Proposal: For Arbitrum DAO to register the Sky Custom Gateway contracts in the Router

Proposals
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Proposal: For Arbitrum DAO to register the Sky Custom Gateway contracts in the Router

Non-Constitutional

This is a draft proposal by SKY to request comments from the community, to correct and finalize this document before submitting to Snapshot for voting by Arbitrum DAO.

Abstract

SKY has launched support for USDS and sUSDS tokens on Arbitrum. This proposal requests Arbitrum DAO to register the Sky Custom Gateway contracts in the Router contracts to allow users bridging USDS and sUSDS through the official Arbitrum Bridge UI.

Motivation

SKY has formally introduced support for USDS and sUSDS tokens on the Arbitrum network, and Spark is set to soon launch Spark Liquidity Layer and Spark Savings (https://spark.fi). The Spark Liquidity Layer will deploy liquidity on Arbitrum to provide slippage-free liquidity for USDC, USDS, and sUSDS tokens natively through a Peg Stability Module (PSM). Arbitrum users will have access to this through Spark Savings (https://app.spark.fi/), enabling stablecoin holders to earn the Sky Savings Rate.

The Arbitrum Ecosystem’s Router contracts maintain a list of gateways used for bridging various L1/L2 tokens to/from Arbitrum. The Arbitrum Bridge UI relies on the routers for gateway information when bridging tokens. Currently, USDS and sUSDS tokens are routed through the default gateways rather than the Sky Custom Gateways. As a result, the Arbitrum team has disabled bridging USDS and sUSDS through the Arbitrum Bridge, creating a suboptimal UX. This means that users will have access to USDS and sUSDS on Arbitrum, and Spark will deploy liquidity there, however, they won’t be able to use the Arbitrum Bridge UI to transfer USDS and sUSDS to Arbitrum.

Rationale

This proposal seeks to update the Router configuration to utilize the Sky Custom Gateways for USDS and sUSDS tokens that are live on Arbitrum, ensuring users receive the official token versions when they use the Router contracts through the Arbitrum Bridge UI.

Sky Custom Gateway

The Sky Custom L1 Gateway on Arbitrum currently bridges USDS and sUSDS tokens from Ethereum to Arbitrum. Sky Custom Gateways are designed to enable Sky governance to extend support to new Sky ecosystem tokens in the future and also perform essential maintenance operations, such as bridge or token upgrades. Additionally, the Sky Custom L1 Gateway leverages a pre-deployed Escrow contract, which is also used by the DAI token, one of the first tokens bridged to Arbitrum.

Key terms

USDS – Stablecoin

sUSDS – Savings USDS (Stablecoin + Yield)

Specifications

Current Status

The Sky Custom Bridge, along with USDS and sUSDS tokens, is currently live on Arbitrum and available for end-user access. Additionally, Spark is set to deploy significant stablecoins liquidity (USDC, USDS and sUSDS) through the Spark Liquidity Layer and will launch Spark Savings, allowing Arbitrum stablecoin holders to access the Sky Saving Rate (available at https://app.spark.fi/) USDS address on Ethereum - https://etherscan.io/address/0xdC035D45d973E3EC169d2276DDab16f1e407384F

Deployment Details

We propose the execution of the setGateways method [1] on the L1GatewayRouter contract [2] on Ethereum for both USDS and sUSDS tokens. This action will register the official USDS and sUSDS tokens along with the Sky Custom Gateway contracts on the Router. Upon approval, the Sky team will collaborate with Offchain Labs to develop and submit an executable proposal for a DAO vote.

[1] https://github.com/OffchainLabs/token-bridge-contracts/blob/5bdf33259d2d9ae52ddc69bc5a9cbc558c4c40c7/contracts/tokenbridge/ethereum/gateway/L1GatewayRouter.sol#L208

[2] https://etherscan.io/address/0x72Ce9c846789fdB6fC1f34aC4AD25Dd9ef7031ef

Overall Costs

There are no direct additional costs associated with this proposal.

