DIP038 - Add Collateral Support to $ARB

Summary

It is proposed to add collateral support to $ARB on dForce (applicable to all L1/L2s dForce supports).

Motivation

The Arbitrum token ($ARB) is gaining popularity across DeFi and centralized exchanges, and has risen to become a top 50 cryptocurrency in terms of market capitalization.

Arbitrum is an Ethereum layer2 scaling solution that supports smart contracts without the limitations of scalability and privacy. Users enjoy low transaction fees and less congestion on Arbitrum. Arbitrum allows developers to create smart contracts by using code to specify the behavior of a virtual machine (VM) that implements the contract’s functionality. Additionally, developers can use Arbitrum for dramatic improvements in scalability and privacy.

Arbitrum's native token is called the Arbitrum token, or $ARB for short. The token is used to pay for transaction fees on the Arbitrum network and also serves as a means of governance. Holders of $ARB can participate in decision-making processes, such as proposing and voting on network upgrades or changes.

With a market capitalization of $1.5b and a 24-hour volume of $1b, $ARB is a viable candidate for collateral on dForce.

Specification

The dForce risk management team has performed a comprehensive assessment of $ARB, including smart contract risks, financial risks, and counterparty risks, to ensure it meets dForce’s risk management standards.

Here are the proposed parameters for $ARB:

• LTV: 80%
• Supply Cap: 10,000,000
• Borrow Cap: 10,000,000
• Borrow Factor: 100%
• Reserve Factor: 15%
• Liquidation Penalty: 7%