Expansion to Lisk - Lisk’s Ethereum Layer-2 Blockchain

Based on Base’s proposal

Summary

This proposal presents a plan to expand Sonne Finance's ecosystem to Lisk’s Layer-2 blockchain solution, built on Optimism’s OP Stack in partnership with Gelato, a well-known Rollup-as-a-Service (RaaS) provider. By diversifying our platform presence, we intend to expand our user reach to different ecosystems within the Superchain, new market regions within emerging markets as well as our product offering when it comes to Real-World Assets (RWA).

We have an opportunity to be an official launch partner of the Lisk Ecosystem as the first Lending Protocol to be deployed on the network, which is the proposal being presented to the community here. Introduction to Lisk Lisk recently transitioned to become an Ethereum Layer 2, leveraging the OP Stack and Gelato’s RaaS to integrate with the Optimism Superchain. The testnet has been launched in Q1 2024, while the developer mainnet and public mainnet launches are planned for Q2 and Q3 2024 respectively.

Lisk’s mission, as an official member of the Optimism Superchain, is to provide Web3 builders with the most attractive ecosystem to realize their products focused on real-world use cases in emerging markets.

In preparation for the launch, Lisk has deepened its relationships within emerging markets by securing government contracts (such as the recently announced partnership with the Indonesian Government) and specific incubation programs with respected partners on the ground that will have as a goal providing the underlying developer platform, mentorship, and initial grant funding to Web3 startups, including via its New Grants Program.

The Expansion Strategy

We propose an integrative expansion strategy to extend Sonne Finance's reach within the Superchain and include Lisk in our offering. Since Lisk is 100% aligned with Superchain’s vision and mission, we believe integrating it will strengthen the case of Sonne being the main lending protocol within the Superchain. If this proposal passes, Lisk will become the third chain within the chain picker on the Sonne.finance front-end, following Optimism and Base;

We also see an opportunity to extend our lending pool offering since Lisk is currently working with big players in the industry on the creation of an RWA fund of around $50M. This opportunity will be used to explore new liquidity pools backed with RWAs, such as tokenized securities/bonds.

User Incentives

USD $200,000 in incentives to the Sonne Finance users on Lisk. As Lisk, we'll provide USD $200,000 worth of incentives to bring additional TVL to the lending market Lisk’s airdrop point system will include Sonne Finance usage.

Liquidity

$5M+ USD worth of onchain liquidity will be seeded on DEX(es), bridges and other relevant DeFi protocols being deployed on Lisk.

Pros and Cons of the Expansion

Pros

Farming Airdrop Points

Lisk announced that a portion of the ERC-20 version of the LSK tokens is allocated for community airdrops. Sonne Finance users will have the chance to farm Airdrop Points when we deploy on Lisk. Our community will have a first-mover advantage with Sonne being an official launch partner of the Lisk Ecosystem as the first Lending Protocol to be deployed on the network

Superchain Alignment

Including Lisk in our offering will strengthen Sonne's position as one of the main lending protocols within the Optimism Superchain. Ease of Integration Integrating Lisk will be a simple process since it is an OP Mainnet rollup, just like Base.

Increased Liquidity

The proposed liquidity mining incentives on Lisk are likely to stimulate higher user participation, providing a boost to our protocol's liquidity.

Greater Exposure

Lisk offers an opportunity to communicate with end users located in emerging markets, enabling us to broaden our reach within the DeFi landscape.

Product Expansion

This integration can lead to having unique liquidity pools within Lisk that offer great yield for significantly low risk.

Co-marketing activities

As the lending protocol launch partner for the Lisk Developer Mainnet, Sonne and Lisk marketing teams will collaborate on different marketing/advertising initiatives.

Cons

Risk of Dilution

Bridging additional SONNE tokens onto Lisk might lead to potential token dilution, impacting the value dynamics.

Risk of Lisk Timeline

The new liquidity pools that can emerge could take some time to develop since Lisk is not yet live. Lisk is currently in testnet and aims to deploy its Dev Mainnet in May, and its User Mainnet during Q3 of 2024.

Velodrome Deployment Timeline

While Velodrome will deploy on Lisk soon, the details around the agreement for the deployment are still being worked on. This means that we will not have the typical flywheel effect we gain through the synergy of our protocol and Velodrome on Day 1, we will see it later.

Lack of Engagement

Just like with expansion to any new chain, there is a risk that there is a lack of engagement after launch.

Voting Options

We believe in collective decision-making, and hence, we invite our community members to cast their votes on the proposed expansion:

Option 1 - Expansion of Sonne to Lisk

Option 2 - No expansion of Sonne to Lisk

Vote on which option you choose to endorse.

Voting Period

Voting Process will take 1 week.

Post Approval Steps

Should the proposal be approved, both teams will discuss how to best allocate the $200K liquidity incentives in order to generate the most TVL and volume for Sonne.finance on Lisk. The Sonne team would have the final say on how to allocate the incentives.

Conclusion

Sonne Finance's proposal to integrate Lisk's Layer-2 blockchain solution into its ecosystem offers strategic advantages such as being among the first communities to farm Airdrop Points on Lisk, enhanced user reach within the Superchain and opportunities for product expansion. While the integration presents technical simplicity and potential for increased liquidity, challenges such as token dilution and timeline uncertainties exist. The community's vote will determine the outcome, after which, Sonne Finance will proceed with implementation steps if approved.