Rubicon Version 2.1

Meta Summary

The Total Value Locked (TVL) of Rubicon has fallen significantly since the deprecation of the V1 contracts. Rubicon has casts its die in favor of an Individual Market Maker design for Liquidity Providers. There are a lot of reasons that this is a great idea, but I do not believe it is a great stand alone idea except where there is trusts between parties. Individual Market Making is successful with competition, and the competition ought to be Rubicon’s unique & revolutionary Automated Market Maker with Single Asset Liquidity Pools.

Summary

Augustus Caesar proposes the addition of Rubicon V1.1 Liquidity Pools, with upgrades if necessary for security purposes alongside the Rubicon V2 Trading.

Abstract

Decentralized Finance was created to destroy intermediaries. Here, code is king, but in chess the king is simple, and requires protection. Who protects the king? The Queen. And here, the Queen is economics. Economics is an expansive field, but here we will focus on behavior.

In my youth, I thought traders brought liquidity, but as I age in DeFi I realize that liquidity begets traders. So the question that we must ask is what brought liquidity providers to Rubicon in the first place. The answer is simple. Rubicon’s Legions stand firm protecting Liquidity providers from impermanent loss with Single Asset Liquidity Pools.

Liquidity could be easily be attracted from competitors on Optimism and likely Arbitrum as well because of the innovative Single Asset Liquidity Pools provided by Rubicon.

The current advancement is very intelligent in that it eliminates impermanent loss as makers put up both sides of the liquidity pair to complete swaps. Rubicon keeps it promise, but I assume that it has become too cumbersome for the average liquidity provider to participate in this market. I know enough about humans to know few keep going when the going gets tougher.

This proposal would reintroduce the Bath Tokens we all know and love to Optimism, and now Arbitrum, for Liquidity Providers to swarm and support traders. There is one obvious question for me.

What happens to the Rubicon V2 Individual Market Makers? They exist to compete with the Automated Market Maker of the Liquidity pools. Will they win out? Of course, if the code is well, economics will nudge traders to the superior technology which is the Individual Market Maker. Why?

Slippage. The AMM will not be as creative as the IMM might be to reduce slippage. If a trade is easier on the IMM, the site UI/UX should nudge users toward it. If Makers want volume they’ll have to work their code to ensure it is efficient enough to provide a better swapping experience than the AMM.

It is very easy to forget that Liquidity begat Traders. I think it is worth recanting. Very few Decentralized Exchanges deprecate their V1 app, launch a V2 app and then grow. It is important to remember why. Users love what they know and walking (virtually) by the V2 application offers different incentives and it garners usage.

Specification

If approved this proposal would open V1.1 liquidity pools to bring more volume to the Rubicon DEX.

Implementation

If this proposal passes, a member of the team will check the Version 1 contracts for bugs and then reopen them for deposits as V1.1.