Introducing Backstop Grants

Retroactive Public Goods Funding (Retro Funding) is a core piece of the Optimism Collective’s long term vision. Early rounds are experimenting towards a future where Retro Funding is mature enough to support the development and maintenance of the Superchain and the entire Collective. This is the fork of capitalism Optimists are building towards: a world where public goods like open source software can thrive, where positive-sum behavior is incentivized, and where impact = profit.

At the same time, Retro Funding is not yet consistent enough to provide the certainty or predictability teams often need to commit themselves full time to helping build Optimism. As a bootstrapping tactic in these early rounds of iteration, the Optimism Foundation is experimenting with “backstop grants.” A backstop grant is a way to give teams the confidence to devote full-time energy to the Collective while still orienting them towards Retro Funding as their long-term source of support. This helps the Foundation reduce its reliance on grants from the Partner Fund and via RFPs, and transition more teams to participating in Retro Funding over time.

How it works

  • In instances in which the Foundation would otherwise make a standard Partner Fund grant, a backstop grant can be made for a certain token amount over a specified time period and specified scope of work. The grant reflects a minimum value of the scoped work, and is subject to completion-based milestones.
  • The grantee will be encouraged to participate in any Retro Funding rounds that match the scope of their contribution.
  • If the grantee receives less OP from Retro Funding than the value specified in their backstop grant, the grantee will receive additional tokens from the Optimism Foundation to cover the difference.
  • If the grantee receives more OP from Retro Funding than specified in their backstop grant, the grantee will not receive any additional tokens from the Optimism Foundation.

For example

  1. Backstop grant for 10,000 OP over 12 months. Project receives 8,000 OP in Retro Funding; they would then receive 2,000 OP from the Foundation for their backstop grant.
  2. Backstop grant for 10,000 OP over 12 months. Project receives 4,000 OP in Retro Funding; they would then receive 6,000 OP from the Foundation for their backstop grant.
  3. Backstop grant for 10,000 OP over 12 months. Project receives 12,000 OP in Retro Funding; they would then receive 0 OP from the Foundation for their backstop grant.

Selection & Criteria

The list of teams who have received a backstop grant to date (as of 14 April 2024) includes Agora and Open Source Observer. We will keep this post updated as other backstop grants are made.

Backstop grants may be made in similar circumstances to those in which a standard Partner Fund grant would be made. To better align incentives, they are more likely to be utilized for teams of builders that are dedicating all or a majority of their bandwidth to the Optimism Collective, and are working on critical infrastructure – including the OP Stack, retro funding tooling, or chain infra provisioning. The size of each grant is estimated to approximate the impact provided to the Collective.

These grants are designed to lower the risk of a team committing substantial bandwidth to the Collective, while also preserving the importance of Retro Funding and public accountability for impact.

Backstop Grants & Retro Funding

In past Retro Funding rounds, the project signup experience has asked for information about past or existing grants and funding sources. We expect voters in Retro Funding to make their assessment of a project’s impact without considering the existence of a backstop grant. Therefore, the exact amounts of each backstop grant are not disclosed, allowing badge holders to impartially assess a project’s impact.

As we evolve Retro Funding into the primary source of impact support across the Collective, we want core teams to orient towards Retro Funding as much as possible. The backstop grant serves as just one type de-risk mechanism for projects that spend a majority of their team’s bandwidth on Optimism. This is a temporary bootstrapping experiment as Optimism continues to work towards reliable, regular Retro Funding rounds that can support ongoing core development across the Collective. In addition, Retro Funding may also benefit from additional mechanisms developed by the community to experiment towards the same goal.

Success Criteria

This program is an experiment in creating alignment and increasing product velocity across the Collective. This program will be considered a success if:

  • More teams are willing to make a full time commitment to building Optimism.
  • Teams with backstop grants receive Retro Funding equal to or greater than the size of their backstop grant.

Thanks to Matt Stephenson and LauNaMu for feedback on earlier drafts of this post, as part of the Collective Feedback Commission

28 Likes

Great initiative! What’s the procedure to apply for a Backstop Grant?

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It follows the partner fund procedure but now also includes a backstop grant. Is not something someone can apply, but just something The Foundation offers to elected projects of some of the GitHub issues to be solved.

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This could be it?