I certainly agree there are pockets of pools where Velodrome does do better. However, it’s undeniable that Uniswap has provided significant value to the Optimism ecosystem despite only distributing 50K of OP out of their 1M allocation thus far.
They’re expending their own resources to analyze the results of that initial phase 1 of distributions and will be looking to improve upon that. I just don’t think we should be too quick to say one protocol doesn’t care about the ecosystem without analyzing their contributions to the ecosystem fairly.
But I’ve said my piece on that, and I think it’s fair to say that Uniswap has provided significant value to Optimism thus far and has shown they are committed to expending their own resources for the benefit of Optimism.
I, and no one else in the thread have said that Uniswap hasn’t provided value to Optimism. My criticism was that under the current single criteria, of gas fees generated, Uniswap would receive the largest delegation from the votable supply earmarked for this program. Optimism - Popular Apps and Project Usage Trends
Uniswap only just started distributing their OP and have done so through third parties, so I will wait until it has finished to make my judgement but I doubt that the 50k OP that is being distributed through third party projects will move the needle much on the value they have brought to Optimism.
Apologies! You’re right that you had advocated solely on the gas fees. I went ahead and edited my post as a correction.
We would love to the see the results as well. It might or might not have. There have been other competitors who have entered the space as well. KyberSwap Elastic is doing very well on USDC-DAI because they implemented a 0.008% fee tier to undercut Uniswap’s 0.01%, and so is Balancer with their veBAL program.
Uniswap should receive one of the largest delegations for this program. They deserve it and they should have a large voice in governance.
Isn’t that the point of this program? To give protocols that are the backbone of Optimism voting power? Right now, they have zero voting power.
They have taken very little OP for their size (including sub-projects that work on them, like Gamma, xToken, Revert) compared to some other projects here. They pledged it all to incentives. They are a power player in crypto and DeFi. They’re critical to the success of Optimism competing against other Layer 2s. They have little to no voice in Optimism governance right now. They never got a committee spot.
Velodrome is well-qualified for a delegation here as well, being they pushed, I think, all of their allocations (both from op labs and governance) to incentives. Velodrome has what? 200k OP allocated to them? That’s pretty small for a protocol of their size on this platform.
Correct me if I’m wrong, but Synthetix has 2.1m OP voting right now, with another 1.28m stuck on a multi-sig. Giving them a vote power of nearly 3.4m when fixed. Far more than any other delegate.
Synthetix 3.4m OP
Velodrome 200k OP
Uniswap 0 OP
I thought the point of this program was to fix this imbalance. Not make it worse.
Fairness doesn’t enter into this. That this is an arbitrary judgment of fairness is probably beside the point.
Let me explain:
I was an early, conspicuous, and hopefully consequential proponent of enfranchising protocols as crucial, often overlooked stakeholders directly shaping Optimism’s ecosystem. I won’t rehash all the arguments I’ve made on this point, but I do want to emphasize two major things.
We want to give protocols votepower because they have unmatched, necessary perspective on the current needs of Optimism from development, strategic, and bizdev standpoints, and because they represent the existing and future developer community’s interests. This is logic similar to why we encourage users to delegate their votepower to others who best reflect their priorities.
Getting the most invested, most plugged-in, and most impactful of these voices involved is good for Optimism, and we want to design this delegation program to maximize that outcome. That’s why we’re doing this in the first place – to make Optimism succeed as an ecosystem and as an organization through active, informed collaboration.
What I haven’t been saying is that protocols or projects are owed votepower simply by deploying on Optimism or being native to Optimism, nor have I been saying that protocols signal more value to governance by operating effectively or providing existing utility to users. Remember that several major protocols are immutable and autonomous – their function doesn’t even require an active team!
So weighting votes by a blunt protocol-level operating metric such as volume or otherwise appealing to the notion of the biggest and best protocols having the biggest voice is missing the entire point of this exercise. Let’s say a bridge protocol deployed everywhere had twice as much volume as all other protocols. What does giving them votepower have to do with why we are giving protocols a vote? What would Optimism possibly have to gain by giving this bridge an outsized voice, and why should we consider them the best representative of developers as a stakeholder class? What opinion can we really expect them to have about where to take Optimism?
Now, where protocols’ effectiveness, operating scale, etc. do become relevant is in grants. A good grant-issuing team would understand the relative strengths of different protocols and know to allocate grants to those protocols.
So if some protocol like that major bridge provides the best means of meeting some objective outlined in a grant, we want to make sure our resources are going toward it more than toward other protocols. That’s when we care about, e.g., whether Uniswap gets more volume than Kyber on a pool.
