SIP-195: L2 Multi ETH Collateral Loans

Simple Summary

Deploy ETH Collateral sUSD loans onto L2 and allow users to borrow synthetic assets against ETH.

Overview

Deploy Multi Collateral ETH loans to Optimism to borrow sUSD. After the Optimism regenesis, ETH is now a "native" currency for L2 which enables the CollateralETH contract to be deployed which accepts ETH as a collateral.

Initially, the system will support borrowing sUSD against ETH on Optimism L2.

Motivation

The supply of sUSD on Optimism L2 is not able to meet the demand for sUSD required for traders and future DeFi ecosystem integrations. Without a large influx of SNX onto L2 Optimism, the sUSD in circulation would not meet the demand resulting in the sUSD peg to be above > $1.0 and affecting traders and other protocols integrating with Synthetix.

• Support the sUSD peg by increasing the amount of sUSD in circulation on L2.
• Improve the supply of sUSD for traders and other partner integrations such as LYRA, dHEDGE and Uniswap by allowing sUSD to be minted with ETH collateral.

We can increase the supply of sUSD safely by introducing Ether collateral backed loans along with SNX staking on L2. This will also increase the fees generated via the interests collected from the loans to stakers.

Rationale

With much lower gas costs for execution on L2 Optimism, we can reduce the minimum collateral and the min c-ratio for ETH collateral loans.

The cost for liquidation keepers to maintain the health of loans would be less so the min ETH collateral can be lower as well and the buffer between liquidation can be reduced.

Technical Specification

The mechanism for Multi Collateral loans is described in SIP 97. The majority of work in this SIP to enable and update CollateralETH to work on OVM was completed in the L2 shorts refactor SIP 135.

• Deploy CollateralETH contract to L2 OVM
• Add CollateralETH to the CollateralManager.sol contract
• Ensure the collateral values are properly set

Test Cases

Unit tests included with implementation in SIP 97 and SIP 135.

Configurable Values (Via SCCP)

• synths the synths which can be borrowed against the collateral. (Default: sUSD)

• minCratio the minimum collateralisation ratio before becoming eligible for liquidation. (Default: 120%)

• minCollateral the minimum collateral required to open a loan. (Default: 0.1 ETH)

• issueFeeRate the fee for opening a loan. (Default: 0)

• utilisationMultiplier the factor that will scale the utilisation ratio. (Default: 0)

• baseBorrowRate the base interest rate applied to all borrows. (Default: 3%)

Copyright

Copyright and related rights waived via CC0.