[FINAL] Economic Co-design of Gas Fees for the OP Stack

[mitch]

Thanks! I signed up yesterday and will be present later today to present this proposal.

[bobby]

@Griff

there should be a clear educational path for the community to take on this critical task.

@Griff

This vote would be only for signaling

Got it – sounds good! Agreed this is a very helpful educational resource. And introducing a signaling vote is a nice intermediate step to bringing this online as a gov right – just wanted to clarify the expectations around this vote so we’re all on the same page.

Excited to see how this goes.

[lefterisjp]

Heh I too remember and played with the TEC dashboard.

The proposal sounds interesting indeed. Would love to see this implemented.

But it also sounds quite expensive. 190k OP with current (low) prices is around 1/4 of a million dollars. Is there no way you could split this into smaller proposals or lower the budget?

[Griff]

I helped price this out and explained my reasoning here:

[FINAL] Improving Governance Accessibility through Praise and Contribution Based Attestations

RE: Price. I helped price this out and these grants are very risky for two main reasons. #1 Tight time pressure. All milestones need to be done by Sept 20th. This means working through the summer where many people in Europe and the US are supposed to be taking vacation, and instead, we need to develop a lot at breakneck speed to get something out in 2.5 months, despite potentially running into a technical blocker! #2 Volatility of OP & 1 year lockup. We don’t get this funding cash in hand, we…

tl;dr

2.5 months to do the work and 1 year lock up on OP creates a lot of risk so we can’t value this request at the current market rate of OP, especially when there is a high issuance rate and no token utility for OP.

That said… This is the ONLY proposal out here working towards OP utility. If we can get this dashboard together and start enabling the token holders, from the bottom up, to understand and decide how to control the levers that create revenue from gas that the network is collecting, then we will be one step closer to being able to decide to potentially buy OP with the gas fees collected (even though, as @bobby said, this is not possible yet.)

Creating a dashboard for the community to design an auction of ETH for OP is going to be a follow up proposal, if we get support from the community and succeed at building this dashboard.

These dashboards allow DAOs to make complex decisions and understand them, and this is what we have to do to get to OP utility, as it seems like the Foundation and OP labs are not allowed to even discuss the topic.

[PGov]

We are an Optimism Delegate (PGov Delegate) and we believe this proposal should be pushed forward to a vote. Excited to see your optimizations and how this will further increase OP’s utility!

[mitch]

Thanks for jumping in @Griff

@lefterisjp

That makes me so happy that you actually played around with the dashboard back in the day (2021, lol).

Just to reiterate what Griff mentioned, we have removed a lot of scope from the grand vision and we will push that development to later Seasons. 190k OP might be 1/4 million today, but as mentioned we are building the thing and having to hold and hope that OP has enough value to cover our expenses, well after we’ve had to fork out the costs to build.

Posts like these are far too frequent in any community:

Enabling $OP as a gas token on Optimism Network!

Enabling $OP as a gas token on Optimism Network! The $OP token can be used to pay gas fees on the Optimism Network!. This is a major addition to the utility of the $OP token, and will help increase adoption and usage of the Optimism Network!. ETH remains the default gas token, but all users will have the option to change to $OP. Users preferring to stick with ETH gas payments do not have to do anything, but using $OP will result in a 25% gas fee discount! Be…

Change the use of OP tokens from a governance token to the main network token for gas payment

Do you agree with changing the use of OP tokens from a governance token to a main network token to pay the gas fee?

OP as an MEV staking token

Hi everyone, I wanted to make an alternate proposal than Enabling $OP as a gas token on Optimism Network!. This is an approach which mirrors PoS as well as Fuel Labs. This is not a token price scheme, please read the full post! EDIT: I found some relevant posts where implementation could be discussed: Use OP to decentralize the sequencer and Pragmatic first step towards decentralizing sequencer (this one has recent activity). I apologize for any duplication, although I think reviving the discu…

While the ideas in principle might be good, there isn’t a clean way to actually figure out the practical details of a high impact, technical decision without taking months of squabbling and a myriad of yes/no votes. The alternative is that the core team makes the decision and by doing so we take a step further away from decentralization.

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I know you’re no stranger to token engineering, we’re really stoked to create a process that permits holistic token engineering process to take place so that we can ensure OP has great value with great utility well into the future. The only way I think we’ll get there is to have collaborative, iterative processes like the one you experienced with the TEC Commons Config.

Even as @bobby mentioned if there isn’t a direct way to do it right now I think this will open up a lot of doors and engage the entire community in incredible ways.

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EDIT

We took your feedback and discussed, we’ve lowered the request OP to 170k, down from 190k, I’ve made the changes to the original proposal above.

[katie]

I am an Optimism delegate with sufficient voting power and I believe this proposal is ready to move to a vote.

[AxlVaz]

As a contributor of @SEEDGov for the @Joxes delegation, I have analyzed this mission following the criteria mentioned in this post.

