Disconnect from Chain

What Is "Disconnect from Chain"?

The Disconnect from Chain feature allows users to remove a blockchain from their unified cluster within the Soul protocol. This operation reverts the connected chain to default behavior, fragmenting the unified liquidity and borrowing power. While this provides flexibility for users to manage their assets independently, it also comes with the critical implication of breaking the unified capital structure of the cluster.

How It Works

• When a user disconnects a chain, the cross-chain functionality for that specific blockchain is deactivated.

• This effectively removes the chain from the unified cluster, isolating its collateral and borrow positions.

• The user's assets and liabilities on the disconnected chain are no longer aggregated with those of other chains in the cluster from which it has been disconnected.

• This fragmentation means that borrowing limits will now be calculated separately for each chain, potentially reducing borrowing capacity.

Technical Explanation

• Users execute the disconnectChain function on the Controller smart contract that currently manages the chain they intend to disconnect. This action notifies the protocol to stop considering the chain as part of the cluster.

• The Controller removes all references to the user's collateral and borrow balances of the disconnecting chain.

• The corresponding Controller on the disconnecting chain reverts to managing the user's positions locally.

• Once disconnected, the user's cluster borrow and liquidations limits are recalculated without the assets or liabilities of the removed chain.

• If the user's borrowing activity was heavily reliant on the cluster's unified liquidity, this may result in a lower borrow and liquidation limits.

• Like all Soul operations, disconnecting a chain does not involve transferring assets. Positions remain securely locked in their original chains and base protocols.

Example: Disconnecting a Chain

• Has a cluster with Ethereum (holding 5 ETH as collateral) and Polygon (where she holds 0.1 WBTC and has borrowed 3,000 USDC), both managed by Ethereum Controller.

• Decides to disconnect Polygon from her cluster.

• Alice executes the disconnectChain operation for Polygon in the Ethereum Controller.

• Polygon is removed from the Ethereum cluster, isolating its borrow position from her Ethereum collateral.

• Since her ETH collateral on Ethereum no longer supports her USDC borrow on Polygon, Alice's Polygon position is now evaluated independently.

Important Warnings

Benefits and Use Cases

While disconnecting a chain can have significant implications, it provides users with flexibility:

• Users regain control over individual chains, allowing them to manage their assets separately.

• Users can restructure their clusters by disconnecting certain chains and reconnecting others.

Transparency and Monitoring

Soul ensures transparency during the Disconnect from Chain operation:

• Real-Time Updates: Users can see immediate changes to their borrowing limits and risk profiles.

• On-Chain Visibility: All changes are recorded on-chain, allowing users to verify the operation and its effects.

The Disconnect from Chain operation provides flexibility for users to manage their DeFi strategies, but it should be executed with caution. By fragmenting liquidity and disassembling clusters, this operation can significantly impact borrowing power and risk levels. Soul empowers users with the tools and transparency to make informed decisions in managing their cross-chain portfolios.