After the successful implementation of GP16, which removed excess inventory on Arbitrum and BNB Smart Chain, we propose a second similar action for zkBob Privacy Wallet. With this proposal, we aim to remove excess BOB on Ethereum Mainnet and Optimism.
At launch, the BOB stablecoin was required for the zkBob Protocol. The first iteration of zkBOB included a single BOB pool on Polygon. The second BOB pool on Optimism followed shortly, but the usage of this BOB pool has not seen much adoption, providing little utility for users.
Since the initial launch, protocol governance migrated the BOB pool on Polygon to USDC, bringing more traction for this pool and reducing the need for BOB liquidity even further. Currently, the only zkBob BOB pool is on Optimism, and as BOB stablecoin has not received significant traction, there is little need to maintain deep liquidity for BOB. (Current pool size is less than 10K BOBhttps://dune.com/zkbob/zkbob)
Reducing BOB liquidity on Ethereum and Optimism will also make it easier for the team to devote resources to the zkBob protocol itself. Switching focus away from the stablecoin and more towards the privacy and compliance aspects of the zkBob Privacy Wallet opens up room for more innovation and focus. We hope this change will help grow the usage and adoption of zkBob and make the protocol more usable for users and other projects.
If this proposal is enacted:
Excess BOB inventory will be reduced on Optimism and Ethereum Mainnet.
BOB onchain liquidity will remain sufficient for all users/holders on Optimism or Ethereum to swap BOB to USDC at a 1:1 rate at any time.
The zkBob BOB pool on Optimism will be retired after 3 months. It is recommended users withdraw from this pool within the 3 month window. Following 3 months, any users can withdraw via forced exits from the contracts, but this method is less convenient.
Please let us know your comments/concerns/questions/ideas in the comments.
But instead of retiring the zkBOB BOB pool on optimism, wouldn’t it be better to migrate it to USDC, just as was done on Polygon?
P.s. In your proposal from Aug 1st, you wrote just this:
“The next logical step will be to then migrate the zkBob BOB pool on Optimism to USDC following the successful migration on Polygon.”
source: Proposal to reduce size of the Inventory pools for BOB
But instead of retiring the zkBOB BOB pool on optimism, wouldn’t it be better to migrate it to USDC, just as was done on Polygon? / Did anything change since?
Considering how long this pool has been deployed, our unsuccessful grant application for OP growth grants, and that we were unable to have a lot of support from the Optimism team for zkBob. We now feel like the better approach is to retire this pool and rather focus on the ETH pool which by its traction clearly indicates that OP users prefer it over the BOB pool. It will also help us to consolidate resources and focus more on chains and pools with more potential for growth. We are currently aiming to deploy a new zkBob pool on the ETH mainnet.
It didn’t have traction because it was a BOB pool. A USDC pool would likely have more traction.
From a user perspective, it’s suboptimal to have to switch chains merely for wanting to use another token. For instance if you want to withdraw some ETH from the ETH pool, exchange it to USDC and deposit that in the USDC pool, you now have to bridge it to another L2.
But I understand that splitting say USDC over two pools may potentially reduce the size of the anonymity set, resulting in two smaller pools instead of 1 bigger one.
It didn’t have traction because it was a BOB pool. A USDC pool would likely have more traction.
I partially agree with this argument as BOB is definitely creating a barrier for users to use the protocol. But Polygon stats and overall usage of the chain say otherwise. There are fewer active users on Optimism than on Polygon. Switching the Polygon pool brought some additional usage but it didn’t impact it significantly.
What is more interesting for the protocol than retail users are integrations with 3rd party protocols which have the ability to bring much more usage for whatever pool. If there is such integration and there is a need to deploy whatever pool on whatever chain such thing will be hugely prioritized.
From a user perspective, it’s suboptimal to have to switch chains merely for wanting to use another token. For instance if you want to withdraw some ETH from the ETH pool, exchange it to USDC and deposit that in the USDC pool, you now have to bridge it to another L2.
There can be such cases where it might be very inconvenient but I feel like users generally use the protocol because of the chain where it is deployed, where they interact with protocols daily, and where they have their funds and not because they want to use just this one specific token for the action. On OP the most convenient pool is arguably ETH being the native token of the chain.
But I understand that splitting say USDC over two pools may potentially reduce the size of the anonymity set, resulting in two smaller pools instead of 1 bigger one.