10 Likes
2

Hey Spike, thanks for putting this proposal forward. Integrating USDS/sUSDS into the Arbitrum Bridge UI could benefit both Arbitrum and Spark by providing users with alternatives to centralized stablecoins and strengthening Arbitrum’s position as a DeFi hub. I’m supportive of this direction, but I’d like to dig deeper into a few key points to ensure we’re aligning incentives and mitigating risks:

  1. Have Sky’s custom gateway contracts undergone third-party audits, and what contingency plans exist for emergencies (e.g., exploits)?

  2. How will governance over gateway upgrades be balanced between Sky and the DAO? Delegates need assurance that the DAO retains oversight if conflicts arise.

  3. Is there any issue for existing users who already bridged via default gateways? Would they have to migrate to any other token?

1 Like
3

From our perspective, this seems like a largely harmless proposal. We’ve done something similar before with the Rari protocol in the past. There may need to be an audit conducted from the AF after/before the temperature check goes live if we follow the process established from last time

3 Likes
4

Thank you for a very straightforward proposal. I like Spark.fi dapp. I have been using it for some time and like how they brought the CeFi experience to DeFi. I would love to see support for Arbitrum chain there.

This proposal doesn’t require any funds, but it does require technical work done by Offchain Labs and the Sky team. Are both entities aware of this proposal? Are they willing to do the work to execute on this proposal?

1 Like
5

Thanks for this proposal - it is a welcome development. Sky is one of the better products in the ecosystem. For a while now there has only been support for USDS / sUSDS tokens on Ethereum and Base or so, (at least from the Spark / Sky frontends). It will also be great to have Arbitrum in the mix.

1 Like
6

Hey, yes there are aware of the proposal, we ran by them the final draft before posting it on forum.

3 Likes
7

Thanks for the proposal—this looks like a win-win. I want to echo the audit sentiment and ensure we don’t run into any issues.

Is the Sky team committed to maintaining and upgrading this integration if needed? For how long? Long-term support is key to ensuring this remains a reliable and efficient solution for the Arbitrum ecosystem.

If yes, this integration seems like a solid step forward.

8

I am not very savvy in the technical part, but if it is safe and does not carry any additional risks in itself, then why not. Arbitrum users will get an additional opportunity to earn. This is great! And it does not carry extra costs from the DAO budget. So if the contract audit is successful then of course it needs to be done.

9

It seems that the news is already out. Arbitrum support is already live. :raised_hands:

Sky: https://x.com/SkyEcosystem/status/1896957839882829892

Spark: https://x.com/sparkdotfi/status/1896955638468804936

2 Likes
10

Those announcements are saying that from SKY side - gateway is working as intended, now in turn Arbitrum has to make an update to their router.

We are working to address all pending question from the community.

2 Likes
12

Thanks for the proposal @spike_stablelab

I see no reason we don’t move forward with this proposal, as there will be many benefits for users to use both products, especially the savings one. If Arbitrum believes this is safe, I am fully onboard to support the proposal.

1 Like
13

Hi @spike_stablelab, Thanks for the proposal. It looks reasonable at first glance.

Just to clarify, since the Sky Custom Gateway is already live, this proposal is only about registering the contract in the Router, correct?

Is the contract being registered in the Router a standard (already used somewhere else) gateway contract, or is it a custom one?

14

Interesting proposal @spike_stablelab. Echoing what the others have mentioned about the auditing and upgrading process that registers the Sky contracts, but wanted to also request some elaboration about the implementation timeline. And to mitigate any risks, is there any proper backup plans (as @0xDonPepe pointed out)?

1 Like
15

Thanks for the proposal, @spike_stablelab!

It’s no brainer to execute the registrations of USDS and sUSDS tokens since Arbitrum already has registered DAI as well and the relevant parties have already been in sync. Consider there was a case from Rari and now Sky, we could consider standardizing the process of requesting the registration of tokens as we anticipate similar questions arise from the delegates for each proposal like this.

1 Like
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hi @spike_stablelab

We do not see any issues with registering Sky’s Custom Gateway contracts in the Router as long as OffChain Labs and/or the Arbitrum Foundation has given the green light after reviewing and validating the contract audit reports.

1 Like
17

I’ll support this proposal since I don’t see any big risks or extra costs for the DAO. I’m not super technical too, but I can see that this will make bridging USDS and sUSDS smoother for users through the official Arbitrum Bridge.