• The proposal follows the standard template and is detailed enough for my liking.
• The requested funds seem a high amount, I do not have the capacity to properly evaluate the cost, but I think this mission is very interesting.
• The proposed scope is beneficial for the Optimism ecosystem.

Therefore, I am IN FAVOR of this mission and the delegation will be using the standard template to confirm this.

[Joxes]

Thank you @AxlVaz

I am an Optimism delegate with sufficient voting power, and I believe this proposal is ready to move to a vote.

[lefterisjp]

Thank you for taking the time to reduce the budget by a small%. I still think the amount is quite high, even considering the lockup.

Though the project is interesting.

Anyway we will see how the vote goes. By my count you already have the needed approvals.

[Michael]

I think one thing I’m missing here is the potential users.

To me, this strikes me as a very large grant amount for a problem that doesn’t yet exist. I’m happy to be corrected, I’m just trying to wrap my head around it.

Is there currently any demand for these kind of gas fee calculations/design? What did a network like Zora do to manage this, did they use any similar tools for gas price simulations?

In general I’d love to see some examples for current demand for a project like this. We have a ton of known problems in governance that need solutions built, so in order to justify a grant this large I’d love to know that the opportunity cost wasn’t too high.

I’m not against novel explorations / tools / research, but approving a grant to build something with only speculative demand seems like something more in line with a 25k OP grant vs 170k OP.

[mitch]

Great questions! Thank you @Michael

I’d like to understand your point on Zora, AFAIK when Zora launched their network the devs simply decided amongst themselves the network settings and launched their L2. I could be mistaken but I don’t think Zora had any transparent process while configuring their network ahead of its launch.

I would point out there is a very noticeable demand to control the network’s settings through Governance, as mentioned above:

@mitch

Posts like these are far too frequent in any community:

Enabling $OP as a gas token on Optimism Network! red_circle star2 red_circle The $OP token can be used to pay gas fees on the Optimism Network!. This is a major addition to the utility of the $OP token, and will help increase adoption and usage of the Optimism Network!. ETH remains the default gas token, but all users will have the option to change to $OP. Users preferring to stick with ETH gas payments do not have to do anything, but using $OP will result in a 25% gas fee discount! Be…

Do you agree with changing the use of OP tokens from a governance token to a main network token to pay the gas fee?

Hi everyone, I wanted to make an alternate proposal than Enabling $OP as a gas token on Optimism Network!. This is an approach which mirrors PoS as well as Fuel Labs. This is not a token price scheme, please read the full post! EDIT: I found some relevant posts where implementation could be discussed: Use OP to decentralize the sequencer and Pragmatic first step towards decentralizing sequencer (this one has recent activity). I apologize for any duplication, although I think reviving the discu…

These are examples just from the Optimism forum, as we can see there is real appetite for community members to propose changes to the network settings.

Every user of each roll up pays gas fees and is affected by the choice of these parameters, Bedrock is specifically designed so that governance can take management over the fee system, but it is a serious, technical decision with a lot of context and implications to understand. Controlling the fees is one of the most impactful decisions made in each OP Stack, this is the primary revenue source for each network.

Whether the parameter choice is determined by a core dev team or there is a process where the choice can be designed by anyone and voted on the dashboard will be relevant. The Economic Co-Design Dashboard will aid in these critical decisions, simulating the potential outcomes, and visualizing them so that non-technical people can understand the effects.

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And this will be the first of many modules designed to tackle these tough technical issues. The greater problem we hope to solve is providing a method for communities to arrive at the best solution for technical decisions with a high degree of consensus and context. Our process we piloted in the TEC was highly successful in leveraging the collective intelligence while creating massive engagement and education for the entire community, even for the humble community it was at the time.

You can see here for example all of the thoughtful and interesting proposals that was produced from the pilot here:

Issues · CommonsBuild/commons-config-proposals

I hope this satisfies some of your concerns in regards to WHO would be our actual users and WHY this particular module is an important starting point.

[shaneMkt]

I represent KyberSwap, an Optimism Protocol Delegate for Season 4 with sufficient voting power, and we believe this proposal is ready to move to a vote.

[mitch]

@lefterisjp @Michael

We had some further team discussions around the requested budget.

We’ve resolved to further lower the requested amount from 170k to 125k OP; that’s a 35% reduction from the original 190k OP.

I think personally that OP has a strong future and that the value of OP will remain strong well into the future, especially considering the value economic co-design could bring to Optimism and the OP stack.

While we are concerned about our upfront costs and the risk of a 1 year lock up, we’re willing to take that risk for the chance to build something very cool for the OP ecosystem.

Thanks for all your valuable feedback and I hope we can count on your support!

[mitch]

Hey everyone! I made a short Loom video to explain a bit more our vision for this mission proposal, check it out here:

[Upnode]

Hope we can collaborate together to leverage your network settings to deploy OP stack chains if our grant proposal has passed. We are experienced in deployment of validators and OP stack chains.

