SCCP-168: Update Parameters of Layer 2 Wrapprs

Simple Summary

This SCCP proposes the following updates to Layer 2 Wrapprs:

• Increase burnFeeRate on LUSD wrappr to 1%
• Increase the maxTokenAmount on the ETH Wrappr by 500 ETH to 3,700 ETH

Abstract

The parameters being updated as are as follows

• The burnFeeRate is a parameter that determines the fee to be paid in order to release the underlying, when a synth is burned
• The maxTokenAmount determines the max amount of a synth that can be minted with a given wrappr

Motivation

This SCCP aims at improving the sETH/ETH liquidity on L2 and negate arbitrage activities that reduce the supply of sETH. The arbitrage involves buying LUSD on optimism using the freshly minted sETH:

• Mint sETH with ETH (20 bp)
• Swap sETH to sUSD (25 bp)
• Burn sUSD to release LUSD (5 bp)
• Send LUSD back to ethereum
• Swap LUSD back to ETH (~80 bp profit)

The current debt pool composition on optimism is around 1,500 long ETH.

Copyright

Copyright and related rights waived via CC0.