Proposal to reduce size of the Inventory pools for BOB

Following the successful migration of the zkBob BOB pool on Polygon to USDC we are proposing a second significant change for the zkBob protocol. We propose shifting from the current stability model, in which the BOB stablecoin peg is maintained through inventory and BobSwap pairs, to utilizing the BOB CDP mechanism to maintain the stability of the BOB token.

The BOB CDP module is currently available on Polygon and uses various types of on-chain collateral to mint over-collateralized BOB tokens as debt. More information on BOB CDP is available at About - BOB.

Although this change will most likely result in an initial reduction of BOB stablecoin liquidity, we believe it is a step in the right direction for long-term stability and growth. This change will make the BOB token more decentralized and resilient in case of market turbulence as it won’t rely only on a single collateral - USDC. It will also promote the use of the BOB CDP module (https://cdp.zkbob.com/) which will undergo additional improvements including explorations into new LP and single asset collaterals for minting BOB.
It will also positively influence zkBob as more resources, which would otherwise be spent on the adoption of BOB stablecoin, can be put toward the zkBob. This can help to grow the adoption of zkBob much faster.

Due to the nature of the current inventory pairs, circulating supply, and BOB’s 1:1 backing to USDC through Uniswap v3, if you currently hold BOB, you can always swap it back to USDC 1:1 on Uniswap v3, at any time now or in the future.

Another result of this proposal, if implemented, will be a significant reduction of BOB liquidity on Arbitrum and BNB Chain, where BOB usage is minimal. The next logical step will be to then migrate the zkBob BOB pool on Optimism to USDC following the successful migration on Polygon. This will create cross-network parity for zkBob pools and promote standardized, private usage for assets.

Please let us know your comments/concerns/questions/ideas in the comments.

Thank you,

zkBob Team

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Almost a reverse MakerDAO, going from an USDC “PSM” to CDP backing. :sweat_smile:

Is the goal to phase out BOB gently?

Is the goal to phase out BOB gently?

BOB’s position in the zkBob ecosystem might change. We see that users very much prefer pools with big, established, liquid tokens - hence the move to USDC and ETH. But CDP is live, working as intended and can be expanded if more resources are directed towards it.

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The proposal has been successfully executed.

Official announcement: https://twitter.com/zkBob_/status/1697288192859263236

More info about all actions taken: GP 16: Remove excess inventory on Arbitrum and BNB Smart Chain - BOB