L2 Launch Strategy

Motivation

Currently, Empty Set is only deployed on Ethereum L1. With L2’s, particularly Arbitrum and Optimism gaining favor, we want to ensure that DSU is natively available on every chain that it may be useful.

As such, we propose a strategy & implementation for launching DSU cross-chain, beginning with L2s.

Architecture

Cross-Chain Ownership model

We define a structure for DSU to maintain complexity across deployments

  1. Each chain has a separate Reserve and DSU deployment
  2. DSU is owned by its corresponding Reserve
  3. Each Reserve is owned by the L1 DAO through the corresponding bridge
  4. Each Reserve is pausable by a chain-native multisig with equivalent signers to L1

Unit of Account / Depository

Each instance of DSU will be differentiated with two properties:

  1. Unit of account — The stable source of collateral backing all DSU.
    For DSU on ETH L1, this is native USDC.
    For DSU on L2s or other chains, examples of this might include native USDC, bridged USDC, or some other fiat-backed stablecoin.

  2. Depository — The protocol in which DSU’s collateral is stored.
    For DSU on ETH L1, this is currently Compound V2.

For DSU on other L2s or other chains, examples of this might include Compound, Aave, or a chain-native borrow/lend protocol.

These properties are important to standardize as they will be the primary differentiators between each chain’s deployment. For each deployment, and on an ongoing basis, the primary role of the Empty Set DAO will be to continually define & adjust these for each chain to ensure each instance of DSU is operating with the most secure backing.

Deployment

Our initial proposal will be to deploy DSU on both Arbitrum and Optimism in an MVP state. This will use bridged USDC as the unit of account and a No-Op (held by the Reserve itself) for the depository. This will allow us to get DSU up and running on both L2s while more research is done on whether a depository like Aave or Compound (or another protocol native to those ecosystems) is sufficiently matured to justify being turned on in a future proposal.

Chain Unit of Account Depository
Ethereum L1 Native USDC Compound V2
Arbitrum Bridged USDC (Arbitrum-native bridge) No-op (temporarily)
Optimism Bridged USDC (Optimism-native bridge) No-op (temporarily)

Implementation

An implementation of the above proposal can be viewed here.