[jackanorak]

Really helpful video. Help me understand the complexity of this project a bit better, but I think there are still some gaps in my understanding. What sorts of considerations are realistically in play for users of this? My silly lay brain sees this as essentially a 1-to-2 input calculator that says, “if gas fees were X, then this transaction would cost Y” - which doesn’t seem like a 125k OP build.

In addition: is any of the modeling here actionable given the current state of the OP Stack and sequencer? It’s hard for me to really assess the likely user base or impact of such a product.

As an aside, I do feel the need to say this:

@Griff

That said… This is the ONLY proposal out here working towards OP utility.

This isn’t true, and in any case I don’t think OP utility is within the scope of this intent, which relates to governance rather than to OP as a potential gas token.

[mitch]

Hey there! Thanks for giving it a watch, I appreciate that, I know this proposal has a lot of different parts in action.

Did you have a chance to play around with the dashboard we built in the TEC? You might not understand everything but it’s the closest example of the product we want to build.

Commons Config Dashboard

Great questions you brought up and I’ll try my best to address them. I also have seen the comments in your delegation communication thread and will try to go over some points as well that you brought up there.

Reference:

@jackanorak

Economic Co-design of Gas Fees for the OP Stack (Alliance: Common Stack) 125k AGAINST -If I understand this correctly, this deserves an entire rant on why this doesn’t make any sense to fund. In short, current OP spec doesn’t have anything related to gas, this is enormous spend for what amounts to a spreadsheet product geared for a handful of users looking to speculate.

To your first point, you are totally right in that the gas fees calculation itself is not a algorithm that offers a lot of room for complexity. It’s basically two variables IIRC the dynamic fee and the fixed fee which are calculated along with the gas price and the gas used to arrive at the final fee on transactions.

Inside of the module we’ll provide a friendlier interface than spreadsheets to play with variables and see the simulation data for making transactions on Optimism and other L2s as a comparison.

However, this is not really the main problem we’re trying to solve. The gas controls module would be the first of hopefully many modules that can be standalone or complement each other.

We’re just getting started…

Gas controls for example would be followed by a module of how to use the gas fees collected to buy OP, which could be followed by a module that dictates how OP collected is then distributed. From there you have a clearer picture of a robust economy that you can propose as an ensemble. That’s the true beauty of economic co-design, but for the limitations of S4 (time & budget) we settled on a smaller scope that could be built upon with subsequent funding and community interest. Gas controls is the simplest module for our vision, and a logical starting point.

The problem that we’re trying to tackle is that there is no good Governance process for a community to decide what any of these settings should be. You can have 40-50 people making endless forks of spreadsheets and arguing their points in forum posts but that can be a tedious and fruitless process.

What this proposal establishes is a clear and engaging process of bringing an entire community together to express their creativity and ideas in a specific format and work through it all until you arrive at the best configuration(s) generated by your community. This is contained specifically in the portions relating to the Module Configuration Archives the custom Snapshot voting UI, and also the education content, all of which we had to cut scope on and want to improve in subsequent proposals.

To your last point about the sequencer I will quote the comment Griff made to Bobby:

[FINAL] Economic Co-design of Gas Fees for the OP Stack

I think the point here is that, BEFORE the community (not just the Token House, but also the Citizen House I hope) should have the power to make this decision, there should be a clear educational path for the community to take on this critical task. This vote would be only for signaling. So it doesnt matter how the parameters are changed, whether it is a token house vote or a multisig that can just change at will, the community can work together to understand and then design the gas fee calcu…

The gas controls can be changed, those two variables I mentioned can be changed. But by whom? It appears only by the core devs for now. However, how might those core devs approach changing them? How would they even assess if the community wants to change them, and to what? The economic co-design dashboard provides a way for all of that to happen.

I’ll admit the gas controls are not something I imagine will be changed frequently, nor should they be, but the framework with gas controls as just one module among many I see as immense value for the OP stack, Optimism and really any network that wants to holistically manage it’s configuration.

I hope this resolves some of your concerns @jackanorak and I’ll be happy to address any more you might have. Thank you for your critical eye and raising some valid concerns!

[jackanorak]

@mitch

The gas controls module would be the first of hopefully many modules that can be standalone or complement each other.

@mitch

I’ll admit the gas controls are not something I imagine will be changed frequently, nor should they be, but the framework with gas controls as just one module among many I see as immense value for the OP stack, Optimism and really any network that wants to holistically manage it’s configuration.

If this is true, I would price the entire project, soup to nuts, at something building up to your overall ask over time, vs the 125k OP up front for just the two-variable gas estimator.

@mitch

Subsequent Mission Proposals will further build on this Dashboard and provide more critical components such as:

So the plan has been to ask for even more funds later on to build more addons?

Instead, why not build something minimal up front first and demonstrate efficacy for RPGF? Otherwise it seems as though OP could spend several multiples of what you’re asking before something truly actionable is built.

[linda]

I would have voted abstain on this had it been an option. The amount requested is high and I didn’t feel strongly about it. I also received input from my colleague Jordan Clifford and he came to the same conclusion.