Better UX is always a win :slight_smile:

19

Thanks for putting this up @spike_stablelab.

If this goes live, the DAO can revoke or modify the registration if needed right?
Just want to confirm there is DAO oversight over the Sky custom gateway contracts if/once it is registered.

Also, we would love an answer to this

1 Like
20

Overall, the proposal is clear. Thank you.
Considering the lack of cost, I see no reason not to do it.

However, I would be glad if you could answer a question:

  • How important is it to use the native Arbitrum bridge, since there are many third-party bridges for these purposes? What is the advantage, since there is a 6-day delay for withdrawals?
21

Assuming this proposal passes the technical audit from the security risk manager, at this stage we plan to support this proposal.

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Thank you everyone for your questions, I hope they will be well addressed

We’ve had the code for the Sky custom gateways audited by ChainSecurity and Cantina. If you’d like to dive into the details, you can check out their reports here:

https://github.com/makerdao/arbitrum-token-bridge/blob/master/audit/20241009-ChainSecurity_MakerDAO_Arbitrum_Token_Bridge_audit.pdf

https://github.com/makerdao/arbitrum-token-bridge/blob/master/audit/20241023-cantina-report-maker-arbitrum-token-bridge.pdf

On top of that, we also used Certora to formally verify the code. You can explore all the formal verification specifications here:

https://github.com/makerdao/arbitrum-token-bridge/tree/master/certora

Sky Ecosystem maintains a set of general emergency response procedures to handle urgent situations like exploits. While this document isn’t gateway-specific, you can view the Sky Atlas Emergency Response System, maintained by Powerhouse, here:

https://sky-atlas.powerhouse.io/A.1.8_Emergency_Response_System/a1c2d773-f5f9-4e17-9da4-edd82ea4140b%7C0db3

Custom gateways are operated by Sky Ecosystem and its governance, so Arbitrum DAO doesn’t have a direct role in their operation or upgrades. However, Arbitrum DAO retains full authority to list these custom gateways—and can revert to the standard gateway on the Arbitrum Router contract at any time—without needing approval from Sky Ecosystem.

Users are not going to lose any funds. If a user already bridged their Arbitrum USDS or sUSDS through the default gateways, they’ll need to send those tokens back to Ethereum first, and then bridge them again using the custom gateways.

Yes

Sky Ecosystem has added upgradeability to both tokens and gateways to be able to add new features as needed later on. We can’t comment on the future roadmap for the Sky Ecosystem (since it’s decentralized), but these custom gateways should be maintained as long as the tokens exist on Arbitrum, since they were all deployed by Sky Ecosystem as an integrated stack. Plus, there’s very little maintenance required because the gateways rely on Arbitrum’s native messaging layer.

Correct

It’s a set of custom gateways on Ethereum and Arbitrum, but it’s built on the same foundations as the existing ones. Under the hood, it still uses Arbitrum’s native cross-chain messaging layer—just like the standard gateways. The Sky ecosystem has already deployed custom gateways for DAI in production for years, so the approach is definitely tried and tested.

We’ll be sharing more details about the implementation timeline soon. Since this has been done before in other comparable proposals, like the one for RARI, we’ll stick to previously tested approaches and also review prior discussions to incorporate any learnings.

It seems that this issue needs to be decided by Arbitrum DAO members, rather than Sky or any other third party.

Arbitrum DAO oversees the Router contract and can update the gateways for any L1 token—including USDS and sUSDS—at any time. Meanwhile, the custom gateways and the tokens themselves remain under the full control of the Sky Ecosystem and its governance.

Please see answer above for 0xDonPepe.

A native bridge that relies on the native messaging layer is always good to have. Native withdrawal delays shouldn’t pose any issues for USDS or sUSDS holders, thanks to the complete setup that the Sky Ecosystem achieved with Spark! The Spark Liquidity Layer maintains USDC liquidity on Arbitrum, which can be replenished on demand. This allows USDS and sUSDS holders earning yield to easily switch to USDC at any point on Arbitrum, and then use Circle CCTP or other fast withdrawal solutions to move their USDC back to Ethereum.

4 Likes