending market. A cap limits allocation to that contract; it does not establish its implementation, collateral model or safety.
Can an existing cap proposal be replaced before its timelock ends?
An existing pending cap must be revoked before a replacement cap can be submitted for that market. Submitting another value while a proposal remains pending reverts. A replacement increase receives its own timelock, so the original proposal’s waiting period does not automatically carry over.
Do smaller supply caps reduce a vault deposit’s transaction cost?
The cap amount does not define a fixed transaction charge. Execution cost depends on the work the deposit requires, including the queue it traverses and the markets receiving funds. Performance fees use a separate basis: earned interest and the configured fee.
Will every vault depositor receive the same market exposure?
Depositors in the same vault share its portfolio through vault shares. Individual deposits may enter different markets as the queue changes, but those destinations do not create a personal market allocation within the vault. Each holder’s claim follows the pooled vault assets and their share ownership.