Update on BOB stablecoin and zkBob private blockchain wallet

zkBob private blockchain wallet

The zkBob privacy project continues to evolve as changes in technology, usage trends, and the regulatory landscape help inform new directions for zkBob and the BOB stablecoin.

The project is shifting focus and resources to developing zkBob as a best-in-class blockchain privacy wallet. While BOB still remains important as a privacy-focused stablecoin, it has not seen the multi-chain traction we'd hoped for. The stablecoin space is crowded and competitive (ie PYUSD), and differentiation is difficult for smaller stables.

In this article we'll describe first some directions for BOB including inventory reductions and a new emphasis on BOB CDP stability. Then, we'll highlight some upcoming and exciting new features coming to the zkBob private wallet!

BOB stablecoin

Since project launch, the BOB stablecoin has performed as designed, maintaining its stability relative to USDC. Stability was impacted by the USDC depegging event (which also impacted many stablecoin protocols), however, BOB quickly regained its peg and has remained stable since.

Until recently, BOB was the only asset that could be transferred within zkBob. This was part of the initial design and worked well with users who were willing to trade for BOB before using zkBob. However, users consistently found this to be a blocker and there were many requests to trade other, more popular assets privately.

These requests opened the door to GP 14, a governance proposal where the primary BOB pool on Polygon was migrated to a USDC pool. Since the migration there has been an uptick in deposits, transfers and withdrawals, but it's too early to tell how much this will influence usage over time.

What has been made clear is that BOB is not required for zkBob to work properly and protect user's privacy. As a result, other tokens can be used with the zkBob wallet, excess BOB inventory can be reduced, and BOB stability can be maintained through the BOB CDP mechanism.

BOB stablecoin inventory reduction

BOB adoption as a stablecoin has been very slow on several chains. BOB inventory was increased on multiple chains with GP 7. However, usage on Arbitrum One and BNB Smart Chain has been sluggish with few users trading or using BOB.

As a result, GP 16 proposes to remove excess inventory of BOB on Arbitrum and BNB Smart Chain. Excess BOB inventory will be burned, but any BOB in active circulation on Arbitrum or BNB will still be available for use and trading purposes.

The overall marketcap for BOB will be reduced through this measure. Functionality, stability, and the ability to use BOB on chains with higher circulation rates will not be impacted.

BOB CDP stability model

As the BOB inventory model winds down, BOB CDP will step in to provide a mechanism for minting BOB from existing assets. BOB CDP is now active on Polygon and available for use. New LP and single asset collaterals for minting BOB are currently under consideration as usage increases. BOB CDP will provide the needed amount of BOB based on actual market demand, while eliminating the need for excess inventory.

zkBob private blockchain wallet

With the shift away from the BOB inventory model, more resources are moving into development of the zkBob privacy wallet. Here are a few features and plans for zkBob in the near term.

  • Private Links: Create a private link you can share anywhere while maintaining account privacy. The person you share it with can then send you ANY token using ANY wallet. They don't need a zkBob account, they just connect their web3 wallet and click send. This feature is arriving soon!
  • Integrations: Throughout the past year zkBob has been sponsoring hackathons all over the globe. During this process the team has developed a direct deposits feature as well as a new SDK. Developers have been using these tools to create some really cool integrations. We're now working with teams to add zkBob integrations to a private donation platform and a private CEX withdrawal Dapp, among others.
  • New chains: We have plans for zkBob private wallet deployments to 2 new chains. Ethereum mainnet is first, and we're gearing up for the first large-scale public ceremony for zkBob! It will be an exciting and important milestone for the project and decentralization. The 2nd chain is TBD, but will be one where privacy is highly valued by its users.

To position zkBob as a leader in blockchain privacy for all users, the protocol must evolve on a regular basis. These changes are a result of protocol analysis, usage insights, and community requests to update the protocol. We are excited for these improvements and other new and ongoing developments!

If you have any comments, questions or would like to get involved, please contact us in Discord, Telegram or the zkBob Forum.