SIP-XXXX: Proposal for Sovryn to Launch on BOB Chain

Author: BOB

Summary

This SIP proposes the integration of Sovryn, the leading Bitcoin DeFi project, onto the BOB (Build on Bitcoin) chain, a new hybrid L2 between Bitcoin and Ethereum. By leveraging the Ethereum ecosystem’s rich functionalities and bringing Sovryn’s best-in-class Bitcoin DeFi suite to a larger market, this collaboration aims to catalyze a significant migration of users and capital from Ethereum and the wider crypto economy back to Bitcoin, capturing a massive market opportunity.

The partnership between Sovryn and BOB will serve as the conduit for this movement, providing users with enhanced UI, functionality, and rewards, while simultaneously expanding Bitcoin’s reach within the DeFi space.

Background

Sovryn has established itself as a pioneering force in the realm of Bitcoin DeFi, offering users a comprehensive suite of decentralized financial services tailored specifically for Bitcoin holders. However, to further extend Sovryn’s reach and solidify its position as the premier Bitcoin DeFi project, it is imperative to integrate with platforms that can facilitate seamless interaction with the broader crypto ecosystem. BOB is the first Bitcoin L2 with full EVM compatibility & native Bitcoin support empowering everyone to build and innovate on Bitcoin.The BOB chain presents an ideal opportunity in this regard, offering a Bitcoin-centric environment while leveraging Ethereum’s extensive toolkit for enhanced functionality.

About BOB

BOB (”Build on Bitcoin”) is a first-of-its kind hybrid L2 network that connects Bitcoin and Ethereum. BOB empowers everyone to build and innovate on Bitcoin today by combining EVM smart contracts with tooling for Bitcoin-native protocols and assets such as Ordinals. Merging the security of Ethereum rollup technology with Bitcoin’s Proof-of-Work makes BOB the most secure and reliable layer 2 network. Through trust-minimized bridges to both Ethereum and Bitcoin, BOB efficiently funnels liquidity from the two leading web3 economies.

Motivation

Benefits to Sovryn

  • Expansion of Market Reach: Integrating Sovryn onto the BOB chain will enable access to Ethereum’s vast user base of over 1 million active users, representing a largely untapped market for Bitcoin DeFi services. This expansion of market reach presents a substantial economic opportunity for Sovryn to capture a significant portion of the rapidly growing Bitcoin DeFi market, projected to reach $100 billion.

By providing Ethereum users with access to Bitcoin DeFi through Sovryn on BOB, Sovryn can tap into a new revenue stream from transaction fees, lending/borrowing interest, and other DeFi services catered to this large user base.

  • Enhanced UI and Functionality: By tapping into Ethereum’s rich ecosystem, Sovryn can leverage advanced UI/UX designs and incorporate innovative functionalities to enhance user experience.

  • Strengthened Leadership Position: Establishing Sovryn on BOB reinforces its status as the leading Bitcoin DeFi project, further solidifying its position within the DeFi landscape.

  • Strategic Partnership: Sovryn’s collaboration with BOB signifies a commitment to fostering interoperability within the Bitcoin and Ethereum ecosystems, paving the way for future synergistic developments.

Benefits to Bitcoin

  • Massive User Acquisition: Integrating Sovryn onto BOB brings a substantial influx of Ethereum users into the Bitcoin ecosystem, contributing to the growth of Bitcoin’s user base.

  • Increased Utility for Bitcoin: By providing Ethereum users with access to Bitcoin DeFi through Sovryn on BOB, Bitcoin’s utility is expanded, offering more opportunities for users to utilize their Bitcoin holdings in DeFi applications.

Implementation

Technical Integration

The technical integration of Sovryn onto the BOB chain will involve adapting Sovryn’s smart contracts and interfaces to seamlessly interact with the BOB chain’s infrastructure. This will require collaboration between the development teams of Sovryn and BOB to ensure compatibility and smooth operation. BOB’s fully EVM-compatible programming layer (OP stack) thereby enables a smooth transition.

Partnership Commitments

As part of the partnership agreement, BOB commits to supporting Sovryn, as an early adopter of BOB, with user acquisition achieved by, including but not limited to, future ecosystem growth and incentive programs.

Conclusion

The integration of Sovryn onto the BOB chain marks the beginning of a transformative journey for Bitcoin DeFi. Being the first to market with this groundbreaking integration, Sovryn and BOB are poised to capture a significant portion of the multi-billion dollar DeFi market, positioning themselves as the leaders in facilitating the migration of users and capital back to Bitcoin.

By leveraging Ethereum’s expansive ecosystem and tapping into a vast pool of Ethereum users, Sovryn and BOB will spearhead a significant migration of users and capital from Ethereum and the wider crypto economy back to Bitcoin. Together, Sovryn and BOB will serve as the conduit for this movement, ushering in a new era of interoperability and collaboration between the Bitcoin and Ethereum ecosystems.

