Governance Update #7

Whew! We just wrapped up Voting Cycle #13, the first Cycle of Season 4, and it was an exciting one! Thank you to everyone who participated in this experiment - from co-grantors, to grant applicants, to our tireless delegates.

As you probably know by now, our governance experiments are meant to be iterative and Missions are no exception. We appreciate all the grant recipients and delegates that have provided valuable feedback throughout this process. Special shout out to Michael, who hosted an impromptu Mission retro in the last community call :slightly_smiling_face: This feedback will help us refine the next iteration of Missions so they are more effective in Season 5.

We’d like to take the opportunity during the relatively calm Voting Cycle #14 to reflect on the Mission proposal process as we have a full slate of exciting governance initiatives we’ll need your feedback on throughout the rest of the Season and Reflection Period.

What Went Well: This was a major step forward!

  • Scaling the number of non-core teams (Alliances) working towards our Collective Intents: We had ~50 draft Mission proposals, 31 of which moved to an approval vote, and 27 of which were approved. We had 20 teams apply to complete 6 RFPs (Foundation Missions) and the Grants Council received 115 grant applications! It’s amazing to see so many teams building the Collective and working to grow the ecosystem.
  • Approvals were painful but worked as expected: We had roughly 50 draft proposals and 31 proposals that progressed to a vote. Of those eligible for voting, 27 were approved. We understand the approval process needs to be improved, but these ratios demonstrate that the delegate community acted as a strong filter.
  • More focused spend: We didn’t max out budgets for Intents…and that’s kind of the point. A lot of DAO treasuries struggle to scope their spend and prioritize different initiatives. Season 4 was designed to reduce these challenges while building the Collective. It’s okay that we didn’t use up the entire budget for each Intent, especially the first time around when budget setting has little precedent and the quality of proposals can be improved. Unallocated budgets will be returned to the Governance Fund for future use.

What We’ve Learned: Things that need to be improved for the next iteration.

  • Timing: Running the Grants Council cycle and the Mission process concurrently was too much. We weren’t sure how many applicants or Mission proposals we would get, but running these process in tandem resulted in strain on Council delegates and some confusion among proposers.
  • Approval/filtering process: It was hard for proposers to understand how to reach delegates and get their approval. Delegates were overloaded with requests for approval. This was especially painful and needs to be improved next Season, for the sake of both delegates and Alliances.
  • Voters need more context: Delegates struggled to evaluate 31 Mission proposals. While this process is only intended to occur twice per year, it could become more challenging as the DAO scales.
  • We need to improve the accessibility of the system (Intent #4!): This was a new experiment and there was some confusion around the different types of grants and the process. It’s important that we make the system more understandable so more grant applicants can access it.
  • Confusion: see “Important Clarifications” below.

How Missions Could Change: Some early ideas for improvement.

  • Timing: We may need to separate the Council and Mission process and/or redesign the interplay between the two. A longer review period was also requested, and while we’d like to keep the process aligned with regular voting cycles, we see opportunities to optimize the process within a five-week cycle to make everyone’s lives easier.
  • Approval process: We are considering a process whereby delegates (meeting some pre-defined criteria) can opt-in to provide approvals for a specific Intent. These delegates would then receive a random sample of proposal drafts under their selected Intent to review. This should allow proposers to know which delegates need to approve their proposal and ensure that their proposals have been reviewed, and would better divide the workload among delegates that opt-in. We think this model may work well for lower context decisions like approving proposals to move to a vote.
  • Voters need more context: For high context decisions, the Grants Council has proven to be an effective model (see the reasoning for the Council here). What about a Council for Missions?
    • We experimented with a more open voting process for Missions to address feedback from non-Council delegates that they wanted to be more involved in these types of decisions, as it’s important for tokenholders to derive utility from the governance token.
    • Missions are focused on building the Collective so the individual members of the Collective should have context on what the Collective needs to accomplish our Intents. This is different than the context required to evaluate Grants Council applications, which are focused on growing the broader ecosystem. Missions are meant to be an alternative to working groups, not traditional ecosystem grants. This is an important distinction.
    • We think it’s important to limit the total number of Councils in the Collective to 4-5 high importance/high impact Councils (more details on these soon) to minimize governance overhead and to balance direct and representative democracy.
    • As such we will be exploring alternatives to Councils, which may include multiple waves of approvals, a recommendation mechanism, a cap on the number of proposals that can move to a vote, etc. Feel free to suggest additional alternatives below :slight_smile:
  • We need to improve the accessibility of the system (Intent #4!): This likely includes providing better templates and guides, introducing some more standardization, hosting multiple workshops/office hours, and or supporting alternative proposal formats or supplemental pitch sessions

Long post, thanks for reading! As always, we appreciate your commitment to experimentation, without such willing and persistent community members, we would not be able to innovate. As always, feel free to leave additional feedback and/or suggestions for improvements in the comments below.

Important Clarifications: Let’s clear up any confusion that arose during Voting Cycle #14!

  • Grant policies:
    • We understand and empathize with your feedback about the limitations of these policies, but it’s very important to remember they are required to align incentives and mitigate legal risk for both the Foundation and grant recipients (among the other reasons outlined here). These policies may be enforced via the Code of Conduct, or by the Foundation. Please remember, these policies are not meant to be punitive but rather to protect the Foundation and grant recipients and to make sure Optimism is able to thrive over the long-term.
    • We are considering an RFP to facilitate the creation of an ecosystem fund that would enable investors to support the incredible work being done in the Collective with upfront capital. If you’d like to help work towards this initiative, please let us know.
    • We’ll also update the Code of Conduct in the next Reflection Period to allow builders grants to be delegated, so that grant recipients may benefit from governance rights before the lock-up expires.
  • Required disclosures:
    • As outlined in the Code of Conduct, actual or reasonably anticipated conflicts of interest must be disclosed in writing and prominently displayed ahead of any voting. Delegates are prohibited from approving and voting on their own proposals. Doing so is a violation of the approving delegate, not the proposer relying on their approval.
    • There is no policy prohibiting the usage of grants-as-a-service, but the usage of these services should be disclosed. The Code of Conduct will be updated to make this explicit.
    • Grants may only be distributed to Alliance members listed in the Mission proposal and may only be distributed as specified in the proposal. Doing otherwise is considered grant misusage and is a violation of the Code of Conduct. Please remember, the Alliance Lead will need to complete a KYC process (all members may KYC if the Alliance Lead does not want to bear the responsibility of distributing the grant to other Alliance members.)
  • Multiple Submissions:
    • Alliances cannot submit the same proposal under multiple Intents, which means an Alliance may not simultaneously submit the same proposal as a Mission and a Grants Council application (falls under Intent #2).
  • Delegate rewards:
    • Delegates are rewarded for their contributions. This happens retroactively based on participation during the previous Season, since workload has varied quite a bit due to a high degree of experimentation (example here). Once the governance structure is established and stable, the way we do delegate rewards may evolve.