Introducing Optimism Co-Granting

Governance Design šŸ“ Metagovernance
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Introducing Optimism Co-Granting

Based on feedback from builders and delegates, the Optimism Collective is piloting a new co-granting mechanism in Season 4!

Token House Grants

The Token House launched last May and to date delegates have been allocating grants out of the Governance Fund. In total, the Token House has processed 155 grants and funded 48 grants. You can see a list of all these grants here.

  • Phase 0 grants were programmatically distributed, according to quantifiable criteria
  • Season 1 & 2 grants were approved by all Token House delegates
  • In Season 3, the grants program was managed by an elected Grants Council. You can see Council Grants in Cycle 10 and Cycle 11

Grants will continue to be made by the Grants Council in Season 4.

Limited by Access to Upfront Capital

All builders grants made by the Token House are granted in the form of OP that is locked for a period of one year. This creates long-term incentive alignment between the grant recipient and the Collective, and helps reinforce OPā€™s function as a governance token.

However, this situation creates barriers for teams that need immediate access to capital. If youā€™re trying to make payroll, pay for infrastructure costs, or are dependent on grants to extend your teamā€™s runway, a grant of locked OP is insufficient. Some of the most promising grants (novel use cases) need access to upfront capital the most. In Season 3, we identified several promising builders in this category that were prevented from applying for Token House grants as a result.

Co-match the Collective!

Syndicate.io is building a custom grant-matching contract so that you can support the work being done in the Token House and build an on-chain record of your contribution. Matching contracts allow co-granters to contribute USDC to a single contract to pro-rata ā€œmatchā€ builders grants made by the Grants Council. Hereā€™s how it works:

  1. Enter the amount youā€™d like to co-grant and submit your contribution. Your co-grant proceeds will flow directly to the matching contract. In Season 4, matching contract distributions will be executed according to the decisions of the Grants Council (if renewed.)
  2. As the Grants Council makes grants, your co-grant will be similarly distributed until the matching contract runs out or until Season 4 ends on September 20th (tentative.)
  3. Youā€™ll receive a co-grantor NFT and an Optimism Attestation to signify your support of the Collective as a Token House co-granter.

Why should I match? Upfront Capital as a Public Good

The Token House plays a critical role in bootstrapping a profitable market for public goods. Token House grants provide certain, upfront funding while a reliable market for RetroPGF further develops in the Citizensā€™ House. Together, the two houses of the Collective create a powerful flywheel, funding public goods that make Optimism blockspace more valuable, leading to more revenue for public goods, and so on.Co-granting is a unique opportunity to provide the upfront capital required to kickstart this flywheel.

Given the importance of this contribution to the development of the Collective, you will receive both a co-grantor NFT and Optimism Attestation, enabling your on-chain reputation to reflect your impact.

FAQ

  • Can I withdraw or edit the amount of my funds after theyā€™ve been deposited?
    • Not in Season 4.
  • What if the Grants Council is not renewed?
    • Matching contracts will not go live before the vote to renew the Council has occurred.
  • What if there is funding left in the matching contract at the end of Season 4?
    • If any funding remains in the matching contract at the end of Season 4, it will be sent back to the Governance Fund to fund grants made in future Seasons. You can think of your co-grant as a donation to the Governance Fund.
  • Can I contribute an asset other than USDC?
    • Not in Season 4, but this capability may be added in the future.
  • Should I expect a return on the capital contributed?
    • These are grants, not for-profit investments, so you should not expect a return on your grant.
  • How is the co-matching distributed to grant recipients?
    • Co-grants will be distributed among approved builders grants in which applicants checked a box on the application form indicating the need for upfront USDC. Co-grants will be matched among these grants on a ā€œpro-rataā€ basis based on the overall budget to be distributed as builders grants for Season 4 (3M OP.)
22 Likes
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Sounds like a good idea; Iā€™m happy to contribute a small co-grant to help some fledgling projects and support Optimism ā€¦and get that NFT and Attestation :smiley: I hope lots of us can chip in a little.

I look forward to seeing if the Grants Council is renewed, and thus seeing Syndicate.io on Optimism with the custom grant-matching contract.

1 Like
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Great solution to resolve the limitations of the no-sell rule!

One unique culture that I can see coming from this is grantees and RetroPGF recipients contributing to the co-granting once their bootstrapped projects become succesful and profitable.

In terms of the actual matching amount, do we have any more information for now on how the ratio between OP and USDC matching will be decided? Will it be a 1:1 USD value? I tried to look at the Syndicate main page but they seem to offer customised solutions.

It could be interesting to incorporate some form of quadratic funding, or another way to give the co-granting to the most Socially Positive projects

6 Likes
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I think this is a great concept. The idea of paying it back to similar projects that are now in the position that you were once in.

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Great and creative idea to get projects some of their up-front funding. It will be interesting to see the community participation in this.

I will for sure be contributing once the contract goes live.

6 Likes
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Itā€™d definitely be interesting to explore other ways beyond the pro-rata matching! Like the idea of quadratic funding.

One thing Iā€™d advocate to avoid is creating a sort of popularity contest amongst grant proposals to get the most matching - this could end up with co-grants mostly benefiting teams with the most resources/existing connections.

Maybe simple but jumping to solution mode, one approach could be two options for people who want to contribute to the co-grants

  1. you donā€™t know anything about the projects but want to support Optimismā€™s efforts, contribute to the pro-rata mechanism
  2. you know what project you want to support, contribute directly to them via a Gitcoin-esque funding
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Greetings,
To me, this is a good idea. If the project seems promising and could raise the value of the Optimism collective in general, and have something unique to say, I can co-grant too.

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Greetings OP community. We would like to propose using 0xSplits as an off-the-shelf, alternate implementation for Co-Granting. A mutable split controlled by the Optimism Foundation can provide the desired functionality with ETH & any ERC20 out-of-the-box (~similar to how Protocol Guild works on mainnet). The contracts are open source, audited, & have been on mainnet since Feb ā€˜22 & OP since Sept ā€˜22. Since launch, they have securely handled tens of millions in volume. We recognize our contracts wonā€™t reward contributors with NFTs; even so, their donation record will still be forever enshrined onchain & verifiable.

We understand this proposal has been live for some time now and arenā€™t keen to derail the work in-process. However, in the interest of starting simple & experimenting with existing, in-use ecosystem tools, we wanted to offer an alternative next-step.

4 Likes
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Updated to include:

and to clarify that the Grants Council was renewed for Season 4

2 Likes
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This is a great way to engage the community and involve in building the ecosystem.

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I wish to get a more suitable description of the co grant information

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While we were impressed by the number of co-grantors that helped to make this experiment a success, we will not continue this experiment in Season 5. Instead, we will focus efforts on a larger scale more sustainable source of capital for projects with this Foundation Mission Request: Optimism Ecosystem Investment Network.