The first version of Rubicon Pools is winding down. All seven liquidity pools have entered Withdrawal-Only mode and tokens are no longer being utilized on the order books. The Deposit button was removed and users are encouraged to withdraw their funds at app.rubicon.finance/pools:
The good news is that deprecating these liquidity pools is one of the first steps in our transition to Rubicon V2! Look out for more news in the coming days and weeks on our media channels regarding the next version of Rubicon 👀
Rubicon Pools was a novel liquidity mechanism that launched on Optimism in September 2021. Passive liquidity providers (LPs) could deposit tokens into single asset pools where active liquidity managers (strategists) used the tokens to provide liquidity by market-marking on the Rubicon order books. Returns from market-making were passed on to the LPs while strategists earned a performance fee.
Pools V1 helped to address Rubicon’s cold-start problem by bootstrapping liquidity on the order books while also giving thousands of users access to market-making returns. The liquidity pools peaked last month at more $15 million in Total Value Locked (TVL) and are responsible for providing liquidity or ‘making’ for more than $30 million in trading volume.
While Pools V1 was live, one thing became apparent to both our community and our team: passive liquidity is a myth. Passive players in an active marketplace expose themselves to lots of toxic flow and will have negative returns. In a sense, the only true form of “passive” liquidity is lending.
While the intentions of Pools V1 were noble: democratize liquidity-providing through a system that has clear roles and balanced incentives for passive suppliers and active managers; the implementation left much to be desired with users exposed to directional risks, trust compromises within the strategist setup, and some liveness issues.
Last year, our team set out to reshape the relationship between the Rubicon order book protocol and the liquidity pools. This new system needed to be capital efficient, trustless, and secure…
Over the past few months we have been heads down building the next generation of the Rubicon protocol. Rubicon V2 combines two powerful DeFi primitives to form an efficient and secure foundation for Rubicon to become the world order book. We’re excited to share more soon, keep a look out on our social platforms!
Alea iacta est.
(This post is for educational purposes only. Nothing in it should be construed as financial advice. Do your own research before making investments.)