Grant Proposal Template

Phase 1 Proposal Template v2

This is an update to the “How to Create a Proposal” post. Please reference the Gov Docs and operating manual for additional details on submitting proposals.

Key information about Governance Fund grants

5.4% of the total initial token supply (231,928,234 OP) will be distributed to Optimism projects and communities via the Governance Fund. During Season 2, projects can continue to submit forum proposals to request any amount of OP tokens from the Governance Fund. All Season 2 proposals must include a plan for how the tokens will incentivize sustainable growth on Optimism.

The purpose of the Governance Fund is to incentivize sustainable growth of projects and communities in the Optimism ecosystem. This does not mean that all grants must be incentive programs. The Token House is welcome to consider any and all proposals which would drive growth or address a gap in the Optimism ecosystem, including public goods projects.

However, it does mean that funding should come with an expectation of growth-related deliverables. It is not the intended purpose of the governance fund to retroactively fund public goods without an expectation of future work—there is a distinct OP allocation dedicated to this, which will be distributed via the Citizens House at a later date. You can read more about the total allocation of OP in the Allocations section of our Governance docs. If your project would be better served by our Partner Fund, please get in touch.

Proposals will be reviewed and voted on by OP token holders and their delegates using the process outlined in the Operating Manual.

How to apply for a Governance Fund grant

To submit a proposal, follow the process outlined in the Operating Manual.

Incentive Proposal Template

Project name:

Author name and contact info (please provide a reliable point of contact for the project):

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: [Yes/No]

L2 recipient address:

Which Voting Cycle are you applying for?:

Grant category: (DeFi, NFT, Tooling, Other)

Is this proposal applicable to a specific committee? (If so, please link to committee)

Project description (please explain how your project works):

Project links:

  • Website:
  • Twitter:
  • Discord/Discourse/Community:
  • Please include all other relevant links below:

Additional team member info (please link):

Please link to any previous projects the team has meaningfully contributed to:

Relevant usage metrics (TVL, transactions, volume, unique addresses, etc. Optimism metrics preferred; please link to public sources such as Dune Analytics, etc.):

Competitors, peers, or similar projects (please link):

Is/will this project be open sourced? Yes/No/In Future

Optimism native?: Yes/No

Date of deployment/expected deployment on Optimism:

Ecosystem Value Proposition:

  • What is the problem statement this proposal hopes to solve for the Optimism ecosystem?
  • How does your proposal offer a value proposition solving the above problem?
  • Why will this solution be a source of growth for the Optimism ecosystem?

Has your project previously applied for an OP grant? If successful, please link to your previous grant proposal and provide a brief update on milestones achieved with the grant. If unsuccessful, and this is a resubmission, please specify how you have incorporated significant changes in accordance with feedback.

Number of OP tokens requested:

Did the project apply for or receive OP tokens through the Foundation Partner Fund?: Yes/No/In Process

If OP tokens were requested from the Foundation Partner Fund, what was the amount?:

How much will your project match in co-incentives? (not required but recommended, when applicable):

Proposal for token distribution:

  • How will the OP tokens be distributed? (please include % allocated to different initiatives such as user rewards/marketing/liquidity mining. Please also include a justification as to why each of these initiatives align with the problem statement this proposal is solving.)
  • Over what period of time will the tokens be distributed for each initiative? Shorter timelines are preferable to longer timelines. Shorter timelines (on the order of weeks) allow teams to quickly demonstrate achievement of milestones, better facilitating additional grants via subsequent proposals.
  • Please list the milestones/KPIs you expect to achieve for each initiative, considering how each relates to incentivizing sustainable usage and liquidity on Optimism. Please keep in mind that progress towards these milestones/KPIs should be trackable.
  • Why will incentivized users and liquidity on Optimism remain after incentives dry up?

Please provide any additional information that will facilitate accountability:(smart contracts addresses relevant to the proposal, relevant organizational wallet addresses, etc.)

Eligibility considerations

The below restrictions may not map with 100% clarity onto all possible scenarios. In the spirit of governance minimization, the Optimism Foundation will not police the application of these rules. Instead, it is the directive of the Token House to apply these parameters consistent with the purpose of the Governance Fund: driving sustainable usage and engagement on Optimism (rather than simply providing teams with working capital or voting power).

