Thank you for raising this conversation. The Collective’s progressive path towards full decentralization is an important topic.
Tactically, the Foundation has been working on several initiatives to share more information about this path, accompanied by collaborative conversations to gather input from the community, in the coming weeks and months.
The timing of this post coincides closely with several of those initiatives, including:
- Publication of a framework outlining the milestones towards Optimism’s progressive decentralization (currently under review by the Collective Feedback Commission and other advisors), meant to occur over a period of multiple years, as originally outlined in the Working Constitution.
- A post outlining how a series of upcoming proposals in Season 6 move us closer to some of these milestones (and interoperability).
- The Foundation’s Product Vision, which lays the groundwork for the Collective to be involved in the 2025 planning process starting in November.
The hope is that these efforts spur constructive, rather than divisive, conversations that result in a plan that is in the best long term interest of the entire Collective.
Ideologically, it is important to remember our original commitment to take a fundamentally different approach towards progressive decentralization, which means drawing direct comparisons to other systems can be counterproductive.
Our Working Constitution outlines that our path towards decentralization will be gradual (over the course of several years), experimental, and iterative. The role of the Foundation in this journey is to bootstrap a sustainable governance system, based heavily on the input of participants, that enables the accomplishment of the key strategic goals of the Collective over the long term.
Optimism Governance is uniquely designed to be the system through which the entire Collective will derive security and accomplish strategic goals. This vision is distinct from other ecosystems’ approaches. It requires a fundamentally different approach and a timeline tied to the security, sustainability, and resilience of the system rather than speed.
We remain fully committed to gradually and fully decentralizing the system. We hope the upcoming publication of our milestones towards decentralization serves as a tool for the community to hold us accountable in this process. The journey along this path will involve ongoing and collaborative conversations with the community.
Below we address @GFXlabs’s specific proposal, line by line:
Phase 1
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Token contract
“the OP token does not even own its own contract”
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Depending on interpretation, we find this statement misleading, if not inaccurate. To clarify, the OP Token does not authorize any L2 account to upgrade its code. The only way to upgrade the OP Token is via a Protocol Upgrade. This was an intentional decision made to reflect our view that token contract upgrades should not occur frequently, if ever. Effectively, this means that the OP Token is already “owned” by the Collective via the same Security Council it has authorized to implement other protocol upgrades. However, we appreciate that this may be opaque and could benefit from a concrete example of the process in practice.
Additionally, we agree that deploying a standardized OP Token contract to other chains is a critical feature, one which we believe does justify using a Protocol Upgrade to modify the OP Token. Several Core Developers in the Collective have been working on this in earnest over the past few months as a part of interop development. We expect that this proposal will be a part of the interop rollout in the first half of 2025. We hope that this will help provide a concrete example of OP Token upgrades, and demonstrates our approach towards bringing governance responsibilities online as they support strategic initiatives and not as ends in and of themselves.
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Governance Contract Ownership
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The transition of control over the onchain Governor contract to OP tokenholders is already planned to occur before the end of Season 6. This proposal will transition upgrade control to the Security Council, which we believe will allow us to remain agile without risking an irrecoverable bug. Stay tuned for more details in the proposal, expected to be posted by Agora in Voting Cycle #28 or #29.
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In regards to the ability for delegates to submit proposals for a vote, we don’t believe it is safe to put the entire Governance Fund onchain with permissionless proposal rights while the cost of governance attack is currently lower than the value of the Governance Fund. This is a dynamic many DAOs currently face but that we can avoid while we work to increase votable supply (and we’ve hired someone to focus exclusively on doing this.) However, Agora has shipped a new feature that allows any delegate to draft a proposal in the voting UI. Drafts will still need to follow a valid proposal type and receive the required delegate approvals to move to a vote.
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Governance Fund Ownership
- The proposal referenced above (expected in Cycle #28 or #29) would move the Governance Fund entirely onchain, meaning budget proposals would execute onchain. This means that the Grants Council, if renewed, would manage its own grant delivery process, largely eliminating the Foundation in this process.
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ETH Collected on Behalf of Optimism Collective Comes Under Governance Control
- We don’t currently believe there is a strategic need for the DAO to manage ETH while the DAO has access to the +150M OP Governance Fund and the +800M OP Retro Fund. This is also a responsibility that should come online alongside a comprehensive framework for managing the treasury, governing the macroeconomic policies of the Collective, and measuring the efficacy of capital allocation. These are all important governance responsibilities that are under or poorly defined in most other systems. We agree with the sentiment that the near term priority should be on the more technical aspects listed above rather than transition of these responsibilities.