And guess who we want to help make this determination – and make sure that we’re chasing the right things in general: that’s right, protocols that are heavily involved in the ecosystem, not necessarily those protocols that happen to be the best means to particular ends. An incumbent multichain defi app may be a default option in a nascent ecosystem and a great grantee – but if there’s no active team to attend to Optimism’s development, it simply doesn’t make sense to give them outsized power over it. It’s not like we owe them anything.
Regarding what sorts of criteria to incorporate, I agree with @millie that it’s clearly appropriate to have a multifactorial approach, and I agree with @StrategicReserve that it can, however, be sticky to introduce subjective factors. I don’t have any strong specific recommendations at the moment.
But I do want to remind people what we’re aiming for in doing this and encourage more thinking along these lines. The question to be asking is: “what sorts of measures can we use to identify the most representative, most beneficial, and most impactful voices among the protocols?” Certainly scale is meaningful here, but there’s much more to it than that.
Just want to come in and say that I completely agree with Millie’s views here.
I think it’s important to consider more than just gas fees generated when deciding how to delegate Optimism to protocols. Gauging just gas fees is a flawed metric, and will come with some very flawed results in my opinion. There’s no reason that something like Quests or Perp Protocol should have outsized influences on Optimism governance. Both of those have varying reasons, but still.
I do think there should be a metric to properly support new projects, and ensure that they’re able to obtain a say in governance as well. But then again, this sort of thing can be rewarded medium/long term with better metrics and involvement from these new protocols.
It’s also worth considering the fact that many protocols on Optimism have been building, innovating, experimenting, and helping to grow Optimism for so long now. It seems only fair to reward these protocols for their efforts while still allowing newer protocols to have a say in the direction of Optimism and continue innovating.
Thanks for bringing up this important issue. I hope the Optimism Foundation and other delegates take your suggestions into consideration.
Great to see the active discussion here, you’ve raised a lot of good points that we’d like to address.
The main goal of this program is to enable protocols with active usage on Optimism to participate in governance without self-delegating grants. It will also increase the votable supply, the importance of which has been raised by delegates several times. The goal is not to measure the relative value a protocol contributes to the ecosystem.
Given the above context, we’d like to get your feedback on an alternate design for the program:
All qualifying protocols would receive the same amount of OP, rather than on a pro-rata basis.
Protocols that are OP Native would receive a small multiplier on the flat rate
Protocols that already have an Optimism delegate would receive a multiplier on the flat rate (slightly larger than the OP Native multiplier)
Protocols may receive both multipliers, if they meet both criteria
As a reminder, delegations will be made up to a cap of 2M total OP delegated. That means that protocols that already have 2M OP delegated to them are not eligible to receive any additional delegation and protocol delegations will be capped at the point at which they would push a protocol’s delegation above 2M total delegated OP.
We understand your concerns about the criteria to derive the list of qualifying protocols. It’s a challenging problem as most criteria are imperfect. We’ve very intentionally selected the criteria to be:
Applicable across protocols
Not easily gameable
Objective (to limit the Foundation’s involvement in this process)
Simple (given this is a temporary pilot program, lasting a maximum of 2 Seasons)
We suggest the following alternative:
The top 15 protocols, based on gas fees generated on Optimism, will receive delegation (flat distribution with multipliers, as described above). If any qualifying protocols have misused grant funding in the past, they will not be eligible.
Protocols that have not qualified, can self-nominate for one of 8 additional spots in the program. The intent is to broaden the stakeholders that are represented and to take into account factors that cannot easily be quantified or standardized.
The Token House would vote on the 8 protocols that are added to the program in Special Voting Cycle #9b. Self-nominations would run from Dec 21st - January 5th.
As in the original design, all qualifying protocols will need to opt into the program in Season 3, creating a delegate commitment and agreeing to abide by the delegate code of conduct. Delegations will not be made without this commitment to participate. Protocols receiving delegation through this program must maintain >70% participation rate to continue to receive delegation in Season 4. Any protocol violating the code of conduct will have their delegation removed.
This program is temporary and will be run for a maximum of 2 Seasons, after which point qualifying protocols will need to maintain their voting power via their own treasuries. Protocols that are active and engaged in the Optimism ecosystem, but that are not part of this program, may still participate in governance via their own treasuries or increase their delegation via other means.
We appreciate your feedback on these proposed changes. Final proposals for the Grants Council and the Protocol Delegation Program will be posted as new posts on the forum later this week.
As we know, Optimism is not a simple Ethereum protocol, but a chain on top of Ethereum to host protocols inside. As a direct consequence, the Optimism governance is of interest to the protocols within it (this is not new but good to remember).
On the other hand, fair distribution of a token for governance purposes is an extremely difficult task, and releases seen as “fair” no longer exist in this space. No token will be distributed in this process, yes, but meets the same criteria. Regarding this, as members of this governance we have been discussing these topics, mainly the cases of self-delegation and how it provides access to the protocols to have representation without it being an unfair or advantageous game. On this we have a proposal in preparation to discuss in the coming days.
