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

Process wise, we are still there but like I said, you are motivated about this so I am joining the conversation, may be I am missing something here.

Last time when we try to involve foundation with joining multi-sig with different project they said no because of bureaucracy, So I would start with getting their permission here. Are they willing to take this responsibility. If you are able to resolve this, then I would agree that we have made some progress.

This proposal will impact all upcoming proposals, So I would assume this going to voting on snapshot and for that reason, If I were you, I would do some math here and extend the analogy.
We know how many token are left in GF fund, you are proposing 25% from from our side and 25% from project side. Run some number and show us the data with, even if it has 10% of variance.

As an impediment to passing this proposal, no. The analogy I used above is that it’s silly to refuse to accept $100 of free money because you’re worried you might lose $10 of that.

We have gone through this many time and I dont agree with this logic. So, i wont repeat again.

The primary reason for doing this in the first place is to take OP you were already going to give away and put it to work for the same purpose it was originally being requested for–but also put it to work for you. How efficiently it works for you is secondary because your alternative is getting 0 value for yourself.

Few other thoughts:-

  1. What about those project that does not have token or cant afford to give 25% of their share ?
  2. Buying OP and putting into foundation treasury would be a good idea where both house would vote to distribute it to public good.
  3. I would remove DAO all together if foundation is accepting to hold the address, or mention specifically that decision(on other project DAO) will be done by OP Token house, foundation role would be just cast those votes. Goal here is to keep Foundation as neutral as possible.
  4. We are asking projects to give co-incentives, are you planning to keep that part or remove it ?
  5. Also put 5 dex of your choice where you want to keep the LP.
  6. Would you suggest putting all in a single dex or distribute it between 3-5 ?
  7. Dex selection should also need voting, I think ?
  8. In order for anyone to call Velodrome bias because you are drafting this proposal, I would suggest taking a voting snapshot of the date this proposal was submitted.

Appreciate your thoughts here @norswap. A few things you’re mentioning I’d like to add on to.

  • Delegating donated LP funds to protocols is a fascinating idea I don’t want to lose. Been struggling to propose an actionable approach to getting distributed OP delegated to these major stakeholders, and this feels like it could be a win-win in that it also incentivizers partners to participate. Would hope to see mutual governance influence in the long term, and the discussion on Perp’s distro stands to disenfranchise a major group
  • Agree on the idea of letting projects decide their own dex – had had this thought. Removes a ton of overhead.
  • I want to make clear: my guess is that we would benefit primarily through TVL, through the ecosystem’s sustained growth, and through sustained OP token value (which would allow more OP incentivization over time). I’ll say again that, economically speaking, this has an unclear effect on us because partner protocols see a lower cost of liquidity and thus may end up bribing less. For a non-bribe-oriented dex such as Uniswap, my guess is that this would be a strict improvement.

Overall, I think we need to remember that we are doing these grants as a collective. We’re granting a ton of rewards because we believe they will generate more economic activity throughout the ecosystem.

My call to everyone here is to try more positive-sum thinking when considering these grants and asking “how does everyone win” vs “does that protocol get more than me”. In my view, this proposal stands to positively directly affect all stakeholders and increase the Collective’s capacity to continue to do so.

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great proposals, good thoughts!

I would break my takes into two parts: high level (concepts) and implementation level (approach to execute/distribute properly)

On a high level

I mostly agree with this statement. Liquidity is one of many key metrics and plays a vital role in adoption whether we want to accept this or not.

Regarding governance fund phase 1, I think it would help protocols on OP to bootstrap users together with liquidity over to OP. However, I have observed that many protocols difficult to match incentives with OP tokens. My take on this is most protocols foresee that the OP token value will be dumped for a while given economic value is limited and still underrealized by the market norms. If the market value of OP dropped, it will lead to difficulty for protocols to inorganically bootstrap new users/liquidity from granted OP.

After I read this proposal, I took EVM (Polygon, BSC) and non-EVM (Osmosis) as references, and it proved that the chain representative tokens are mainly used as the main pair (or second to stablecoin(s)).

Referring back to Optimism, based on what I can find, there are only WETH and VELO that are highly paired with OP. The rest are heavily paired with USDC.

On an implementation level
I would not comment on this since I still could not think of ways to execute the liquidity pairing properly. (not saying your proposal is wrong, maybe just me that is unable to imagine it)


I agree with the proposal, in general.
There needs to be a separate fund for “Layer-Owned-Liquidity” aka LOL.
I agree that projects should have voting power in Optimism Collective, but for sure the voting power of projects should not exceed or equal the voting power of the community.
Of course the main goal is to maintain the value of the OP so that public goods have more value.

Context: don’t mix DEXs incentives and Public Goods. This need in stimulus is the result of similar projects with low liquidity. We need more exceptional ideas.
Public Goods is something special, which I hope will focus on research, innovation, education…
And I don’t agree with “metagovernance” = “metamonopoly”.

