Hey everyone,
This is a proposal to deploy the Borrowing module of the protocol on Avalanche.
Context
Angle Borrowing module is already deployed on Ethereum, Polygon, Arbitrum, and Optimism.
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.
Recently, Angle deployed agEUR on Avalanche and seeded a agEUR-USDC pool on TraderJoe. These actions were part of an effort to develop agEUR on Avalanche which is a major Layer 1 blockchain, and to make sure that we could ensure potential liquidations on Avalanche, even in the absence of cross-chain liquidation bots.
Proposal
The proposal is to deploy the Borrowing module on Avalanche.
The proposed list of collateral assets is: USDC, wAVAX, wETH.
Governance will be able to whitelist new assets to be added as collateral.
The exact parameters and collateral factors proposed can be found here.
Added value to Angle and its users
Avalanche is a major alternative L1 that has a complete and well-established Defi ecosystem. Its low fees and technological features indicate a great potential for widespread adoption.
As a stablecoin protocol, we need to make sure that agEUR can be accessed easily and cheaply everywhere, and deploying Angle Borrowing module is a first step in guaranteeing this.
There are also no Euro stablecoin protocols so far on Avalanche, and being the first ones to deploy there might give us an advantage over future players coming there (and possibility to be in the Curve meta pools)
With the borrowing module on Avalanche, Avalanche users 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.
Implementation
To perform this update we will simply have to deploy the same contracts for the Borrowing module.
Several multisig have been deployed on Avalanche to govern the protocol from there. Avalanche Governor and guardian multisig will be composed of the same members as the ones on mainnet.
agEUR has also been deployed on Avalanche, so the Borrowing module deployment only implies deploying a few other contracts.
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.
Since liquidity for agEUR will necessarily be smaller one Avalanche and since there’s no Core module deployed on that chain, 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 chains on which Angle is could harm the protocol.