Let's settle once and for all the question of grantees self-delegating

[jackanorak]

Reading through a few of these proposals, I’ve seen some start to move toward self-delegation, which is causing some confusion we should address.

I believe consensus is that self-delegation (when specifically included) is a valid ask, and yet some delegates are claiming that self-delegating is a blanket no and outright discouraging any self-delegation.

This is a tough one because it’s not like liquidity mining, for which we try to give rough value judgements because we’d rather not rely on too much on it, it’s: can protocols self-delegate or no. And I think we should be definitive about whether doing so is something allowed.

If it is allowed, we can then discuss how much delegation is acceptable, how to manage held tokens for self-delegation, do these tokens need to also be earmarked for some other ask (and thus drawn down over time), etc.

We started to do this in this thread but it doesn’t seem as though we collectively got somewhere solid.

In addition, right now the language in the template (shown below) is confusing:

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.

Some people might take that first sentence to mean that token grants shouldn’t be self-delegated, rather than that the default is that they are not. If we think they’re allowed, we should be more direct and even perhaps include a field in the template.

Curious to hear people’s thoughts - think this ought to be a settled matter soon before more protocols ask for this.

[Jadmat]

Personal opinion, according to the different cases seen here.

1. tokens are received (linked to a proposal that does not include self-delegation); self-delegation is decided - resounding NO.

2. inclusion of self-delegation in a vague proposal - NO

3. detailed explanation of what this delegation will look like, the causes they interpret and how it will link to the rest of the proposal is added to the proposal - To be discussed by whomever appropriate.

At first glance it seems to make more sense that the $Op tokens are received by the users and it is up to them to decide who to delegate to; but I think we should not limit ourselves to this, maybe we can see some interesting self-delegation proposal.

PS: I expect innovation/creativity

[Prometheus]

Self-delegation serves self-interest meaning grants used to leverage self-interest instead of providing sustainable usage and growth will most likely not gain my favorable vote (if I vote).

[Gonna.eth]

@jackanorak

this should be made clear in your grant proposal along with your reasoning.

If self-delegation is clear in the proposal and approved then yes, if not then no.

For past projects, make a second proposal applying for self-delegation.

[Netrim]

I think the wording is clear.

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.

The first line (italics my own) refers to the baseline expectation from OP Labs, this distributed funds incentivize usage and growth.

Is it a prohibitive provision? No. It sets an expectation only.

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.

The second portion of the statement is where I think OP Labs leaves the door open. Protocols CAN self delegate the granted OP but we as a community should be aware of that, be mindful of that and in the end, delegates can approve such distribution/usage or not.
As always Optimism is breaking down barriers everywhere and experimenting continuously.

So what are my own thoughts on this?
Protocols CAN self delegate or delegate to others.
Protocols NEED to include a explicit provision on their proposal that a portion of the ask will be used for delegation, to self or to others (the others need not be specified).

Can this be gamed on some way? a thousand, but the most important step is we as a community will need to be vigilant

[jackanorak]

For my part, I’ll just repurpose what I said in another thread:

I think in many cases people need to be shown the value of governance power.

There’s a ton we’re capable of accomplishing with enough participation and buyin from stakeholders, and we’re all here because we know this. Not everyone knows this, and unless they do we’re not going to have enough resources to follow through on our goals.

There’s an entire graveyard of projects and ecosystems that’ll show you that grants and airdrops are in themselves not enough to sustain effort. Users, developers, and partners getting OP handouts can’t be expected to immediately ‘get it’ just because they got some free money – they need to have some actual hands-on exposure to what we’re doing.

What i’m saying is that sometimes you need to drag people to the party when you want them to show up. That’s what facilitating self-delegation is to me.

On concerns about collusion and centralization derived from this

I think this fear is legitimate but entirely misplaced if you think self-delegation in broad daylight is a major vector here. The routes to collusion are many and don’t require a lick of self-delegation. Self-interest is inherent to these structures and more insidious than ppl want to admit.

You want to know how to avoid centralization and kneecap collusion? Get more stakeholders in the game. Right now the distribution of votes is more or less fixed since the airdrop, and the only distribution of OP is to protocols, which are doing nothing with them until doling out 60% of their granted tokens (realistically closer to 100% initially given the speed of liq mining relative to other uses) to the likes of stablecoin farmers to be dumped into LPs, again doing nothing.