OP received through the Governance Fund should not be sold by the grant recipient. This “no sale” rule:

  • Includes the grant recipient, their affiliates and any other related persons. These persons cannot receive OP for the purpose of selling (or if the grant recipient knows they intend to sell) the tokens.
  • Includes the direct exchange of OP for crypto or fiat, whether done publicly or privately. Think selling OP in exchange for fiat or crypto, regardless of whether done on a CEX, DEX, OTC desk, at your local park, or otherwise.
  • Does not include using OP to incentivize usage. Providing OP as liquidity mining incentives is not restricted by these parameters.

The expectation is that token grants will not be self-delegated for use in governance. The primary purpose of these token grants is to incentivize sustainable usage and growth of the Optimism ecosystem. If you plan to increase your voting power by delegating a portion or all of your grant tokens to your own protocol, or a closely affiliated party, this should be made clear in your grant proposal along with your reasoning.

24 Likes
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This is an super cool, I see couple of suggestion raised by me along with other delegates and community member. So thank you for working on feedback and making the changes accordingly.

Relevant usage metrics (TVL, transactions, volume, unique addresses, etc. Optimism metrics preferred; please link to public sources such as Dune Analytics, etc.)

Dont just provide a link of dune or defillama.If your account is new and you are limited to post link on your proposal. Post the related images, link as a comment. I am huge fan of Curve proposal, use that a reference and improve on top of it.

10 Likes

Such a lot of great additions on this, explicitly requiring links to the various community channels, data sources and similar projects are small, simple changes that will be a much appreciated QoL improvement for delegates. Really impressed.

Another addition that would be useful might be a section for links to the team’s previous projects, so if the one they are deploying to Optimism is brand new and doesn’t show much in the way of impressive metrics yet, proposers can still demonstrate that they have a good track record of shipping decent dApps (or whatever they do).

I’m also a big fan of the explicit restriction on using tokens for governance unless that use is included in the proposal, obviously that occurred briefly and was resolved by the cooperative response from the team who did it, but making it clear before hand that this is not cool seems a better way to avoid any bad vibes from misunderstanding and different interpretations of the token’s purpose.

Overall the new template is :fire:

9 Likes

I think this update is very good, I would add two more questions:

1- Did the project apply for or receive OP tokens through the Foundation Partners Fund? Yes/No or we have applied and have not received a response yet.

2- If OP tokens were requested from the Foundation Partners Fund, what was the amount?

Note: I believe these questions are important because currently the Partners Fund is managed by OF, and delegates/government members do not have access to this information.

There are protocols that apply to Phase 1 and also apply to the Partners Fund, I think both the token house and the OF should maintain communication about this to the Partners Fund

7 Likes

These changes should be satisfactory for the vast majority of proposals received so far (as a measure), which is a very good sign.

First, I would like it to be clarified,

it would be important to know if the KYC implies that there will be applicants who would be restricted from receiving these grants if they are located in certain countries, or if this point is not an issue that a team should worry about.

Second, doing echo of this:

We have recently seen how projects like Aave have received funds through both fund allocations (partners and governance fund) or like Velodrome, which received funds from the partner fund and they have a draft ongoing to the governance fund.

In these case, for reasons of transparency, it would be positive to know if a team is in the process of applying (sending the same proposal or another plan) through partner funds.

5 Likes

These are valuable additions to the current proposal template and will significantly help token holders, especially delegates, make decisions since most of the information will now be presented within the forum.

In previous voting cycles, I would deep dive into as many protocols as possible to make informed opinions, but it wasn’t always possible due to time constraints.

Here are some further thoughts on this new template structure.

  1. I agree with DeFi_Latam that it’d be helpful to see whether projects have received tokens for transparency reasons. It wouldn’t reduce their chance of getting a grant from the governance fund, but it’s excellent to understand how they would spend the extra $OP.

  2. Should projects clarify why they are asking for x amount? They detail the project and distribution method, but I’d like to understand why they need x amount rather than a higher or lower amount.

  3. It’s important that we don’t burden grantees with an overwhelming application. We should only keep the necessary questions within the template. Right now, it is a good size, but I am wary that if we add much more, it might deter communities from applying.

4 Likes

I’m supportive of the new information requested in this updated template. It will make reviewing proposals a lot smoother.

One aspect I would like to better understand expectations on is the “OP received through the Governance Fund should not be sold by the grant recipient” rule. Is there an expected timeline for this request? In some cases, I would imagine teams requesting funding to further build on Optimism might need help in covering non-OP denominated expenses especially if they are building a public good. Is there an expectation that they can’t sell any tokens indefinitely even if means helping them fulfill the goal in the proposal?

