With the crypto market heating up in recent months, new and old projects receive a lot of attention. This being also the case for EVM-compatible chains (L1), Sidechains to Ethereum and various Layer 2s. During these times, relevant information gets diluted with noise and reaching consensus around decisions of deployment on other chains or L2s gets harder.
For our protocol, it is in its best interest to focus on real data and analyse which deployments make sense. The two apparent extreme approaches are undesirable and would produce the worst outcome - this being to deploy everywhere (Shotgun or Sushiswap approach) or deploy nowhere. The optima lies somewhere in between.
This post is here to analyse relevant factors and suggest a framework to engage in a fruitful discussion with everyone.
First, we should discuss what are the current possibilities. For that, let’s set up categories and order them from the most relevant target to least:
- EVM compatible Layer 2 (e.g. Optimism, Arbitrum)
- EVM compatible Layer 1 (e.g. Binance Smartchain, Fantom, Avalanche)
- non-EVM compatible Layer 2 (e.g. StarkWare)
- non-EVM compatible Layer 1
- non-smart contracts platforms (Cardano lol)
Why this order?
Firstly, EVM compatibility should be the most important factor. A specialized Layer 2 or a Layer 1 that is not EVM compatible would add significant development hours.
Secondly, Layer 2s to Ethereum are the natural extension to the Ethereum ecosystem in which mStable is rooted and where mStable users are based in and therefore the prefered choice. Bridges enable natively easy access.
What should we consider as points when it comes to evaluating deployment opportunities? mStable as a protocol needs some prerequisites. Without it, it can’t add value to the ecosystems. Let’s analyse what are the most important ones.
- Are there at minimum 3 similar priced assets available (e.g. Stablecoins pegged to USD) to create a basket?
– Similar in market cap to avoid mispricing.
- Is there an established lending market for these assets (e.g. Aave) to generate some yield for SAVE?
– Ideally, 2 lending markets that are considered safe (Tier 1 and Audited)
- Ideal timing: Is there an established AMM Swap market but no Stableswap?
- Is there already an ecosystem to expand around (To avoid 100% of the mAssets being deposited in SAVE)?.
This post offers a framework approach to new deployment opportunities. This is intentionally kept high level to start a discussion and not to get lost in details.
I am very eager to hear what you think and if you think there should be more, less or any other considerations that are relevant.
Next steps: We should come to some consensus around this approach and start to evaluate the market conditions. Hopefully, then we can have a good framework upon which we can rely to evaluate the landscape.