Hello everyone,
This is a proposal to deploy the borrowing module of the protocol on Optimism.
Context
Angle Borrowing module was recently deployed on Ethereum and on Polygon.
This module was built to be safe to scale to many chains at the same time provided that there are liquidations happening.
Liquidations in the borrowing module are what keep the protocol over-collateralized.
Proposal here is to deploy the module on Optimism. We’ve been working recently on cross-chain liquidation bots which can liquidate positions even though there’s no liquidity available on the chain where the position needs to be liquidated.
We’ve also put up a proposal to seed agEUR liquidity on Optimism to make sure that liquidations will still be able to happen on the corresponding chain.
Another thing to have in mind is that high gas fees on Ethereum mainnet make it unsafe for the protocol to enable debt <10k agEUR (otherwise no liquidator may be incentivized to come). On L2s like Optimism, the protocol can enable positions with far smaller debts since liquidators may still come for smaller debt amounts.
Proposal
The proposal is to deploy the Borrowing module on Optimism.
The list of collateral assets to support from scratch can still be debated. What I had in mind was launching with wETH and USDC as supported assets.
Governance will be able to whitelist new assets to be added as collateral.
I’ll update the proposal when parameters and assets have been finalized. You can track the state of the changes for the parameters in the SDK.
Added value to Angle and its users
After Polygon, Optimism would be another chain with a great potential of widespread adoption where Angle is easily accessible.
People will be able to get leverage on their collateral assets not only with cheap fees but with almost no gas costs while relying on the security of the Ethereum network. 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
As mentioned above, 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.
Since liquidity for agEUR will necessarily be smaller or even null on Optimism and since there’s no Core module there, liquidating potentially implies bridging over some agEUR liquidity.
With the protocol existing in multiple chains, it will go a bit more complex, and a failure of one of the chain on which Angle is could harm the protocol. Yet given that Optimism is a L2 and not a sidechain makes it far safer
Implementation
To perform this update we will simply have to deploy the same contracts for the borowing module, except for the implementation of the canonical agEUR which is common to all sidechains (except Polygon).
Several multisig have been deployed on Optimism to govern the protocol from there.
Optimism Governor (0x3245d3204EEB67afba7B0bA9143E8081365e08a6) and guardian (0xD245678e417aEE2d91763F6f4eFE570FF52fD080) multisig will be composed of the same members as the ones on mainnet.
Note that we have another similar proposal to deploy on Arbitrum. Feel free to share your comments on these deployments here or on the Arbitrum proposal.