Sharing our thoughts
Definitely talking about this is a good idea, a way to insert a new type of delegate is fascinating to diversify with differents types of governance participants that can contribute to the enrichment of Optimism ecosystem and its future.
For now, this new proposed base of 5M is a good start to offer to projects deployed in Optimism participation. According to Defillama, Optimism currently has 36 protocols with a TVL above $1M, while the addresses per day metrics indicate that 47 projects are used by at least 100 addresses according to Dune on Optimism protocols metrics. Ideally, this removes all doubts about the activity and purpose of Optimism being fulfilled.
Now, we’re going to assume that most of the protocols have the same level of intentions to participate in the program; What would be a good criterion to measure a good voting power allocation method?
As discussed above, this measure alone cannot make a good fit from the subjectivity of benefiting the protocols that provide more benefits to Optimism: We should take into account that some even grant subsidies for use sponsored by the same governance (in the form of OP tokens) so add a weighting of other metrics like:
Active addresses per week
Other metrics combined (same treatment as recent airdrop criteria).
For those projects that are encouraging activity with $op distribution, we will possibly find oversized data, the metrics regarding: Active addresses per week, TVL and volume, will not be taken according to current data; In these cases, each project must resolve the way in which they present this data. Pre-distribution metrics can be a parameter, but it will not be applicable to all (this is because many projects deployed with the grant and their distribution is not yet complete) along with their declaration of participation as delegates. These are just criteria ideas to consider.
You could even think of a previous protocol classification:
And from there, use one or a maximum of two objective metrics (gas and active addresses, for example, as applicable). The first classification would have to be approved and adjusted by governance, we would recommend doing it through a weighted vote (where each delegate expresses what % of allocation each category deserves, of the total proposed), and the rest according to the results of the metrics taken.
The limits, participation requirement and code of conduct seem reasonable to be in line with the progress of governance, and not a big change from the current climate.
One of the points that remain open is how to obtain a diverse participation of protocol representatives in Optimism before large lobbies repel other participation intentions, and at the same time, adjust to the processes that each protocol organization has to follow in order to be able to participate. exercise their work (what is the opportunity cost for a DAO to organize to elect a member dedicated to a possible delegation with potential concrete benefits) that doesn’t discourage the desire to participate in this initiative. Small DAOs or reputable teams could quickly get up to speed but large protocols with governance such as Uniswap or Aave can lead to cumbersome processes.
In addition, Optimism should be careful about endorsing representations to protocols that are not legitimate or agreed with the governance/DAO/community or whoever conforms to the protocol set, for example, let’s imagine the following scenario: What happens if a founder decides to participate in the delegation on behalf of the protocol without explicit approval of the protocol (DAO/governance/community)? How can the Optimism collective deal with scenarios like this and distinguish legitimate entries?
Receiving the same voting power base for protocols is a better approach for the participation in a fairer way, but it is essential to evaluate how much the base would be equivalent to the multiplier.
Resolving this, said proposal looks more solid and easier to reach a consensus regarding the use of metrics and objective and subjective classifications that will lengthen the discussion.
For this reason, we consider it important to summarize the following advantages and disadvantages of this proposal:
On the original proposal: prioritize participation in probably more genuinely used protocols, indirectly representing Optimism users not yet involved in governance.
On the alternative proposal: equal and fair treatment to begin with for all interested protocols.
About the original proposal: too complex and it will take a long discussion without reaching a consensus of the majority (say >70%).
About the alternative proposal: we do not like the proposed selection mode of 15 predefined and 8 additional by voting. We prefer to vote all 23 in a single round or faithfully follow the order of a table; since they result in better and simpler resolution paths (for example, discovering the protocols that are really interested from those that are not).
A final concern
We cannot rule out that the sudden appearance of a new group of delegates may further discourage the work of independent or individual delegations, which at the end of the day, may reduce the diversity of participation in governance and, if unsuccessful, the delegations to protocols and have to be modified, reduced or eliminated, it’s likely that some individual delegates have already left.
A protocol being OP native should get highest weight but we should also give equal voice to protocol bringing more user/trust to the chain even if they are multi-chain in comparison to an OP native project.
Beefy/Curve/Uni to name some, they are funneling more users, transaction and TVL in comparison to few OP native project ( Optimism TVL - DefiLlama ) and giving multiplier to OP native will not give justice to such multi-chain project, given that they are interested in gov.
For me its more important on which project is keeping the sequencer busy as its revenue will help our other house, Citizen house, so I will work towards giving them equal voice.
Also would like to echo Joxes view that this will discourage independent or individual delegates.
We understand the concerns about the potential for this program to discourage independent or individual delegates from participating in Optimism governance. Individual delegates and value-aligned protocols are both extremely important ecosystem stakeholders.
