Energy ETH

Purpose

This project was intended to be version 2.0.0 of Ozel (docs), but its efforts were halted at the moment due to a shift in the priorities of the system. Ozel is trying to be a trust-minimized concept with the least amount possible of offchain dependencies, and the original vision of Energy ETH was requiring some serious offchain efforts for it to be a reality.

Vision

Energy ETH is an index composed of Ether (ETH) as the base price (basePrice) of the asset, and which primarily defines its behavior + the price action of Gold and WTI Crude Oil, which are both multiplied by Chainlink's Crypto Volatility index in order to amplify these differences and create a more influential performance.

The price action of boths assets (XAU and WTI) is then combined and added to basePrice (which is ETH) to then form a new asset, that acts as an index, with an unique market behavior, and that it's heavily influenced by the commodities and energy markets. Hence, the name: Energy ETH.

Current State

This project, at the moment, is a very raw proof-of-concept, that haven't been polished nor tested for production, but it's worth noting that the price feed itself (eETH), the one described below, WORKS without issues.

The project, like Ozel v1, would be deployed to Arbitrum One.

Business & Logical Specs

When getting the price of eETH, the following flow happens:

• The current and previous values for XAU and WTI are queried.
• The current value of ETH is queried (basePrice).
  • Its original source is Uniswap v3's spot TWAP oracle of the ETHUSD 0.05% pool with 10 seconds of time-weighted means, but there's an anti-manipulation mechanism in place that if the difference of Uniswap's oracle and Chainlink's previous price update is bigger than 5%, then it defaults to the Chainlink's price feed for ETHUSD as basePrice.
• The previous value of ETH is queried.
  • For the check mentioned above.
• The net differences between the current and previous price updates for XAU and WTI are calculated independently, elevated to a 100% percentage scale, the result multiplied by Chainlink's Crypto Volatility Index, and the product of each set of operations (one for XAU and oe for WTI) are added together, and then combined to basePrice.
• eETH's price can be lower than ETH's if the price fluctuation of XAU and/or WTI is negative between Chainlink updates.
  • Since this is raw PoC implementation, the formula for calculating eETH can be improved to only allow positive fluctuations.

This gives us an asset that follows ETH trend, but it diverges towards its own price action due to the influence of XAU and WTI.

Technical specifications

• It's an extension of Ozel v1's Diamond pattern (EIP-2535), in the sense that it's an upgrade done through the diamondCut() function described in the specs of the EIP.
• It uses the following Chainlink price feeds (on Arbitrum One) for calculating eETH:
  • ETH/USD: 0x639Fe6ab55C921f74e7fac1ee960C0B6293ba612.
  • XAU/USD: 0x1F954Dc24a49708C26E0C1777f16750B5C6d5a2c.
  • WTI/USD: 0x594b919AD828e693B935705c3F816221729E7AE8.
    • The actual feeds from above are not used themselves since the project is not live in Arbitrum mainnet, but it does use mocks that comform to the AggregatorV3Interface specs, which is the interface used by Chainlink's price feeds.
  • Volatility Index: 0xbcD8bEA7831f392bb019ef3a672CC15866004536.
• It uses Uniswap's TWAP spot oracle of the ETH/USD 0.05% for the calculation of basePrice.
• Permit2 is used to be able to mint new eETH tokens without an approval.
• It also has the possibility to add more assets/prices to the calculation of eETH due to the upgradeability of the system.

Running the PoC

If you want run the Foundry test that shows the values for eETH as an index and the sub-values that it's made of:

• Pull the proper Docker image with docker pull dnyrm/energy_eth_logs:0.0.2.
• Run the Docker container with docker run -it dnyrm/energy_eth_logs:0.0.2.
• The test that's ran is test_logPrices() from the file EnergyETH.t.sol.
• This would be the output:

Running the tests

If you want to run the basic tests the prove that the system is functional, do these:

• Pull the proper Docker image with docker pull dnyrm/energy_eth_tests:0.0.2.
• Run the Docker container with docker run -it dnyrm/energy_eth_tests:0.0.2.