Phase 2
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Bridge L1 Escrow Comes Under Governance Control
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It is not entirely clear whether this milestone is suggesting any change in control structure. All L1 contracts, including bridge Escrow contracts, are already held by the Security Council. If this is a suggestion to move the ownership directly to an onchain governor contract, we feel the need to emphasize that this would pose a potentially existential security risk until we achieve Stage 2 decentralization.
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We agree that all Protocol Upgrades—of which L1 Escrow contracts are among the highest stakes—are decisions for governance to make. However, since this post alludes to “utilizing” the bridge funds, we feel an obligation to express our strongly held viewpoint that such appropriation of user assets would represent an existential threat to Optimism’s social contract, business reputation, and long-term viability. Tactically speaking, it is a clear violation of the key User Protection to State Transition and Message Validity outlined in the Law of Chains. Strategically speaking, the Collective is in the business of providing neutral, scalable blockspace. No matter how alluring it may be to move user assets, deposited with the clear expectation of being fully custodied in a known escrow contract, into a different smart contract—even a relatively low-risk one—the long-term erosion of trust which would accompany such violation of expectations outweighs any short-term sustainability improvements which might come with it.
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We would also like to reinforce that the Law of Chains is a critical governing document, which was ratified by the Token House. The Law of Chains also plays a pivotal role in onboarding OP Chains to join the Superchain, which is the sustainable way to drive revenue for the Collective.
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Sequencer Decentralization Roadmap
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We think sharing more plans on the timeline suggested is a reasonable goal. It feels worth flagging now that this will be a long burn — decentralized sequencing protocols are still rapidly evolving, but even beyond the tech itself, have deep economic and strategic implications for the Superchain and its partners. As such, we think holding the sequencer accountable to governance is the correct short-term focus.
The OP Labs team is actively working on productionizing and open-sourcing the infrastructure required to easily run a high-availability, performant sequencer, so that switching OP Mainnet to a new sequencer is more feasible. The Standard Rollup Charter draft contains an initial proposal for sequencer accountability structures; we welcome feedback and collaboration on the relevant governing policies.
Lastly—over the next quarter, we expect to see new core development work with a focus on sequencing. For example, the Flashbots team recently began engaging heavily with OP Stack core development processes. We are extremely excited to build a collaborative roadmap with industry experts, and hope that this will both accelerate development, and decrease reliance on OP Labs and the Optimism Foundation as a bottleneck to this part of the roadmap.
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Revisions and Re-Ratification of the Law of Chains
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The Law of Chains is a foundational governing document upon which all OP Chains rely. This document serves the critical purpose of providing a neutral, transparent, and long-term social contract for how the Collective makes decisions about protocol upgrades. As such, it should not be subject to change often–especially as we move towards upcoming interoperability milestones, where governance rigidity is even more of a key value proposition (see framework by Vitalik here). Periodic review of this document can be facilitated, but should occur on a 1-3 year cadence.
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The ability to propose amendments to the Law of Chains is a metagovernance right, which has always been slated to be the last set of governance responsibilities to come online. This is partly because the ability to change the system while it is being built, and while new partners are relying on its consistency, is destabilizing. The Collective Feedback Commission is the first step in a gradual path to decentralizing these rights.
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Phase 3
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Full Control of Optimism by Optimism Governance and Completed Decentralization of the Sequencer
- We continue to be fully committed to the transition of full control over the system to Optimism Governance and to complete decentralization of the sequencer. The difference of opinions on this is only in regards to the timeline required to make this transition responsibly.
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Foundation Grants Disclosure
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Although the budget with which the Foundation makes these grants was part of the initial token distribution, and is therefore not subject to detailed disclosure, we are supportive of greater disclosure around the Foundation’s expenditures. However:
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Public disclosures about individual grants will only be made at the point in time at which it does not jeopardize the Foundation’s ability to onboard more OP Chains to the Superchain, something which greatly benefits all members of the Collective.
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We are not supportive of select grant disclosures to certain delegates within the Collective, as that can create tiered information asymmetry among delegates.
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For reference on current disclosures, delegates can refer to previous budget reports on the forum.
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As stated above, this is a very important topic and this post has started a very important conversation. We look forward to continuing to engage in many more constructive and collaborative conversations on this topic as we work to progress on this path as a Collective.