Layer 2 Integration

Layer 2 Deployment and Key Differences from Mainnet

While IBNSCTrade primarily operates on the Ethereum Mainnet, it also extends its services to Layer 2 networks like Optimism and Arbitrum. In these Layer 2 environments, certain distinctions are made in the assets and their functionalities:

1. IBN Token on Layer 2

   • Minting and Bridging: IBN tokens are originally minted only on the Ethereum Mainnet. These can be transferred to Layer 2 networks like Arbitrum or Optimism via the Connext bridge.

   • Lockbox Mechanism: When IBN is moved to Layer 2, it's locked in a Mainnet contract, and an equivalent xIBN (Layer 2 IBN) is issued on Layer 2.

   • Redemption Process: To move back to Mainnet, xIBN can be burned on Layer 2, enabling the retrieval of the locked IBN from the Mainnet lockbox.

2. Synthetic Debt Tokens (alAssets) on Layer 2

   • Conversion and Bridging: Just like xIBN, alUSD and alETH can be bridged from Mainnet to Layer 2, allowing users to mint equivalent xalUSD and xalETH (Layer 2 versions of alUSD and alETH).

   • Minting on Layer 2: Users can also directly mint xalUSD and xalETH on Layer 2 networks by taking out self-repaying loans.

   • Bridging Limitations: The ability to burn xalAssets for bridging to another chain is limited by the amount of xalAsset minted by the bridge on that chain.

   • Backing of xalAssets: xalAssets are backed by a combination of Mainnet alAssets (through bridging) and the yield sources specific to the Layer 2 chain.

Liquidity Dynamics and Asset Valuation

• Liquidity Creation and Distribution: This system facilitates increased liquidity on Layer 2 chains, ensuring that the primary IBNSCTrade deployment on Mainnet remains distinct and secure from Layer 2 activities.

• Value Comparison: Generally, xalAssets on Layer 2 are expected to hold equivalent or lesser value compared to their Mainnet counterparts. This stems from the unrestricted nature of bridging from Mainnet to Layer 2s, while the reverse bridging is contingent on existing liquidity.

Through this layered approach, IBNSCTrade effectively extends its innovative financial services to Layer 2 networks, ensuring seamless interaction across different blockchain layers while maintaining the integrity and value of its assets. This model not only enhances liquidity across the networks but also provides a secure and efficient way for users to navigate between Mainnet and Layer 2 environments.

IBNSCTrade's Ecosystem on Layer 2 Networks

IBNSCTrade Alchemists on Layer 2

• Loan Functionality: The loan system on Layer 2 chains mirrors that of the Mainnet. Each Layer 2 chain features its unique set of yield strategies, tailored to the specific characteristics and opportunities of the chain.

Transmuter Operations on Layer 2

• Transmuter Consistency: The Transmuter's function remains consistent across Layer 2 networks. Users can deposit xalAssets on Layer 2, which can be redeemed over time at a 1:1 rate for the corresponding underlying assets.

• Flow Dynamics: The flow of funds to the Transmuter on each Layer 2 chain depends on the specific yield generated on that chain.

• Bridging for Transmuter Deposits: Users can bridge alAssets from the Mainnet to Layer 2 to acquire xalAssets, which can then be deposited into the Layer 2 Transmuter.

Elixir AMO on Layer 2

• Functionality Across Chains: Wherever the Elixir AMO is present, its function on Layer 2 parallels that on the Mainnet. The AMO's backing is maintained in the alAsset liquidity pool and can be withdrawn as alAssets, as determined by governance directives.

Appendix: Connext Bridge Utilization

• Connext Bridge Role: IBNSCTrade employs the Connext xERC20 + Lockbox standard for bridging activities. Connext is the exclusive whitelisted bridge in the ecosystem, managing the secure transfer of alAssets and IBN tokens across Ethereum, Arbitrum, and Optimism networks.

• Bridge Security: The secure operation of the bridge relies on Connext’s system of cross-chain messages and the use of canonical bridges on Arbitrum and Optimism. Alchemix’s bridge contracts on each chain are under the direct control of Alchemix.

Multisig Admin Rights and Access Control in Alchemist Contracts

• Roles and Privileges: Alchemist contracts for alUSD and alETH facilitate the creation of collateralized debt positions. Each contract appoints specific roles with distinct privileges:

  1. Admin: Responsible for managing the list of supported tokens, adjusting parameters, adding/removing sentinels and keepers, transferring admin roles, and handling emergency measures like resetting the expected value of yield tokens.

  2. Sentinel and Keeper: These roles, while not elaborated upon here, play crucial parts in maintaining the contract’s integrity and operational efficiency.

IBNSCTrade's Layer 2 integration and comprehensive governance structure ensure a resilient and adaptable ecosystem, capable of thriving across multiple blockchain environments. This integration highlights the protocol’s commitment to innovation, security, and accessibility for its community across different blockchain networks.