[DRAFT] [GF: META] Proposal to reserve a share of GF distribution for liquidity backstopping and stronger governance

It is worth noting that this proposal would introduce a new type of risk onto the Optimism Treasury’s balance sheet. Not going to argue with you about impermanent loss, in this scenario it would, in some capacity, occur on some of the Collective’s liquidity positions.

Area Man unsure whether accepting free $100 a good idea:
“What if I lose $10?” he wonders

The risk is trivial when you’re comparing it against giving away the entire position. You can’t seriously be continuing on this point.

Your “modeling” is the assumption that every OP token that goes to users in the next 6 months is going to be market sold on an Optimism DEX in the current state of unincentivized Optimism liquidity. I find this unrealistic and pointed to previous network incentive campaigns where enough growth and liquidity were generated to counteract the natural selling pressure that token incentives bring.

It’s an illustrative model for which i’ve already noted there is a substantial buffer within which the sell effect continues to be intolerable. And who is going to incentivize the LPing of OP tokens? Haven’t seen any proposals detailing those specifically. Let’s say there’s 50% less selling on 50% more LP (HIGHLY generous): that would be 3.3mm sold on 15mm, still over 20% of all LPed tokens sold per month. Are you actually okay with this?

This proposal tries to lock in 25% of OP token incentives for “pairing” on long-tail AMM pairs. If a protocol wants to do this with its own OP grant, great! But why standardize this?

The 25% was a sample amount and subject to discussion, but standardization as an option (and potentially a requirement) is a good one because it makes clear and puts into action Optimism’s commitment to 1) supporting OP as an ongoing means of funding public goods, 2) supporting enduring liquidity and facilitation of market performance, and 3) expanding the scope and stakes of its governance.

The top of funnel for OP incentives should remain open-ended.

It still would be; again, this is ultimately about increasing and sustaining OP incentives for all kinds of initiatives.

Am I wrong? Given that liquidity mining on the dominant liquidity venue on the network, Uniswap V3, is not very approachable, Velodrome stands the most to benefit from this proposal. That’s all I said

You are, and it’s okay to be wrong, though I appreciate the implied compliment that we are a dominant player on Optimism.

Already explained why the marginal effect of this proposal passing (even if we were to get all of the liqudity) is insignificant and possibly a liability; if we are that dominant, all the liq mining rewards in the status quo are going to veVELO holders (i.e., not LPs) directly as revenue. If this proposal passes, we lose a big chunk of that.

But we’re still coming from behind. Synthetix, Perpetual, and Lyra, the largest players, continue to do most of their incentivization on Curve and v3. Beethoven and Zipswap are also certainly relevant as outlets.

Okay, now you’re grasping. If this were the final word, there would be no voting on any OP grants at all. Think we’ll have to do our own research.

No, it’s sincerely been a good exercise. Hope it’s been meaningful for you.

Unfortunately, yes. This demands constitutional change which need both house approval, as @Netrim has mentioned.

But I am not from OP team and if you feel its something urgent and time sensitive matter, please jump in our discord and check with them.

One thing i like about DAO is chautic co-ordination and just because we have different opinion does not mean either of us a wrong, it just that we see differently.
I would suggest you two thing, jump in to our discord(gov-temp-check channel) and seek feedback on this, that might help you move things faster and second would wait until you have some support here from other users and/or delegates.

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Sure thing. But the OP Team already viewed this proposal at several levels and deemed it appropriate for review under the current structure, so seems like an unnecessary step.

Still haven’t seen anything definitive indicating that what we’re proposing entails a constitutional disruption.

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We are going in circle here, I feel.
Owning the LP address and related responsibility that will come with it will be a task for OP foundation.
In order for us to recommend this, we need approval from Both house.

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For sure. You’re making this assertion, and I’m trying to determine whether it’s true. Will research and consult.

But questions about process shouldn’t limit discussion on this proposal on its merits.

