SIP-214: Add OIL on Optimism
| Author | |
|---|---|
| Status | Draft |
| Type | Governance |
| Network | Optimism |
| Implementor | TBD |
| Release | TBD |
| Created | 2022-02-27 |
Simple Summary
Add oil as a synth on Optimism.
Overview
This SIP will add oil as an individual synths on Optimism. This SIP proposes to name the synth sOIL. This SIP will also make oil shortable on Optimism.
Motivation
Listing commodity synths like oil on Optimism will benefit the Synthetix "ecosystem" by adding a new asset category alongside crypto synths. The ecosystem partners (eg. Lyra and Kwenta) can strengthen their value proposition and drive additional volume through the Synthetix protocol.
Rationale
The need for commodity synths, such as oil, was expressed clearly by various community members in the Synthetix discord channel #new-synth-additions. Adding commodities makes sense given their "safe haven" nature and popularity among traders during market turmoil.
Commodity synths were phased out during the Wezen release https://sips.synthetix.io/sips/sip-169/) on L1 with the intent to re-add these synths later on Optimism. Front running risks and high trading fees were important reasons for phasing out commodity synths on Ethereum mainnet; however these issues have been mitigated sufficiently on Optimism.
Depth and volume The market depth and volume for oil reasonably poses no risk with regards to price manipulation given the market's size.
Specification
The synth (sOIL) will be implemented using Chainlink OCR aggregators on Optimism by the use of a non-expiring Crude Oil Index based on ICE Brent Crude Oil futures prices.
The synths will be made shortable via the CollateralShort contract by calling CollateralManager.addShortableSynths.
Copyright
Copyright and related rights waived via CC0.