Hey everyone,
This is a proposal to deploy the Borrowing module of the protocol on Polygon.
Context
Angle Borrowing module was recently deployed on the Ethereum mainnet.
This module allows people to borrow agEUR against wETH, wstETH and wBTC.
One issue faced by this module on mainnet is that to prevent the creation of bad debt, there is a minimum cap on how much you can borrow from this module.
Indeed, liquidators cannot make a profit when liquidating small positions because the gas cost is necessarily going to be too big with respect to the discounted collateral obtained.
This limit has been set to 10k agEUR on mainnet.
This borrowing cap could be far smaller in chains where gas is cheap like Polygon. And hence deploying this new module on other chains is not only a way to facilitate the growth of agEUR on these chains but also to reduce the hurdles from interacting with Angle.
Proposal
The proposal is to deploy the Borrowing module on Polygon.
We propose to start with wETH, wMATIC and USDC as collateral assets. Exact parameters and collateral factors proposed can be found here.
Proposal for the dust is 20€.
Added value to Angle and its users
The borrowing module on Polygon would be the first implementation of Angle deployed on another chain than Ethereum mainnet. It would make the protocol accessible to users who could not afford prior to that to use Angle to get agEUR.
People will be able to get leverage on their collateral assets not only with cheap fees but with almost no gas costs. They’ll be able to take more easily advantage of their collateral holdings to borrow agEUR against.
This is also going to be a first step in building a truly multichain infrastructure for Angle.
Risks
The risks when deploying the Borrowing module are essentially liquidation risks. If positions fail to be liquidated this will create bad debt for the protocol. We are working at the Core team on cross-chain liquidation bots to make sure that positions on any chain could be safely liquidated.
Since liquidity for agEUR is smaller on mainnet and since there’s no Core module there, liquidating potentially implies bridging over some agEUR liquidity.
Other risk is that the protocol will start existing in multiple chains, and agEUR will natively be minted in other places than Ethereum. The protocol will go a bit more complex, and a failure of one of the chain on which Angle is could harm the protocol.
Implementation
To perform this update we will have to upgrade the agEUR contract on Polygon. The same agEUR as the one that can be bridged by the PoS bridge should be used.
Contracts deployed, except for the router contract which will be specifically adapted to Polygon, will all be the same audited ones as the ones deployed on mainnet.
Several multisig have been deployed on Polygon to govern the protocol from there.
Polygon Governor and guardian multisig will be composed of the same members as the ones on mainnet.