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@diligit - thanks for critically engaging with the ideas behind this proposal.

I agree that projects should have voting power in Optimism Collective, but for sure the voting power of projects should not exceed or equal the voting power of the community.

I absolutely agree with this sentiment. Part of what I found appealing about Norswap’s suggestion was that it seemed like a pretty tractable way to both grant and set boundaries around protocols’ governance power. But we’re still in early stages of discussing implementation (assuming there’s appetite for the broader strokes of this proposal), and I’d love for you to stay involved on this front.

Context: don’t mix DEXs incentives and Public Goods. This need in stimulus is the result of similar projects with low liquidity. We need more exceptional ideas.

I couldn’t agree more with this belief. Liquidity provision is foundational to DeFi health at this current stage of development, but it’s also primarily an intermediate means to an end. Most dapps, DeFi or otherwise, don’t even really need tokens!
The observation that a disproportionate amount of rewards went to liquidity provision (again, important at this current stage) was part of the motivation behind wanting to at least in part separate this service from others, so that projects could be encouraged to think more expansively about how best to use the Optimism Collective’s capacity. It doesn’t need to all be going to LPs (which imo is is a pretty convenient way to funnel grants and vote power to project teams, as we may have already seen in some cases).

Public Goods is something special, which I hope will focus on research, innovation, education…
And I don’t agree with “metagovernance” = “metamonopoly”.

Could you please expand on this? Would like to have a discussion around your concerns. We could do this in the forums in case we have to do a back and forth.


I agree in principle with much of what you’re saying, and indeed I’m starting to see that, following this initial proposal (not sure whether baader-meinhof phenomenon), there has been a surge in delegates’ interest in pairing tokens with OP.

If there is broad agreement that this is something generally worth pursuing, one way or another we need to make sure it’s done as part of a deliberate campaign. The worst thing would be to push scattershot rewards, fragmenting the centrality of liquidity between, e.g., WETH and OP, which could hurt the systemic efficiency of swap liquidity.

Let this be the first proposal to put forth such a dedicated effort; we can use it to discuss how best to achieve this (and perhaps jog your thinking on how we could do so).


That’s good, now I understand how metagovernance will be achieved and how the Optimism Collective will be involved in it. There is too much extra information in the proposal, it would be better if it was structured in “Why” and “For” in details, but yes, I support the proposal.
And I can answer your questions:

From Ecosystem Fund, through GF


max. 5%



The Optimism Foundation


No comments.

Would like to take the opportunity to restart the conversation here. I’m not really sure where else we ought to go from here, as this proposal has now had some form of approval from a wide swath of the community, including OP Labs members (in a private capacity) as well as delegates.

But there’s clearly more to hash out here. Perhaps in a way to make this actionable and take advantage in the pause in rewards, could we perhaps start a working group to hash out the details here to submit for a proposal?

Separately, would like to mention that there is some outside support for measures such as this to lend immediate utility to OP. Here’s Crocswap’s founder, Doug Colkitt, remarking on the core problem:

This proposal offers a solution to the issue he’s posing.

would like to mention this to anyone not reading the complete thread that this proposal does not have approval from OP Labs and wording seems misleading, at least to me.

As per bobby, this is valid proposal, he is not endorsing the content or providing his approval.

What norswap has said is his personal opinion as mentioned in his comment and not of OP Lab team.

I said that OP Labs members agreed with this in a private capacity, i.e., not as team members. This is clearly true and not intended to be misleading; this may be lost in translation. Would appreciate a retraction.

I’ll also echo @OPUser that OP Labs team members said in an official capacity that this proposal was suitable to present in the forum, i.e., that it is in fact a valid proposal.

Monthly bump to restart the conversation - some people in the Velodrome discord had been theorizing on this very point and I was hoping some thoughtful people would weigh in.

Monthly bump for some engagement here in the wake of a massive drop in OP’s price

think we’ve now gotten to a place where people are asking about how to ‘use’ OP.

the answer of course is for governance. so let’s make sure that this governance value is worth enough to fund the projects we all want

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After a helpful round of feedback, it may be prudent to roll back one piece of the metagovernance part of this proposal, where the LP positions – though representing yield-bearing stakes in ecosystem DAOs – will not have voting power in the constituent protocols. This would make prospective grantees more likely to participate and eliminate unnecessary decision-making.

The really important part of this piece as it relates to the Collective’s stake is that it is 1) a direct representation of the ecosystem’s stake in aggregate economic activity and 2) tangible, accretive value that can flow to governance and continually refresh the Collective’s capacity to fund growth initiatives, public goods, and so on.

I remain eager to entertain thoughts on this, especially in light of governance funds’ outcomes to date as shown by yesterday’s conference call.

great news for all of us

If Optimism wants META superiority , this is one of those proposals that the whole should look into! Much love OPTI! :red_circle:

I am big fan of OP & VELO ! I hope the two would be discussing something exciting and juicy in the future! Lfg! :red_circle::rocket: