Put tokenized assets to work

The LP experience is the center of Silo. It should make advanced market structure understandable without hiding the choices that determine a position's behavior.

1. 1
   Choose a market

   Select a tokenized asset and quote asset, such as NVDA and USDG.

2. 2
   Read the market

   Review the reference price, liquidity distribution, TVL, recent volume, fees, and current conditions.

3. 3
   Select a strategy

   Choose a preset liquidity shape or define a custom range if advanced controls are available.

4. 4
   Supply assets

   Deposit the tokenized asset, USDG, or both. The selected range determines which bins receive capital.

5. 5
   Monitor the position

   Track active range status, asset composition, fee accrual, reference movement, and liquidity depth.

6. 6
   Remove or reposition

   Withdraw or move liquidity when the range or risk profile no longer fits the LP's intent.

Those six steps describe the mechanics, but the substance sits almost entirely in steps two and three. Reading the market and choosing a range are where the outcome is decided, and supplying assets afterwards is a mechanical consequence of those decisions. An interface that makes depositing effortless and treats range selection as an afterthought has made the easy part easy and left the hard part unsupported.

Before depositing

Most of the risk in a position is decided before it is opened. These are the checks the interface should make easy to complete.

• The asset and its issuer
• The canonical contract address
• The current and reference prices
• Recent volume and fee levels
• The range the strategy will cover
• What the position holds if price leaves that range

The list is short because most of it can be checked in a minute, and the cost of skipping it is asymmetric. Confirming a canonical contract address takes one comparison and prevents depositing into a market built on a token that merely shares a name with the real one. Reading the current fee and recent volume takes a glance, and it is the difference between a market that pays for the risk being taken and one that does not.

Sizing a first position

The size of a first position matters less than whether its range is one the LP understands. A small position in a deliberately chosen range teaches more than a large one placed on a default.

1. 1
   Decide what you are willing to hold

   A range below the market means accepting the base asset. A range above means accepting the quote asset. Choose a range whose ends are both acceptable outcomes.

2. 2
   Check the depth already there

   Look at how much liquidity sits in the bins you are about to fund. Joining a crowded bin earns a smaller share of the same fees.

3. 3
   Size for the move you will miss

   Assume the market moves while nobody is watching, and pick a width that is still acceptable in that case.

4. 4
   Record the entry composition

   A withdrawal returns a mix, not an entry price. Knowing the starting mix is what makes the eventual result readable.

The most common error in sizing is anchoring on the deposit amount rather than on the range. An LP who decides to supply $5,000 and then picks a range to fit has chosen the number that matters least, first. The range determines what the position holds, when it earns, and how often it needs attention. The amount only scales the result. Choosing the range first and the size second produces a position the LP can actually reason about.

Position composition

A position can begin with one asset and later contain the other. Trading changes pool inventory as the market passes through an LP's bins. The interface should show both the current asset mix and the range where liquidity remains active.

Composition is worth watching precisely because it changes without any action from the LP. A position opened with an even split can be entirely one asset a day later purely because the market moved through it, and nothing will have prompted the LP about it. The position did what it was configured to do. Whether the resulting holding is one the LP still wants is a question only they can answer, and they can only answer it if the composition is visible.

Monitoring a position

A position is not static. These are the values worth watching once capital is deposited.

• Range statusWhether liquidity is currently active at the market price.
• CompositionThe current split between the base asset and the quote asset.
• Fees accruedWhat the position has earned and whether it is still accruing.
• Reference movementHow far the market has drifted from its external reference, where one exists.

How fees accrue

Fees are credited to a position as trades cross the bins it funds. They are not compounded back into the position automatically, and they are not paid on a schedule. They accumulate against the position and are realized when the LP claims them or withdraws.

Because fees are not compounded automatically, a position does not grow on its own. Fees sit alongside it until they are claimed, and claiming is a separate decision from adjusting the position. An LP who wants compounding has to claim and redeposit, which means paying transaction costs and re-entering at the current price rather than the original one. Whether that is worthwhile depends on the accrued fees relative to those costs, which is a calculation that only starts making sense at a certain size.

Removing or repositioning

Withdrawing returns whatever the position currently holds, in whatever mix the market has left it, plus accrued fees. Repositioning is a withdrawal and a new deposit: the new range is chosen from the current price, not the original one. Both actions realize the position's composition at that moment, which is why the composition matters more than the entry price when deciding to move.

The asymmetry worth understanding is that repositioning is not a correction. It does not undo the conversion that happened; it accepts it and starts again from the new price. An LP repositioning after a large move is buying back into the market at that new level, holding whatever the move left them with. Doing this repeatedly through a trending market converts a series of paper positions into a series of settled ones, each at a worse price than the last, which is how an LP can be right about the range every single time and still finish behind.

Common and avoidable mistakes

Most losses that surprise an LP come from a small number of errors, and all of them are decided before the position is opened.

• Reading APR as a rateAn APR figure extrapolates from a past window. It is not something the market has agreed to pay. See metrics and analytics.
• Choosing a range from the entry priceThe market does not know where a position was opened. Ranges should be set from the current price and the current reference.
• Ignoring the closed-market gapA tokenized equity can reopen far from where it traded overnight. See asset types.
• Treating composition as temporaryAn out-of-range position holds one asset for as long as the market stays away, which can be indefinitely.
• Repositioning on every moveEach reposition settles the current mix, converting a paper composition into a realized one.

What connects all five is timing. Each is a decision made before the position exists, and none can be fixed afterwards by watching more closely. Monitoring tells an LP what is happening. It does not change what the position was configured to do when the market moves, and by the time the monitoring shows a problem, the configuration has already produced it.