Crossing the Rubicon: May Development Update

The march towards mainnet continues. Updates on layer 2, a new team member (!), and more.

It is now June, which means the Summer of Scaling™ has officially begun. We are seeing amazing progress from the teams working on Ethereum layer 2 solutions, and we at Rubicon can do nothing but rejoice at the amount of excitement and support the community is showing these teams. We have a beautiful decentralized network, Ethereum, to act as the global settlement layer for finance. Now 2021 is scaling the network to take us from a few million users to a few billion - Rubicon is prepared to be the killer application that leverages these network improvements and brings them to the masses.

Rubicon Layer 2 Integration(s): Live on Optimism Testnet!

As you may know by now, the first layer 2 solution we are integrating Rubicon on is Optimism. If you are not familiar with Optimism or optimistic rollups, we encourage you to check out this great post from Georgios Konstantopoulos, where he explains blockchain resource constraints from first principles, building upon those foundations to introduce layer 2 scaling and how optimistic rollups offer a solution. It’s a fantastic read and no matter your level of knowledge it’s a great introduction to layer 2 scaling.

We are thrilled to announce that Rubicon is live on Optimism’s Kovan test network! Our beta application is live as of today, so go try out layer 2 Rubicon trading for yourself on the Optimism testnet. Transactions on Rubicon using Optimism’s scaling solution cost cents and take milliseconds. You can check out our various smart contract deployments for yourself here (we are still working on getting our Optimism contracts verified - a side effect of being one of the first projects on Optimism’s testnet is that some things move slowly and processes are still being formed!). Once again, please try out our app on Optimism today! If you have any questions or feedback, please feel free to pop into our Discord channel for real-time support from our team.

If you are using MetaMask as your wallet, you can one-click connect to this new network on our app, as seen above. Note: Currently, transactions on the Optimism testnet are set to 0 gwei (no cost), so you do not need any ETH on the testnet to use Rubicon. This differs from Optimism’s mainnet, where the (greatly reduced) fees are paid in ETH and are needed to transact on the network.

In other news, we were very excited to see Optimism partner with Etherscan as a block explorer. It’s very important that users can see the technical “anatomy” of their transactions on-chain, and Etherscan is a clear leader in providing users transparency on the underlying blockchain infrastructure. Moreover, we added Etherscan links on our History feature on the Rubicon app so you can easily view the details of any of your past Rubicon trades.

Rubicon Application Updates

Most of our time in May was spent improving the Rubicon application and preparing the protocol for layer 2 integrations. We now support what we see as the leading Ethereum wallets, adding support for WalletConnect, and we will continue to add more! Adding WalletConnect means that over 60 new wallets and applications can interact with the Rubicon app by simply scanning a QR code. See a list of wallets using WalletConnect here.

In addition to wallet improvements, we upgraded our order books to allow for real-time updating of on-chain activity and iterated our core trading functionality. If you are using our app and want to see a new feature, let us know. We welcome all input and criticism on how to improve Rubicon!

Looking forward: EVM Compatibility

At the beginning of DeFi’s explosive 2020, it was undisputed that Ethereum mainnet was the network that hosted almost all of this financial revolution. Towards the end of the year, we saw the rise of alternative destinations for users and capital in the DeFi ecosystem, whether it be entirely separate blockchains (Binance Smart Chain, Solana), sidechains (Polygon, Fantom, xDai), or layer 2 solutions (Optimism, Arbitrum, zkSync, Starkware). If we can point to one catalyst for the adoption of these networks, it is certainly the rising transaction fees on Ethereum. Especially towards the end of the year, fees were getting so high that it was beginning to prevent efficient financial markets, and retail users were starting to be priced out, or even off of Ethereum.

Each of the networks listed above is unique and carries with it different security assumptions, and we encourage you to do your own research before using any of them. But many of them have one thing in common, that we feel is an untold catalyst for their explosive growth: EVM Compatibility.

The EVM, or the Ethereum Virtual Machine, is the leading software standard for smart contract development and the bedrock of Ethereum itself. There is a massive amount of learning that can be done about the EVM, but for the sake of this article, the most important thing to understand is that other networks can be EVM compatible. This means that developers can have a relatively seamless transition moving their Ethereum smart contracts and users onto another network that may provide added benefits like throughput and cost. It also allows users to flow nicely between different networks since wallets like MetaMask have functionality for easy switching between EVM-compatible networks.

