Title: Deploy Euler on Arbitrum
Related Discussions: N/A
Submission Date: 18.1.2023
This is a pulse check with the Euler community to prioritize deploying Euler on Arbitrum once the ongoing audit (supply caps and eMode) is done. Goal of the proposal is to choose Arbitrum as the first expansion chain.
Arbitrum is already the largest Ethereum L2 and the 5th largest chain overall with over $1.1b in TVL, just shy of Polygon’s (according to Defillama). Among lending markets Aave v3 has deployed in Arbitrum and Radiant (fork of Aave v2) is the major native lending protocol.
However, Aave governance has been too slow to move relative to DeFi speed, both in terms of listing new assets as collateral and borrowable, and in risk management (as evidenced by their reaction to the CRV bad debt debacle). Popular native Arbitrum assets are missing from Aave (GMX, GLP, DPX, rDPX, GNS, gDAI, LUSD, wstETH, VST, VESTA, etc) and the permissionless nature of Euler can outcompete Aave for market share as any tradeable asset can be enabled as Isolated by default. On the other hand, Radiant relies on a 2/3 multi-sig that brings centralization concerns to larger capital allocators. Their TVL has sky rocketed due to their liquidity mining program so it is unsure what their “real” product-market fit is with an Aave fork.
There is a strong business case then for Euler to deploy on Arbitrum and outcompete the incumbents through permissionless. markets and greater risk management that Euler is known for.
For capital allocators:
- Provide them with a battle-tested alternative for lending and borrowing with robust risk controls and wider breadth of borrowable assets
- Quickly gain market share and grow protocol revenue by filling the current gap in the market
- As other players build on Arbitrum, Euler can become the preferred source of liquidity due to its wider breadth of borrowable assets
Specification & Implementation
Collateral and cross assets would be decided by the DAO and after more discussion given that the same tokens (ex WBTC) across Ethereum and Arbitrum have different liquidity profiles and thus carry different risk.