[RFC] : Deploy Euler on Optimism

[eIP] Euler Improvement Proposals RFC
1

Title: RFC: Deploy Euler on Optimism
Author: Matt, SNX Ambassador and Optimism Delegate
Related Discussions: N/A
Submission Date: Feb 20th, 2023

Simple Summary:

The Euler community should consider supporting the deployment of the project on Optimism, a layer two scaling solution built on top of Ethereum Mainnet. Optimism’s focus on scalability and decentralization aligns with the ethos of DeFi, and the platform provides a great testing ground for lending markets. In this proposal, we will develop the rationale by which we believe this to be true.

Abstract:

Optimism is a Layer 2 scaling solution that enables fast and low-cost transactions on the Ethereum Mainnet. It is based on Optimistic Rollup, a scaling technique that allows for thousands of transactions per second while maintaining the security of the underlying Ethereum network. Optimism’s design aligns with the goals of DeFi, which emphasize speed, security, and decentralization.

Optimism has a vibrant DeFi ecosystem and is the 7th largest chain by TVL (at the time of writing) with $858M in TVL with $672M of that being in stables. Optimism features may DeFi protocols that those in Ethereum mainnet know and love, like - Synthetix, Curve, AAVE, Uniswap, Pool Together, new protocols like Velodrome, and an entire ecosystem surrounding Synthetix - Kwenta, Lyra, dHEDGE/Toros, Polynomial, Decentrex, and so on.

Optimism’s biggest strength is its dedication to building on top of Ethereum and enabling scaling while still maintaining the security of the Ethereum network. It also heavily aligns with the ethos of Ethereum by having a strong commitment to retroactive public goods, to which it has donated millions of dollars to, and a great grants program that has incentivized countless projects to build.

Data:

Optimism has seen rapid growth over the past year, with TVL on the platform increasing from less than $20 million in September 2021 to over $2.5 billion in January 2023. The platform is well-capitalized and has attracted investment from top-tier venture capital firms.

Regarding on-chain metrics for Optimism, everything below has been sourced from the Optimism Community Dune (Optimism Protocol Metrics 🔴✨) and DefiLlama. Here are some metrics I’ve pulled from that to support Euler deploying onto Optimism:

Average TX per day for last 30 days - 200k
Average transacting accounts per day for last 30 days - 32k
Transacting addresses per month - 328k
AVG L1 Gas Savings: 158x
Optimism TVL: $858M
Optimism 24 hour volume: $40m
Comparable lending markets:
AAVE TVL : $90m
SONNE Finance TVL: $24M

Technical Framework:

Optimism is EVM compatible and is supported by top infrastructure/data providers that DeFi developers know and love. This includes, but is not limited to: Chainlink, The Graph, Pyth and so on. RPC providers can be found at Optimism RPC and Chain settings | Chainlist but include ankr, alchemy, and so on.

Motivation:

Deploying Euler on Optimism would provide significant benefits to both the Euler community and the broader DeFi ecosystem. It would enable the protocol to scale to meet the demands of a growing user base while maintaining the security and decentralization that are critical to the success of DeFi. Additionally, it would provide a unique opportunity for the Euler community to collaborate with other top DeFi projects and developers, which can help to further refine and improve the protocol.

Implementation

The Euler deployment on Optimism would be a full deployment of all Euler functionalities. It is up to DAO to propose which assets would be the first to be used in the lending market.

Collaboration

I’m more than happy to connect Euler contributors with Synthetix’s extensive contacts at Optimism to help collaborate with Optimism on a potential launch. There’s a great opportunity here to promote Euler in front of a wide audience of users that haven’t found their ideal lending market yet through various mediums – Twitter spaces, co-marketing tweets, discord calls, and so on.

Conclusion

In conclusion, the Euler community should strongly consider supporting the deployment of the project on Optimism. The platform’s focus on scalability and decentralization aligns with the ethos of DeFi, and the platform provides a great testing ground for lending markets. By deploying on Optimism, Euler can continue to grow and innovate while maintaining the highest standards of security and reliability.

Voting

Should this proposal pass the temperature check, we suggest voting in two ways:

Yes: Deploy Euler to Optimism
No: Make no change

4 Likes
2

I have two question to every chain advocate that proposes for Euler deployment on their respective chain:

  1. How will your chain support Euler (marketing, engineering, liquidity, any other commitments, etc) before, during and after the deployment.

  2. What incentive can the chain provide Euler to help Euler incentivise user acquisition in your chain.

3

I’m most interested in the core team’s position on liquidity fractionalization and their thoughts on L2’s.

If the team is open to numerous ETH L2 deployments and the belief that they capture unique userbases (therefore have less fears that the same liquidity would be fragmented) then the more the merrier.

However if not, there are a couple arguments that work against an Optimism deployment over Arbitrum at the moment. (Outside of any fundamental advantages bedrock may offer as time passes)

First and foremost , there are a number of protocols already partnered with Euler on mainnet, which themselves are already deployed on Arbitrum – Ourselves at Swivel (soonTM), Yield protocol, Contango (Expirable Futures), Illuminate (Fixed-Yields/Options), etc.

So with a deployment on Arbitrum, Euler has some significant liquidity and TAM already available across fixed rates, options, expirables, etc., which makes the choice to stand up a ArbiEuler stack relatively intuitive.

4

I definitely don’t think these deployments are zero sum - e.g. to frame it as opti vs arbi feels sub-optimal to me. both seem like great opportunties!

