Boba Network (BOBA): A Multi-Chain L2 Ecosystem Supporting Rapid Bridging and Hybrid Computing.

What is the Boba Network?

The Boba Network (BOBA), developed and maintained by Enya Labs, was initially positioned as the first multi-chain Layer 2 solution. It also supported rapid fund withdrawal to Layer 1 by designing liquidity pools. Boba Network was once active on Avalanche, Fantom, and Moonbeam but has since been gradually deprecated.

Currently, the primary narrative of the Boba Network revolves around hybrid computing. By connecting to off-chain computing resources, data, and APIs, users can engage in complex, specialized computations to address specific scenarios. For example, DApps deployed on the Boba Network can operate at a lower cost than L1 DApps, providing the performance needed for blockchain games through off-chain computing via Web2 APIs.

Optimistic Rollup vs ZK-rollup

The technical stack of the Boba Network is a branch of Optimistic Rollup, with a consensus algorithm relying on Layer 1. Therefore, theoretically, while ensuring the same level of security as Layer 1, it can achieve lower gas fees, higher transaction throughput, and EVM compatibility.

Rollups primarily come in two types: Optimistic Rollup and ZK-rollup. In Optimistic Rollup, transactions are assumed to be completed correctly, with third-party validators checking transactions afterward. If any issues arise, they enter a dispute resolution process. On the other hand, in ZK-rollup, each transaction generates real-time created and verified validity proofs. However, this computation involves complex circuit designs, and related infrastructure is still under continuous development.

Regarding protocol revenue, it’s worth noting that as a Rollup, the implementation of the Boba Network primarily focuses on execution. It outsources settlement, consensus, and data availability to their respective Layer 1s. Therefore, in terms of protocol revenue, profits must be deducted from the costs of Layer 1 sequencers from the total income.

Funding Situation

According to publicly available data, Boba Network raised $45M in Series A financing on April 6, 2022, with a valuation of up to $1.5B. The investment institutions involved are listed in the following table:

Source: Rootdata Data

The Development Team

Boba Network is developed by Enya Labs (formerly Enya.ai), an infrastructure company and multi-party computation service provider specializing in decentralized data privacy and software frameworks. Enya Labs has served over 10 million users in more than 91 countries/regions.

Alan Chiu and Jan Liphardt co-founded Enya Labs in 2018. Alan Chiu currently serves as the CEO of Enya Labs and co-founder of Boba Network. He holds engineering and management degrees from The University of British Columbia and Stanford University, respectively. Previously, Alan Chiu was a partner at XSeed Capital, focusing on building and investing in startups. Jan Liphardt is a Stanford professor who has assisted hardware and computing startups in the StartX Accelerator program.

Regarding recent developments in the leadership team, Jan Liphardt is no longer listed on Enya Labs’ team page. Since 2022, Violet Abtahi, former CEO of cross-platform spatial computing company SynXspace, has joined Boba Network and Enya Labs. Initially serving as COO, she has been president since January 2024.

Development History

In May 2021, Enya Labs launched the OMGX testnet, a joint research effort between Enya Labs and the OMG Foundation (formerly OMG Network).

The early focus of the OMG Network team was on scaling the Ethereum ecosystem. In 2020, they launched the Plasma mainnet. However, during the DeFi Summer, when smart contracts were in high demand, the Plasma mainnet did not gain much attention due to its lack of support for EVM-compatible smart contracts.

Subsequently, the OMG Network team began searching for someone to take over the project. Eventually, with the support of investment firm GBV, Enya Labs took over the project. Some members of the original project also joined Enya Labs. The role of OMG Network transitioned to that of a foundation, signing a contract with Enya Labs and issuing the Boba token, starting the development of the next-generation Layer 2 solution, which later became the Boba Network. The Boba Network mainnet launched in September 2021.

L2 Track Analysis

As a well-established L2 project, Boba Network reached a single-day Total Value Locked (TVL) of $615.42 million in November 2021. Let’s compare it with other participants in the L2 space at that time:

• Arbitrum had a TVL of $2.23 billion.
• Boba Network’s TVL was approximately 27.6% of Arbitrum’s.
• Optimism, recognized as an official L2 solution by Ethereum, raised $267.5 million in funding, with a TVL of $300 million, half of Boba Networks. It’s worth noting that Boba Network is based on a branch of Optimistic Rollup.

The main reason for Boba Network’s high TVL at that time was the OMG Network × Boba Network airdrop event announced in September 2021. This airdrop distributed BOBA tokens in a 1:1 ratio to all individual wallets participating in the OMG cross-chain bridge. Additionally, participants in staking activities on the Ethereum mainnet and Boba Network Layer 2 also received corresponding airdrop rewards. Many mainstream exchanges, such as Gate.io, Binance, FTX, Huobi Global, Crypto.com, Bitfinex, etc., supported this airdrop event, creating unprecedented TVL for Boba Network.