18 Likes

What does this mean/ what are the implications for our current ‘built on rsk’ ecosystem?

2 Likes

This is very nice but,
If sovryn revenue on BOB is not share with bitocracy from RSK, I’ll vote no.

If accepted, this means that Sovryn is going multi-chain. RSK and BOB.

…and this means?

A situation like with eSOV where it may be tradeable everywhere but governance (and everything that comes with it) falls back to ‘real’ SOV?

Or it is Iike creating multiple DAOs, staking, governance, reward schemes, etc…

…ultimately not just making a transition, but also a division of user base. Along with competition with basically ourselves and between different chains that is.

I’m sure there is a plan for this path going forward.

For example, on a new chain;
AMM, lending, Zero, staking, whatever… could easily be established
not by individual users, but by incorporating what we already use in battle tested fashion:
Namely, the governance system we already have. By deploying eg adoption or ecosys funds to act as intermediary while the rewards/returns are directed in the same fashion as with rsk staking (proportional to VP)

That way governance can continue to function like it already does.
No dividing of user base.
No hard feelings or tough decision on “which chain do I go with?”
Easily expandible to other chains if needed.
Upcoming SIP about staking rewards would make more sense this way as well.
Staking could be even more attractive.

this means if you have 1/10 of you SOV locked in RSK it is alright.
but if you have all of your SOV plus you are a bagholder on RSK you are locked out from this new stream of fees. and worry not because you get 9% in tokens that you cant use for nothing for 1 plus year.

First of all i’d like to thank Alexei and BOB for submitting this SIP to the Sovryn community. It is a great proposal and opportunity for BOB and Sovryn. I would like to see this cooperation succeed.

I think that Sovryn has some internal things to discuss on this matter.

  1. How do we ensure that the Sovryn bitocracy (stakers and userbase) is not fractured, forked and divided? Long term RSK stakers are financially incentivized to govern for revenue on RSK, but not necessarily on BOB. How can we make sure that the incentives on both chains stay aligned?
  1. How will we ensure that bitocracy SIP’s on BOB reach enough VP to succeed if the majority of Sovryn VP is locked on RSK? How can we make sure to transition our Bitocracy to BitcoinOS when we fracture and divide it before that?

Shipping the smart contracts over is fine. Shipping and dividing bitocracy is a much more risky thing to do.

Therefore i propose a solution in which 100% of fees and revenue generated by the Sovryn protocols on BOB will be used to buy and hold eSov on BOB, in a multisig adress controlled by RSK bitocracy.

At least until we figured out how to go multichain without destroying the Sovryn bitocracy.

11 Likes

That’s a good starting point.

After meeting with the BOB team, I can assure that they are here to put Bitcoin on the DeFi map & make the world more sovereign.

These are just my thoughts on the order of operations for Sovryn dex & bitocracy, and these are my thoughts only.

Until BitcoinOS and Sovryn Layer is live, bitocracy should sit on RSK. It’s been a robust chain for years. It works. It’s not changing any time soon. It functions well.

IMO we don’t need Bitocracy on every layer we deploy on (immediately). At least not on the scale of Bitocracy as we see it now. But if a lite Sovryn suite were to deploy on BOB, whether AMMs, lending/borrowing, or Zero or some combination of these, fees will be collected, sent to a designated multisig (let’s call it a “pod”) ratified by Sovryn Bitocracy (on RSK) and should be sent to Sovryn treasury on RSK. It would be even better if these fees could automatically bridge to Sovryn & we wouldn’t need to trust multisigs. Maybe we can do that day 1, not sure.

I think at first the SOV liquidity will be too fragmented (because it’s spread across eth, BOB & RSK nevermind centralized exchanges) to execute SIPs on anywhere that’s not RSK.

When the time comes that Sovryn Layer is live, we can potentially migrate all of Bitocracy to it. But for now, Sovryn on RSK is still the origin and home of Sovryn dapp 2.0 & Bitocracy. It works & it’s safe.

I’m not sure if people are aware, but there will be many, many Bitcoin L2s springing up as we move to a more modular way of building in web3. Sovryn should make its goal to solidify itself as the standard wherever there is an ecosystem of users who want to trade bitcoin, whether it’s on the app layer or execution layer.

15 Likes

Very much agree to that

While Sovryn needs bob, I don’t see, why bob will need sovryn

Imo its a situation of mutual benefit.
We go about expansion, BOB is able to show fast(er) progress and working products from the get-go. Therefore hopefully attracting users more easily (both benefit)

3 Likes

I thought, sovryn is trying to build on Bitcoin, therefore, a competitor. Do you know, how far sovryn is close to launching Bitcoin os. They ve been working on this already 3 years. I don’t see any good news

This is great, for BOB and for Sovryn. Very much in favor.

