AIP - 16: Deploy Angle Borrowing module on Arbitrum

This is a proposal to deploy the borrowing module of the protocol on Arbitrum.

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 Arbitrum. 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 vote to seed agEUR liquidity on Arbitrum 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 Arbitrum, the protocol can enable positions with far smaller debts since liquidators may still come for smaller debt amounts (200 agEUR as a minimum).

Proposal

The proposal is to deploy the Borrowing module on Arbitrum with USDC and wETH as collateral assets. You can look at the SDK for the associated parameters.

Governance will be able to whitelist new assets to be added as collateral.

Added value to Angle and its users

After Polygon, Arbitrum 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 Arbitrum 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 Arbitrum 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 Arbitrum to govern the protocol from there. Arbitrum Governor (0xAA2DaCCAb539649D1839772C625108674154df0B) and guardian (0x55F01DDaE74b60e3c255BD2f619FEbdFce560a9C) multisig will be composed of the same members as the ones on mainnet.

Voting Options

1. For, deploy on Arbitrum
2. Against, do nothing