Yes please, supporting document will help.

My source of knowledge is OPerating manual. This is what comes under gov funding proposal.

OPerating Manual of the Optimism Collective (v0.1.2)

And I dont see this proposal fitting in any catorgy mentioned there, So this requires updating the OPerating manual which need to be done by OP Foundation.

But questions about process shouldn’t limit discussion on this proposal on its merits.



Yeah for example I think this proposal falls clearly under Phase 1 because it entails a use of distributable tokens for a specific purpose, and these tokens are matched. This is simply talking about what to do with the Phase 1 tokens, no? Seems pretty neat.

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Think we’d need an authoritative voice to make this claim; there’s already mention of OP treasury actions in scope for the Token House, so custodying tokens to provide a service doesn’t seem to be an issue.

Questions around actual governance operations could maybe wait for the Foundation/Citizens, but at worst waiting for them to clear those sorts of actions doesn’t prevent the first step here.

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thanks for your considerate reply, more of a general note on tone.

For example:

Is this explicitly stated in any of the rules around OP governance or delegation? I cannot find any mention of it, and therefor disagree that this is a norm that should be considered a rule to be followed.

I am not sure if this pointed towards me or just an open question to everyone but I got notification so replying. I would really appreciate if you could tag me if a question is directly pointed towards me.

I think we can agree to disagree, you dont see this as an issue and I do.

Not that I support of this proposal but I like that you are quite motivated about this and want to have a discussion. So, my suggestion would be,

  1. update the proposal with exact words, who will own the LP address, OP foundation ? or someone else ? This need clear answer.
  2. What would you suggest to do with the LP rewards. Give some of your suggestion ?
  3. How long will this LP last ? Who will make a call do dilute the LP and /or its rewards.
  4. Do you see Impermanent loss as a problem? What would you recommend to mitigate this ?

Assuming we have other project token and want to participate in their DAO

  1. How this will work ? Lets say OP foundation has the token owned by multi-sig, now who will vote and participate in the DAO ? will it be foundation or the delegates ?

Update this to the proposal, if you have already answered them, please link them to the proposal.

and please remember to tag me if any comment is pointed directly towards me.

No, its not mentioned anywhere in OP manual as this is normal and expected behavior in gov voting.

and therefor disagree that this is a norm that should be considered a rule to be followed

Understandable, I would not insist you to be on an agreement with me. I was merely sharing what I believe and would expect others to do so, its not a must to agree with my view and opinion.


I am someone who was drawn to the Vision Optimism laid out several months ago. Impact resonates with me very deeply and I have been quite engaged with the rollup since learning about the plans and Public Goods and thinking of new ways to contribute.

I believe this is not a good Proposal and would not benefit Optimism.

If what you say is true about your very close collaboration and relationship with OP Labs; I really don’t understand or know what to say because it seems so at odds with the stated Vision.

I’ve noticed lately that nearly evey time I read a post like this whether in the Optimism discord or forum, I Ieave feeling more pessimistic about DeFi; and I’ve never had this experience.

I am definitely not in favor of this in any capacity.


Yes it is true, we have worked closely with Optimism Foundation, they funded the launch of our project with a grant and Partnership team reviewed this proposal prior to publication and deemed it appropriate for consideration under current frameworks.

can you please provide context as to how you arrive at this opinion?

I am personally a delegate and will be participating in governance discussions and do not have this belief in the slightest. Ty!

hey @gabagool I am happy that you are curious but I dont see how sharing my opinion will change your belief and ideally it should not.

One approach would be to discuss this as a new idea, you can create a tread and involve other users to get their feedback and opinion on this. feel free to quote any comment that i have mention if you need it as an example.

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hey @bobby @vonnie610 , is this true ? I thought pre-check of proposals from OP foundation was only for Phase 0.

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how do we know if you are not trolling us by saying that op team reviewed this proposal and supported it @gabagool @jackanorak

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