Zooming out a bit, if you are building a network, making it EVM compatible is a way to dramatically reduce switching costs for both developers and users. Not yet sold on its significance? Let’s take a look at the largest EVM compatible blockchain (apart from Ethereum itself), Binance Smart Chain (BSC), compared to a similar competitor, Solana, which is not EVM compatible.

From a technical perspective, BSC is just a fork of Ethereum that changed a few parameters to make transactions cost next to nothing and implemented a central set of validators (Proof of Authority), rather than following Ethereum and using a decentralized network of validators (Proof of Work). Solana uses completely novel tech, using a Proof of History method (functionally similar to Proof of Authority but not identical) which allows for extremely low transaction fees and a high throughput blockchain. Both are backed by a centralized crypto exchange with a large user base, BSC by, well, Binance, and Solana by FTX. Solana has been at market much longer than BSC, but BSC’s EVM compatibility allowed them to quickly onboard users and developers, and outperform Solana on almost every single metric. Of special note, as of writing, Binance Smart Chain is valued at over $60 billion.

TL;DR on the above, Solana had the time advantage and the tech advantage, but BSC came to market with very low switching costs and saw absolutely insane growth. We are beginning to see a similar story unfold with Polygon, an EVM-compatible sidechain that brands itself as “aligned with Ethereum” and uses Ethereum for security checkpoints. As of now, Polygon is growing even faster than BSC did and is also starting to pass Solana on numerous on-chain metrics.

So how is all of this relevant to layer 2? After all, separate blockchains and sidechains introduce different (read as weaker) security assurances than Ethereum does, but layer 2 networks use Ethereum layer 1 for security. From an EVM compatibility perspective, layer 2 networks function just like other blockchains and sidechains. They are also separate networks from Ethereum that seek to gain traction with users and developers (although, unlike the other chains, layer 2’s are focused on scaling the underlying base layer of Ethereum, and they use ETH as the currency to pay transaction fees). In light of Ethereum’s rollup-centric roadmap for scaling, current Ethereum activity will essentially be fragmented across different L2 solutions.

Layer 2 teams are arguably some of the brightest and most talented people in the space, and every solution comes with its own set of pros and cons. Based on what we can observe from the last few months, we believe that a layer 2 solution’s EVM compatibility will be one of the more significant factors for its adoption with both users and developers. In a vacuum, we will favor platforms that have low switching costs even compared to a platform that may have some technical advantages, but higher switching costs. Ultimately we have decided to prioritize deploying Rubicon on EVM compatible scaling solutions before we pursue any others.

We do not know how the layer 2 scaling wars will end, but based on the evidence we have seen so far, EVM-compatible networks lend themselves to explosive growth, whereas those who are not EVM-compatible have a more difficult time winning over users and developers. As a layer 2 native project, it is our job to find the best home for Rubicon across all of these different networks. With this in mind, we think an optimal layer 2 strategy for Rubicon will be deploying our protocol on every EVM-compatible layer 2 that we can. Right now, our core development team is focused on perfecting our Optimism deployment, but as soon as the groundwork is laid for both our protocol and our application to thrive on Optimism, we will focus on integrating with other scaling solutions.

We cannot express how excited we are to share our work with the world, as we have said before we think Rubicon Pools has the potential to completely rework the market structure in decentralized finance (but perhaps we are a bit biased). The Summer of Scaling™ has started, and Rubicon is coming soon to EVM-compatible networks near you!

New Rubicon Team Member! We are hiring!

During May, Rubicon gained its first full-time team member apart from our founders. Please give a big round of virtual applause to Otavio Madalosso! Hailing from the sunny shores of Brazil, Otavio is an experienced software engineer who will lead the Rubicon team in scaling our web application and integrating Rubicon with layer 2 solutions. He has already made a huge impact on our team and we are lucky to have him; from our first meetings with him, Otavio bought great ideas to the table that have already found their way into our core product.

We are hiring! If you want to join a passionate team working on the cutting edge of decentralized finance, and you want a place where you will be a decision-maker and have total agency in your work, get in touch with us. You can follow us on Twitter, check out our blog, join our Discord server, and Telegram where you can keep up with our team day-to-day. And if you are inclined to check out the Rubicon protocol yourself, you can review all of our contracts on our Github. You can also reach us at contact@rubicon.finance

Alea iacta est.