After the snapshot, the price of OMG dropped by 33% from its monthly high of $19.35 to around $13, indicating that this airdrop event was also a process of brand rebuilding and asset transfer. November 2021 also marked when Alameda Research held significant amounts of BOBA tokens. Since there were not yet mature DApp protocols and applications on Boba Network in 2021 to support such TVL, the TVL quickly returned to lower levels after the airdrop ended.

Data: DefiLlama

According to data from DefiLlama, as of April 2024, the TVL of Boba Network is $6.11 million, approximately 1% of its peak value. Its market share in the L2 space is 0.06%, ranking 19th among all L2 projects, below Scroll (ranked 13th) and zkSync (ranked 11th). Currently, the top three projects in terms of TVL among L2 projects are Arbitrum One ($2.7 billion), Base ($1.6 billion), and Blast ($1.5 billion).

What Problems Does the Boba Network Solve?

Rapid Bridging and Light Bridge

Rapid bridging involves a mechanism design for “fraud proofs” within an L2. Taking Optimistic Rollup as an example:

State commitments (records of on-chain state roots) are published to L1 (Ethereum in the case of the OP mainnet). If these records are not challenged within a challenge window (7 days), they are considered final, and smart contracts on Ethereum can safely accept withdrawal proofs. If challenged, these records can be invalidated through a fraud-proof (later renamed as Fault Proofs) process. Simply put, if users want to withdraw their funds from L2 OP back to the Ethereum mainnet today, they must wait seven days.

Unlike other Optimistic Rollups, Boba Network has a cross-chain messaging protocol and a community fraud detector (fraud proofs are still under development), allowing anyone to verify transactions independently. However, to avoid users feeling that the 7-day challenge period is too long, Boba Network has also developed a mechanism for rapid bridging, which can shorten the withdrawal time to within a few minutes.

Their approach involves setting up a liquidity pool on L1: the pool acts as a lender, providing funds for the 7-day withdrawal. If a user wants to withdraw $1000, the funds will be locked for seven days, and the liquidity pool will intervene and immediately provide the $1000, charging a certain fee. LPs in the pool bear the risk and earn fees. Like all swap-based liquidity pools, fees are dynamic and depend on the ratio of coins and demand for a particular coin.

However, the question arises: are enough LPs willing to inject liquidity into the Boba Network to act as lenders? On April 3, 2024, Boba Network announced the launch of its interoperability infrastructure, Light Bridge. This alternative option is added to the original Gateway page, which adopts a centralized approach, with liquidity provided directly by Boba’s foundation.

Hybrid Computing

In simple terms, hybrid computing refers to the combination of on-chain and off-chain computation. Hybrid computing allows smart contracts in the Boba Network to easily communicate and interact with existing Web2 systems, enabling DApp developers to integrate Web2 computing systems or databases into the Web3 world. This includes machine learning and artificial intelligence systems, advanced financial modeling tools, game engines, and social media platforms.

Boba Network deployed hybrid computing in March 2022, where smart contracts deployed on Boba can make hybrid computing calls to external servers. These servers accept these calls and return data to your smart contracts in an EVM-compatible format. Developers need to prepare:

• A smart contract capable of making Turing-complete calls.
• An external server that accepts calls and returns data in an EVM-compatible format.

Smart contracts can invoke complex algorithms, such as machine learning classifiers, interact with real-world data, or synchronize with the latest state of external servers. The hybrid computing infrastructure acts as a “pipeline” between Boba Network’s sequencers and external APIs.

Hybrid computing is emphasized because this feature is not intended to move everything off-chain. Developers can choose to invoke only certain endpoints as needed and write back the returned results to the calling data, and once accepted by L1, there is an immutable record of the result returned from off-chain.

Tokenomics

BOBA is the ERC-20 staking and governance token of the Boba Network, based on Ethereum. At its inception, the total supply was 500 million tokens, pre-mined and allocated to the following roles: 28% to OMG token holders, 10% to strategic investors, 42% to the treasury, and 20% to the team. Approximately 150 million tokens entered circulation during the 2021 airdrop (most of which went to airdrop recipients). The remaining tokens will be gradually unlocked from September 20, 2022, to June 20, 2025, over 33 months. During each quarter (3 months), 29,979,550 tokens will be unlocked.

Source: Boba Network Official Website

Initially, BOBA primarily served as the governance token for the Boba Network DAO and could also be used for various incentive mechanisms such as staking. BOBA tokens from the DAO treasury were used to incentivize network growth. These tokens funded multiple initiatives, including bug bounty programs, liquidity mining rewards, and transitional incentives. In April 2022, the DAO passed a governance proposal allowing BOBA to be used for paying gas fees. Using BOBA to pay gas fees comes with a 25% discount.

Ecosystem Analysis

GameFi Development and Collaboration

Like other participants in the GameFi space, the game ecosystem on the Boba Network is still in the early stages of development and collaboration. Currently, the main partners include:

• DEGA, a Web3 gaming infrastructure project: They provide tools for character builders, map builders, and AI coding.
• Game developers announcing their choice of Boba Network: Both Convival, a game ecosystem, and Open Games Builders have announced their plans to develop games on the Boba Network.
• NFT marketplace XDSea began integrating with Boba in Q4 2023. XDSea will also have an infrastructure such as creator tools and a low-code creator console.