So there are likely few marginal delegators (the # of delegated tokens has consistently decreased, even as circulating supply has increased), and the same centralization concerns persist until the next marquee OP airdrop, which may or may not improve the distribution.

@OPUser in the discord, probably responding to our discussions here, has floated the idea of making delegation a quest. This could be good for some delegation, but that power goes away when the vast majority of these players cash out their 5 OP earned. (This is up for debate, though – would love to see some early results from these quests.)

But if we show projects, partners, builders what it means to get into governance and take part in assembling the collective, to tangle over heady ideas about coordination and incentivization, to cooperate and compete, and you start to see the decentralization we all want here.

That’s all to say that i think allowing some measure of self-delegation in fact hastens decentralization, and what’s more, you get a bunch more voices in the forums.

[OPGovWatch]

My personal opinion here is that getting more protocols and builders invested and engaged in governance is unquestionably a good thing. If governance deems a protocol worthy of a grant, then I believe they should deem them worthy of some sort of formal voice in governance.

This could actually be done very simply by saying that every protocol that receives a grant can use a flat amount (say 200,000 OP) to self-delegate as those tokens are waiting to be used for their intended purpose. This seems far better than having them just sit passively in wallets and would hopefully help protocols understand the value of acquiring OP tokens for this purpose.

We have to remember that current token distribution was largely driven by the gifting of tokens via airdrop and the nature of delegation UI. It is right now fairly concentrated amongst a small group of people who have largely not had to go out and acquire it themselves. Now is the time to grow the governance pie and further decentralize, not create barriers to participation.

But if my opinion is in the minority, I agree that we should make it clear to protocols that proposals for self-delegation only increases the likelihood they’ll be rejected by the committees. If they want a voice in governance they’ll either need to purchase it or spend time campaigning for it. I think this is sub-optimal, but lack of clarity or consistency here would be much worse.

[Jadmat]

Some narratives seem to confuse the means with the end; the only way a protocol can get involved in governance is not by receiving tokens for subsidy; they can buy $op on the open market, they can include it in their treasury; subsidizing voting power is what seems to be claimed.

[jackanorak]

what is gained by having them buy OP versus having them granted some as part of a proposal for OP intended for a wide range of uses?

and how do we encourage these stakeholders to begin to start doing this when there’s been little if any evidence of this type of deliberate accumulation to date - why do we expect protocol representatives to choose to pay money to participate in governance at this stage

[Jadmat]

That the protocols participate in the governance is the decision of each one; I personally support diversity and decentralization, as long as there is no conflict of interest.

Perhaps my comment was unclear; there is a difference between: allowing protocols to participate in governance; and subsidizing protocols’ participation in governance; optimism is open and anyone can make use of $op to represent their interests; that the funds to make this happen MUST be provided by optimism is where the misinterpretation lies.

I repeat once again what I said in my first comment; I agree, and will likely support a proposal that provides real value in self-delegation.

[jackanorak]

I don’t believe that anybody here has said that Optimism governance ought to be obligated to provide delegation when requested, any more than it ought to be obligated to give any grants at all when requested. I’m worried we may be talking past each other.

What’s an example of a proposal that provides a real value in self-delegation, and what’s one that doesn’t? I’d like to extend this to other people who’ve said similar things, @AxlVaz @OPUser – what’s the litmus test for an acceptable ask?

And what constitutes a conflict of interest for you?

[jackanorak]

Would love to hear some opinions on this issue from some more people. I’m going to gather what I’m hearing so far.

[jackanorak]

For completion I will include a post from @AxlVaz:

@AxlVaz

I think self-delegation can also bring parasitic protocols into the network as well as users farming the token in their protocols.

I also believe that if Alchemix had any interest in this governance it would have appointed at least one delegate, why didn’t it do so if it sought to have a say in this governance? Asking for support in your community is a good start and has a cost of $0 as well as appointing a delegate to represent Alchemix’s interests.

In the event that the proposal is not voted YES, will Alchemix still be interested in governance as one of the protocols they seek to develop in the network? Self-delegation with token grants is the same thing @jackanorak complains about from users.

What I don’t see in the protocols being pushed by @jackanorak for self-delegation is at least minimal participation beyond his own proposals.

[lavande]

Great conversation happening in this thread and thanks for flagging the ambiguity. We’ve updated the language on the grant proposal template to further clarify.