A trivial loophole around the no-selling rule is posting OP as collateral. Should protocols be discouraged from borrowing against their granted OP?
I can imagine some strategic uses for this, e.g., temporarily increasing capacity as you wait to āspendā your OP on whatever growth initiatives over some time period, but Iād imagine this would be the kind of thing that would have to be outlined well in advance.
This is a fine line sure, because a sufficiently malicious interpretation would be post as collateral and then let it be liquidated since then the borrowed assets would be āfreeā to use.
What if a protocol posts the OP as collateral, borrows something and with that something buys more OP to use for delegation. Is this a realistic expectation?
The case you outlined I think falls within a non malicious, non governance attack. Itās protecting their granted assets while their plan bears fruit, as long as itās clearly outlined from the beggining.
Yeah, thatās a great set of examples spanning the range of possible intentions.
A lot of hangups weāve faced in Season 1 have come from insufficiently defined expectations and somewhat clumsy post-hoc reactions, and frankly weāve just scratched the surface of possible shenanigans protocols could engage in. Mere self-delegation as an unexpected activity could seem quaint by the end of the coming season.
My suggestion is that (until we come up with a better method than issuing a lump sum up front to be used over 3-12 months) we explicitly prohibit any movement of or action with OP except in accordance with whatās outlined in a proposal.
There are indeed strategic uses of in-reserve OP, and I think itās fair not to outright prohibit any use that doesnāt directly translate to Optimismās growth, so long as the final āactionā of the OP does work to grow the eco. But grantees should at min outline their strategies.
Updated to include a field that asks proposers to specify a voting cycle to avoid ambiguity weāre encountering in Voting Cycle 6 about which proposals should be evaluated
Updated to reflect changes related to the Grants Council
Hi @lavande and @ben-chain
Do you have any response to Lindaās and ArabianHorsesā issues?
I.e. The blanket no-sale rule: Does it expire after a designated lock up period? Is there any allowance to use grants for the actual project that will be carried out?
It just seems odd that this rule has no stated expiry. Whatās the incentive or reward for applying to and winning a grant from Season 3?
It seems like a paradox: Applicants are meant to incentivise growth, yet all the can do is effectively become an organisational bridge to hand over OP to its users. If these users are already familiar with Optimism then there is no growth, and if they are new to Optimism then why do they want OP (without at least at lot of future work & incurred costs by applicants to make OP appealing).
Sorry, Iām happy to be corrected, by anyone here. But what am I missing? Why are organisations applying for Season 3, to become obligated to future work, without a reward or incentive? In particular when this is meant for small scale experiments?
Disclosure: Iām strongly considering applying for Season 3 to help get a unique education program up and running in 2023, but after reading this Forum topic Iām confused as to why to volunteer for this ~6 month effort with zero help to meet the running costs of the project, let alone be rewarded for it (beyond the incurred costs).
Thanks for any advice or clarification.
It is very good post. Thanks.
Hi, we created a grant proposal just before the end of the last voting cycle but unfortunately too late to finish by the cycle deadline. You can see this here . Now it seems that we donāt fit in either the Growth Experiments or Builder sub-committee outlines and the Partner fund looks to be intended for existing projects migrating to Optimism.
Could anyone suggest what we should do?
Hi @Axel_T I think the idea is for OP tokens to be distributed to users and let them choose if they want to sell or not. Mainly to achieve decentralization. If you want/need funding there are other channels for it like Partnership Program, Retroactive public good funding, etc.
My own opinion is that OP tokens are tough to be a governance token. Even if they have a price, liquidity, and all. Their main use of them is to vote on the token house governance and this is why projects have a lock and no selling policy.
Thanks @Gonna.eth I appreciate your direct response.
I donāt necessarily agree with your advice, as I donāt think it aligns with the Governance Fundās goals and purpose, as outlined in the Optimism Docs and the Governance Fund Charter, and thus I donāt think itās the best advice for the future of Optimism overall, but I still genuinely appreciate the response.
Itās always good to get otherās opinions, see how they interpret things, and you are still the only one to date who has responded to ArabianHorsesā, Lindaās, and my own queries (all noted above) about this particular issue. So cheers! Itāll all be taken on board.
Have a great day!
Weāre working on clarifying for everyone and will publish an update to the grant proposal template shortly!
Updated as outlined below:
Hi @lavande
Whatās the reasoning behind the asymmetrical restrictions on āselling OP by grant recipientā? One group of grants is restricted from selling for a year, the other group of grants cannot sell forever. Whatās the logic being used for the two different treatments? In particular if all objectives, plans and activities are outlined across both types of Proposals?
Secondly, @Subli_Defi and @Michael were discussing this issue (the idea of being āsponsoredā via OP for future work) in the Post, (Request for Grants: Growth Experiments - #14 by FractalVisions. Michael says the operating framework and rules are yet to be set, and to stay tuned. But you have updated the Proposal Template 4 days ago, with apparently finalised policies. Iām confused. Who should Grant Proposers be listening to when structuring our Proposals? Can anyone clarify this?
Thanks to anyone for any input here. Iām considering dedicating the time to structure a Proposal for a Season 3 Grant, but Iām just unable to prepare adequately with the conflicted messaging. So thanks to anyone for some clear & final guidance (even if that guidance is just to wait for now 
)
Cheers.
Hey @Axel_T,
On point #2, I would follow what is said in this post. I hadnāt seen the most recent update when I wrote the message in the other thread.
Cheers,
Michael
Hello! Iām new here and trying to understand the processes and how everything works. I was wondering how this rule is getting enforced? As in, if a recipient breaks this rule, how would we know? And what would the consequence be for that recipient?
Note that this post will be updated. The Cycle 11 grants forms can be found here: Grants Proposal Template - Cycle 11.