4 Likes

Thank you for the valuable feedback on the new proposal template! We’ve added 3 additional fields to reflect your feedback:

  • Please link to any previous projects the team has meaningfully contributed to:
  • Did the project apply for or receive OP tokens through the Foundation Partner Fund? Yes/No/In Process
  • If OP tokens were requested from the Foundation Partner Fund, what was the amount?

We hope this new template will save you valuable time and improve the delegate experience in Season 2!

6 Likes

Much needed change! I spent a lot of time researching projects requesting funds, this template will make delegates’ lives much easier.

2 Likes

I agree that proposals should include some subjective proposer generated data and analytics, which will be a great improvement vs what was available in cycles 3 and 4.

However, I’d also like to see some basic information to enable objective data and analytics professionals / community members to perform analysis for the Optimism community / delegates. Information could include:

  • All smart contracts relevant to the proposal, at minimum including (i) address, (ii) chain, (iii) description of the smart contract, (iv) if branded / marketed differently than proposal protocol…reason for inclusion (e.g., core team forked protocol, etc.). Even something similar to the Velodrome security page in docs would be a good start. Ideally across all chains so user base performance and brand loyalty could be observed

  • All relevant organization addresses (e.g., treasury address, DAO operational address, sub DAO addresses, etc.).

This would give analytics professionals a head start and if provided directly by the proposal team should cut down on cycles where contracts are missing, chains are missing, etc. (i.e., enables completeness of the on chain picture / performance).

There’s always a balance between zero data supported diligence vs overly restrictive diligence, but there is a lot of $OP up for grabs and I for one would like to execute some data diligence to objectively support or challenge proposer teams in a productive and optimistic way.

Additionally:

  • Would be great to hear feedback from other delegates if there are other key breadcrumbs which would be helpful in this context?
  • If formalized or structured in the future, a call with proposers to ask questions about trends and performance may be more efficient / productive than comments in discourse, but would require coordination. To make sure the proposer is being fairly represented by objective data analyses

Lastly, generally a minor point and may be overly prescriptive, but should probably suggest that teams make a linktr.ee or similar for their proposal as I know there are limits to the number of links to post in Discourse. Could make it easier for delegates to make sure they hit all the relevant key links and nothing is buried in comments.

5 Likes

yep, it makes sense, but some grants are not directly for users, some projects use their allocation to make their projects better, for example, ‘rotki’ has used %100 of their allocation to fund their developers (they sold their allocation directly) these kinda projects are out of scope? or was it just a mistake? just asking. btw I also support these kinda incentives if It makes OP ecosystem better, if it is worthy, it is okay for me.

would love to know if this apply to only Phase 1 gov token or Phase 0 as well ?

Some context:-

We had a discussion on this in past when Perp choose to self-delegate( I want to discuss project boosting their delegate power with governance fund ) but after our feedback they decided to revoke it.

Today, I saw that SNX team has done the same by using their phase 0 fund(Dune).
My opinion still remains the same, I think team should not use gov fund token to self-delegate

One thing I like to see is Foundation not micro-managing us but If we go though my thread on Perp, we are clearly divided here, one side find it against open gov while other doesnt and quite frankly I dont see us making any progress by repeating the same conversation again so I wont create a new thread.

My request from foundation would be to update the template to reflect if the rules apply to all grant fund or just Phase 1. Doing so will make the process more clear and put an end to this conversation.

7 Likes

I just saw this entry. I was looking in the discord and here in the forum if someone had touched the subject of self-delegation. I have written this thread:

3 Likes

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 ‘spend’ your OP on whatever growth initiatives over some time period, but I’d 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 “free” 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. It’s protecting their granted assets while their plan bears fruit, as long as it’s clearly outlined from the beggining.

2 Likes

Yeah, that’s a great set of examples spanning the range of possible intentions.

A lot of hangups we’ve faced in Season 1 have come from insufficiently defined expectations and somewhat clumsy post-hoc reactions, and frankly we’ve 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 what’s outlined in a proposal.

There are indeed strategic uses of in-reserve OP, and I think it’s fair not to outright prohibit any use that doesn’t directly translate to Optimism’s growth, so long as the final ‘action’ of the OP does work to grow the eco. But grantees should at min outline their strategies.

1 Like

Updated to include a field that asks proposers to specify a voting cycle to avoid ambiguity we’re encountering in Voting Cycle 6 about which proposals should be evaluated