[TEMP CHECK] Aave V3 Deployment on zkSync Era Mainnet

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Title: [TEMP CHECK] Aave V3 deployment on zkSync Era Mainnet

Author: @fig - Flipside Crypto

Date: 2023-03-26

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Simple Summary

This Temperature Check seeks community input for the opportunity to deploy Aave V3 on the zkSync Era Mainnet, expanding Aave’s presence and tapping into the growing zkEVM ecosystem.

Background

zkSync is a zk rollup, a trustless protocol that uses cryptographic validity proofs to provide scalable and low-cost transactions on Ethereum. zkSync Era is made to look and feel like Ethereum, but with lower fees. Era empowers users with more security and embeds into the familiar infrastructure and ecosystem of EVM.

zkSync Era has launched with a diverse array of DeFi offerings, listed in its ecosystem documents – and others on the way. Deploying Aave V3 on zkSync Era could provide opportunities for growth and collaboration between the Aave and zkSync communities.

Era provides key EVM features, such as smart contract composability - leading to easier deployment of Aave V3 and requiring minimal development work.

Motivation

The Aave community has previously voted to deploy the Aave V3 codebase on zkSync’s v2 Testnet, approved by this off-chain vote. With the release of Era Mainnet, it is possible to re-invest the work of developers, empowering Aave as a hub for mainnet activity and liquidity.

zkSync has the potential to benefit the Aave ecosystem by introducing new users into DeFi, and cementing Aave as the premier borrowing platform within this growing zk ecosystem. zkSync would benefit from having a flagship DeFi project like Aave on its platform, further diversifying and growing the DeFi options available to its users.

Contributing teams like the ACI have described this benefit well before: “EVM-equivalence allows deployment with little development work needed to adapt Aave to [a] new network.”

Additionally, ecosystem developers note “zkSync will further Aave’s expansion cross-chain, reinforcing Aave’s place as the top liquidity market.”

Specification

This TEMP CHECK presents the Aave governance with the opportunity to deploy Aave V3 on the zkSync Era Mainnet with a limited deployment of initial assets: USDC and ETH.

Suggested risk parameters for these assets are provided in the table below.

Flipside Crypto invites risk service providers ( such as @Pauljlei & @ChaosLabs) to provide feedback on these assets - as teams wait to confirm native or non-native versions of their token.

We hope this list grows as the network matures with more users and integrations:

Risk Parameter	WETH	USDC
Isolation Mode	NO	NO
Enable Borrow	NO	YES
Enable Collateral	YES	YES
Stable borrowing	N/A	NO
Emode Category	N/A	N/A
Loan To Value	80%	82.5%
Liquidation Threshold	82.5%	85%
Liquidation Bonus	5%	5%
Reserve Factor	10%	10%
Liquidation Protocol Fee	10%	10%
Borrow Cap	N/A	10,000,000
Supply Cap	25,000	25,000,000
Debt Ceiling	N/A	N/A
Base	0%	0%
Slope1	7%	4%
Uoptimal	45%	90%

Disclaimer

Flipside Crypto is not compensated in any form by zkSync or Matter Labs for creating this Temperature Check proposal. This TEMP CHECK has been prepared solely to facilitate community discussion.

Next Steps

ARFC: If the Temperature Check Snapshot indicates positive sentiment, proceed to the ARFC stage for further discussion, risk parameter evaluation network analysis, and finalization of the proposal.

AIP: If the ARFC stage Snapshot is successful, submit the proposal as an AIP for voting and on-chain governance approval.

Copyright

Copyright and related rights waived via CC0.