Optimism goal is reducing transaction fees, yet OP value comes from governance over transaction fee revenue. Is this contradiction problematic?

OP holders apparently gain from increasing transaction fee revenue. This seems directly contradictory to Optimism’s mission. Can this be problematic in the future? Should we think of better ways to align governance interests?

1 Like

I don’t see an issue here. Incentives are the bedrock or decentralization.

OP price goes up if transaction fee revenue increases. Optimism seeks reducing transaction fees. OP holder incentive structure is apparently contradicting Optimism’s mission.

To give a clear example: Assuming transaction throughput is inflexible in the short term (fair assumption), in the short term OP holders directly gain by approving a random proposal that solely increases transaction fees.

Where did you see this correlation? Fees are paid in ETH, and Optimism fees vary depending on Ethereum fees and/or ETH price variation.

3 Likes

There is no contradiction here. OP utility is 100% governance token, fees are paid in ETH. There is no current way/plan that I am aware to change this.

Value is a very broad term.
From a financial view, OP should tend to X since the only intrinsic value is driven by governance utility. What is X? That is the experiment we are all into, market cap analyst keep on getting warned on Discord because they are sorely looking at increase in supply, no revenue sharing, inflation.

From a non financial view, OP cannot be priced. The market movements will make the price move. But we are seeing that protocols are actively engaging on chain governance and they are the ones that really take the long view on this.

Why is there no issue? It’d be awesome to have a discussion rather than “No issue here.”

Optimism gets a (small) cut of transaction fees.

I don’t think the interest misalignment is related to fees being paid in ETH.

Yes, execution fees = sequencer revenue, are allocated for retroPGF, funds that have not yet been distributed to somehow influence the OP.

I think one thing to keep in mind is that Optimism isn’t operating in a vacuum. There are other L2s and L1s that users would move to if Optimism wasn’t competitive on the fee front. Optimism wins this race by having the best experience for users, including lower fees.

2 Likes

Yeah that’s the central idea I was hoping to receive as response! Can we make OP holders benefit from increased ecosystem activity, besides tx fees?

For example, extending EVM op codes with app-optimized ops, with larger revenue margins for that extended op set. Just one idea I had. Another might be giving users the option to pay cheaper tx fees is they use OP, while still allowing ETH tx fees; this slightly incentivizes using OP as SoV.

1 Like