BOB’s connection to Bitcoin (the network) is currently somewhat weaker than that of RSK; so for me there is an element of trust involved, namely that in later phases, BOB will indeed be strengthening that connection, as planned.

BOB is new, and that has advantages and disadvantages. The main disadvantage is that they will need to actually succeed in drawing in liquidity, a risk for Sovryn here is that Bitcoin L2s is a crowded market. Main advantage here is that crypto folks are addicted to shiny new things, and Sovryn can be part of any hype that BOB manages to generate, as it might well do. BOB has seemed to one of the most exciting new bitcoin L2 projects that I’m aware of. Also, Sovryn can play a part in supporting a serious Bitcoin project, and put our money where our mouth is in helping to further a bitcoin-based economy.

I have a slightly different view from some of the other community members on the issue of bitocracy. I think we should aim to establish a bitocracy on BOB together with any other DeFi protocol we launch. I’m opposed to launching protocols what would otherwise be effectively ungoverned protocols; I think we should do better than that. I think we should embrace multiplication at the bitocracy level, as long as we keep a good eye on what binds the overall Sovryn community together. For me one key thing here is the SOV token, and the type of bridging that we use.

I realize that raises questions. For example:

I do not think that establishing a bitocracy on BOB implies a fractured community and I do not think that incentives on BOB and RSK need necessarily be aligned. Say that Sovryn on BOB generates 2x the revenue that is generated currently on RSK. Is this something that creates frustration/division with the long term stakers on RSK? I think that would be pretty stupid. This means deploying there was a success, that this has created increased demand for SOV, and that SOV will be added more to stakes on BOB and less to stakes on RSK and this slowly balances out over time due to market forces. I think we need to be careful not to see problems where there aren’t any.

I think this is a great question that Sacro is asking, but I think it is one that will need a straight up solution if Sovryn is serious about it’s multichain future. Would one solution be to define the required voting power simply relative to the total voting power in a given Bitocracy. So instead of setting a VP treshold in absolute numbers, set the treshold in terms of a % of the available voting power in a given bitocracy?

I agree a 100% with this. But I think the real advantage here is to diversify our dependencies. As long as we have Bitocracy centralized in one place (be it RSK for now, and BitcoinOS later), Sovryn is dependent on the performance of whatever one place sovryn plants its central bitocracy. Decentralization involves a diversification of dependencies, and I would like to see a vast network of Bitocracies at different bitcoin-based places. If BitcoinOS stalls or fails, or if RSK sees less and less development, there is always some Sovryn Bitocracy ticking along somewhere. So let’s move away from talk of “fracturing”, and let’s start seeing it as decentralizing our community and governance.

2 Likes

Couple of questions probably for @yago to answer or/and someone from EC:

  1. What monetary resources does Sovryn commit to the BOB project? Will that eat away the runway we have left?

  2. What Human Resources do we commit to the BOB project? Will that delay the development of BitcoinOS in any capacity?

  3. Any benefits for RSK stakers from the BOB project directly?

1 Like

To start we will definitely have a multi-sig control the contracts and accrue fees.

This is for 2 reasons:

  1. Safety. Just like we did on Rootstock, we will allow the system to run before full Bitocracy centralization.
  2. To allow time to develop a plan for fee distribution and governance. For example, it is possible that BOB will be integrated into BitcoinOS and a single, trustless governance is possible.

If a single, unified, trustless governance is not possible, then the right approach in my view is to have two separate Bitcoracies, both with SOV.

In any event we are not splittlng the community, anymore than adding new trading pairs splits the community. Yes, the different pools compete for liquidity - but they are all Sovryn and expand the pie much more than splitting it.

2 Likes

Will rewards generated on BOB be distributed to RSK stakers?

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The BOB deployment will have it’s own Bitocracy, with it’s own staking.

This is one of the reasons I have proposed SOV rewards on Rootstock - this way we can make sure that RSK stakers are receiving a base set of rewards that take advantage of the growth of the Sovryn/SOV ecosystem wherever it happens.

1 Like
  1. What monetary resources does Sovryn commit to the BOB project? Will that eat away the runway we have left?

The only commitment is to deployment. There are no funds transferred to BOB. The expected costs are low - see below. Runway is not impacted.

  1. What Human Resources do we commit to the BOB project? Will that delay the development of BitcoinOS in any capacity?

We must redploy the contracts and make frontend changes. After that, the costs appear to be minimal.

  1. Any benefits for RSK stakers from the BOB project directly?

Increased users, increased SOV demand, stronger brand awareness, more DLLR demand - potentially other benefits as well.

6 Likes

I did not get this question answered during X spaces, so I am trying it here: What will be the role of DLLR, if any, on BOB? Will it be bridgeable from RSK ??

2 Likes