DeFi Protocols: Uniswap and Teahouse

The following image shows the top four protocols with the highest TVL in the Boba Network. It can be observed that all of them are DeFi protocols (three DEXs and one liquidity management protocol), and they collectively dominate most of the TVL in the Boba Network ($5.28 million, approximately 86%). This article will take the most representative DEX, Uniswap, and the liquidity management protocol, Teahouse, as examples.

Data: DefiLlama

Uniswap V3 Deployment Proposal: Boba Network × FranklinDAO

In November 2022, FranklinDAO (formerly Penn Blockchain) initiated a proposal within the Uniswap protocol governance to deploy Uniswap V3 on the Boba Network.

Initially, the proposal faced opposition from the community due to the relatively low TVL of the Boba Network at that time. Some community members were concerned that this deployment might dilute the brand value of Uniswap. However, through coordination efforts led by FranklinDAO and other organizations, the proposal eventually passed with a vote of 51,006,300 / 40,000,000 in favor versus 2,700,345 against.

Subsequently, the Boba Foundation announced it would provide $1 million worth of BOBA tokens as an incentive program to promote using Uniswap V3 on the Boba Network. These tokens will be sent to a multi-signature wallet jointly owned by the Uniswap Grants Program (UGP) and the Boba Network. They will be designed to support other projects on top of Uniswap V3, such as ICHI, Perpetual Protocol, Paraswap, or 1inch. Any unused funds after two years will be returned to Boba.

Teahouse: Liquidity Management Protocol

Teahouse is a liquidity management protocol. The essence of such protocols is to maximize the utilization of funds by automatically adjusting the liquidity ranges of LPs in DEXs based on the AMM model, allowing LPs to earn more fees. The parameters for adjusting the ranges are implemented through smart contracts that automatically execute specific strategies. Teahouse’s main strategies are primarily based on Uniswap V3, with a few from other DEXs.

One of Teahouse’s well-known strategies is the single-sided stablecoin strategy. By providing one-sided liquidity for stablecoins on L2 (LPs only need to deposit one type of L2 stablecoin asset), the price range is set above and below the spot price through contracts. As long as users swap tokens using the pool, according to the design of the AMM model (concentrated liquidity range), the spot price will enter the range set by the Teahouse strategy, thereby generating fee income for LPs. The benefit of single-sided LP ranges is to reduce the wear and tear of rebalancing.

In essence, liquidity management protocols typically provide strategy design (based on extensive backtesting of historical AMM pool data) and a DApp for automatically executing these strategies. Such management protocols are usually composed of complex smart contract logic.

Source: DefiLlama Data, Messari Compilation

Infrastructure Development

Erigon Client

The Erigon execution client is compatible with the Optimism Bedrock architecture, primarily developed by Enya Labs. Erigon mainly facilitates support for eth_getProof from upstream, which returns the account and storage values of a specified account, including Merkle-proof. By calling it, anyone can verify whether the extracted data has been tampered with.

Anchorage Upgrade

The Anchorage framework is developed on top of Optimism’s Bedrock architecture and enhances the functionality of the Boba Network. The Anchorage upgrade will involve a hard fork on the current mainnet of the Boba Network, transitioning the network to operate under the new framework. The upgrade is scheduled from April 16th to 17th, 2024, UTC, from 20:00 to 4:00.

This upgrade positions the Boba Network as one of the first L2 networks to operate robustly with different execution clients while maintaining alignment with the latest EVM standards. It introduces Erigon as the sequencer and Geth as the validator replica. The benefit of ensuring diversity in execution clients is that even if one implementation is compromised, others can still maintain the network’s stability.

• Support for proto-dank sharding (part of the Ethereum Dencun upgrade) is introduced, reducing gas costs by 40% while expanding the network.
• Support for the account abstraction functionality proposed by EIP-4844 is also introduced, enabling a smoother web3 user experience and opening up various possibilities for future development. DApp developers can leverage features such as OAuth, custom account spending limits, and jointly signed transactions through account abstraction.

Conclusion

Currently, the Boba Network operates as a single proposer/sequencer system, meaning that the sequencer nodes are operated by the official team, with future sequencer node operators to be determined by the network’s governance mechanism. The progress in this area is uncertain, indicating that the Boba Network remains relatively centralized. Without a more robust fraud-proof design, the network relies on the honesty of the officially operated sequencer system.

Additionally, from the case of the Light Bridge, we can see that the team ultimately resorted to centralized means (introducing liquidity from the foundation). This was undoubtedly done to prioritize user experience, but it also indirectly indicates that there isn’t enough liquidity in the Boba Network to incentivize LPs to operate liquidity pools.

In the long term, from November 2022 to April 2024, the total value locked (TVL) in the entire Boba Network hasn’t shown significant growth. When the Boba Network will experience real growth, it remains to be seen and requires ongoing attention.