While we cannot entirely limit the potential impact this program may have on individual delegates, the program has been designed to incorporate several measures to limit any impact:
The program is temporary and will only last 2 Seasons, after which point protocols will need to maintain their voting power via their own treasuries
Delegations are capped at the point at which a protocol reaches a total of 2M delegated OP (which is just below the amount of OP delegated to the top individual delegate)
All protocols are subject to the same code of conduct as individual delegates, which prohibits self-dealing and other violations. Protocols determined to be in violation of the code of conduct will have delegations received through this program removed.
Based on delegate feedback, the total program size has been updated to reflect active votable supply (adjusted program size downwards from 8M OP to 5M OP)
We’ll continue experimenting with ways to empower all types of delegates. We welcome discussion or ideas around future programs that could increase participation, balance representation, and/or get more folks involved.
Really appreciate all the insightful discussion here. Since Uniswap’s deployment on Optimism, we have been committed to ensuring the user experience is as accessible and seamless as possible.
Just to clarify, the Uniswap Foundation does not host any frontends or interfaces at this time, instead our goal is to empower teams already building on Uniswap, creating more opportunities in the same way that Optimism is doing so in this Protocol Delegate Proposal and with the grants awards before. We are definitely open to feedback on how we can improve generally. As a Day 1 ally of Optimism (a la unipigs), we are committed to helping increase usage of Uniswap on Optimism, but want to do so with both communities’ best interests at the forefront. Whatever metrics the community chooses to prioritize projects, we will gladly support together with committed members of the Uniswap community.
This being the most important question for this proposal, is equally just as important for us for much of what the Uniswap Foundation does for the growth of our own protocol. As an example, when the UF kicked off the OP Liquidity Mining campaign with the $OP that was rewarded to the protocol about 2 months ago, here, we had broken it into 3 phases which get progressively larger and were designed with input from the Uniswap community.
In growing an aligned ecosystem for both the Uniswap and Optimism communities, we have been actively creating more opportunities to meaningfully contribute. As noted, the Uniswap Foundation Community Analytics Program ran an open bounty program for data analysts to analyze the first Phase of the LM program here. Looking at data from Phase 1, the LM program used only a small percentage (6.25%) of our $OP allocation in only 3 pools, brought over 200 new LPs with over $30M of TVL throughout the campaign, and maintained LP stickiness, even increasing TVL and transaction volume for 2 of the pools (credit to @springzhang). With the community’s help, we will post a retro on Phase 1 soon, integrate community feedback for tweaks to Phase 2, and launch that sometime in December to onboard even more users to Optimism!
This proposal is really exciting for us because Uniswap has not had the capability to participate in cross-protocol governance until now. With the UF, a core mission of ours is to be an advocate for the Uniswap community, including our governance representation on chains that Uniswap is deployed on. If we are included in the Protocol Delegation Program, our tentative plan is to propose the $OP be delegated to a multisig of 5, four being Uniswap community delegates and one representative from the UF. Our intention is to source nominations for the OP-UNI multisig from community members who are currently building on or are actively participating in Optimism ecosystem development. While the final details will not be confirmed until we receive more clarity on the Protocol Delegation Program, we are thrilled by the opportunity to be long term stakeholders in Optimism governance with help of other committed Uniswap community builders!
Thanks for jumping in here Ken, I’m a big Uniswap fan, perhaps such a big fan that I may even be overly critical at times
I fully appreciate the totally separate entities that make up Uniswap as we know it, however in your own quote above, you mention that the UniswapFDN doesn’t have any influence over the Uniswap Labs inerface, then go on to say that “As a Day 1 ally of OP (a la unipigs)…”, while at the time of UniPigs there was no Uniswap Foundation. I feel like even you are (perhaps by accident) referencing Uniswap Labs synonymously with the Uniswap Foundation
Any way I don’t want to get semantical but I think it’s fair to say that “empowering” protocols building on top of Uniswap, clearly doesn’t have the same reach as an Uniswap Labs initiative. Another issue I have is that the protocols selected to carry out the OP distribution on behalf of UniswapFDN, are leveraging semi-custodial at worst and more centralized at best, solutions for the OP distribution. Liquidity managers are not high trust among LPs in DeFi and rightfully so, since they come with added smart contract risks.
I’m disappointed that the open source UniswapV3staking.sol contract (which is quite secure) wasn’t used or recommended by you guys. There’s also a variation of that contract built by @david with a small modification to allow for more passive LPing using the UniV3staker.
Uniswap is obviously one of the most important protocols in crypto and so I hold anyone repping that name to a high standard. I’m really glad that you are taking interest in the forum and I think this is a positive development. I’d be happy to continue some of this discussion in the Uniswap forum but I’m equally as pleased to see you active here as well, so thanks