I do think point on more unified x-chain approach is very good one. E.g. using something like Hyperlane to unify liquidity and provide better experience to end user seems worth exploring

5

I’m not a big fan of L2 tbh. The hype around them, imho, is largely explained by airdrop aspiration. While Euler could benefit from L2 solutions in the short term, the long term benefits are difficult to predict. My concern is that once all drops are distributed, TVL and TPD could significantly decrease. That is why I would prefer to postpone L2 deployment to a later stage when they prove their sustainability.

6

I waited a few days to reply to these replies to give the proper amount of time for everyone to get their thoughts in. I’m happy to reply here so we’re in a spot to move this one forward.

I have two questions for every chain advocate that proposes Euler deployment on their respective chain:

  1. How will your chain support Euler (marketing, engineering, liquidity, any other commitments, etc) before, during, and after the deployment?
  2. What incentive can the chain provide Euler to help Euler incentivize user acquisition in your chain?

Hey @shaishav0x - Just want to make it 100% clear - I am not a core contributor at Optimism and wouldn’t be able to lay out any sorts of promises on the fronts you’re looking for. Although I can say that as a core contributor at Synthetix, I can lean on the extensive contact network at Optimism to help on the marketing / engineering side to make it a priority for Optimism contributors.

Incentives would be through one of two mediums:

  1. Optimism Grants Program - I am a member of the growth experiments council and would be happy to work through setting up the proposal with Euler core team / community members. - Read the attached link to learn more about the program. (250k OP max)
  2. Optimism Partner Fund - Can be used outside of the grants program for projects that need a larger amount of OP than 250k OP.

I’m most interested in the core team’s position on liquidity fractionalization and their thoughts on L2s.

If the team is open to numerous ETH L2 deployments and the belief that they capture unique user bases (therefore have less fear that the same liquidity would be fragmented), then the more, the merrier.

However, if not, there are a couple of arguments that work against an Optimism deployment over Arbitrum at the moment. (Outside of any fundamental advantages bedrock may offer as time passes)

First and foremost, there are a number of protocols already partnered with Euler on mainnet, which themselves are already deployed on Arbitrum – Ourselves at Swivel (soonTM), Yield protocol, Contango (Expirable Futures), Illuminate (Fixed-Yields/Options), etc.

So with a deployment on Arbitrum, Euler has some significant liquidity and TAM already available across fixed rates, options, expirables, etc., which makes the choice to stand up an ArbiEuler stack relatively intuitive.

I’d also be interested in hearing the core team’s position on liquidity fragmentation and such on L2s, though I think with supporting BSC, the fear isn’t really there.

But regarding Optimism, there are a great deal of Optimism-specific projects that have a real need for a lending market as robust as Euler. Optimism isn’t something to think of as lesser as well and has announced a recent collaboration with Base to build an interoperable L2 within the OP Stack.

I can comfortably say that from the Synthetix side, there’s a large number of ecosystem projects that are looking for a lending market to support them.

Agreed, I think there are large benefits to deploying on as many EVM-compatible places as possible AND to try to have cross-chain liquidity.

While I understand the criticism as there is a large number of tokens being used for various reward programs and such, I think the goals of both Arbitrum and Optimism are amazing and are something that aligns with the overall ethos of Euler as well. Scaling on Ethereum Mainnet has been shown to be able to onboard large numbers of new users and is also funding great missions across DeFi (Optimism public goods, etc). It’s fair to say “will this be sustainable” - but overall, I think that the long-term place for people to build, with EIPs coming to help support Optimistic rollups + additional updates coming for Optimism, this will be the place to be instead of an alt l1 sidechain.

I’ll also point back to the fact that Coinbase is building Base within the OP Stack that plans to be interoperable with Optimism and plans to use some portion of revenues for public goods as well.

2 Likes
7

Thanks @Matt ! After the partnership announcement between Optimism and Coinbase, I now look more optimistic to your proposal. After BSC deployment, it seems not a bad idea to expand towards Coinbase ecosystem.

1 Like
8

Good time for a temperature check! Thanks for all the feedback and such up to now.

Deploy Euler to Optimism
  • Yes, in favor of the proposal
  • No, against the proposal
  • Modify the proposal

0 voters

9

Hi, core team at Velodrome here. We want Euler to deploy on Optimism and think there’s a ton of stuff in the works that it could plug into – it’s been a big priority for us. And as a sort of BD arm of Optimism, we’d happily give Euler all the support it could possibly need, from partnerships to liquidity to any sort of infrastructure development. We’ve done the same for other protocols migrating to Optimism, and we’d put all of our effort into ensuring Euler has everything it needs.

I’m also part of the team (along with Matt L) in Optimism’s governance responsible for layer grants and echo his assertions that engaging governance could be worth Euler’s while.

2 Likes
10

Hey,

From Polynomial team here, we would also love Euler to be part of the optimism ecosystem.

3 Likes
11

This is a no brainer, lets get this ready for a vote!

Euler to Optimism!

12

We are waiting for you on Optimism !

1 Like
13

As part of Synthetix Ambassadors Council and as Optimism user, I can’t wait to use Euler on Optimism!

1 Like
14

I’m in favor of this deployment

1 Like
15

While I support the idea to chose Optimism as the next deployment, I’m not sure that we need to proceed to voting before the BSC deployment is finished (or about to be finished). It could take months and the whole situation with regard to the DAO’s deployment priorities could change a lot

16

Hi all,

I’m Smit, the Head of DeFi at OP Labs contributing to the Optimism Collective. We love the Euler product and would definitely help out the team with marketing efforts. As for other commitments, we can have the Euler team go through the process for any other needs (technical, incentives, etc). Many things will open up once you’re deployed and I’d be happy to be a point of contact to facilitate the needs of the Euler community!