Polynya - Delegate Communication Thread

I have finished my votes for Gov Fund Phase 1 Season 1.

My general impression thus far is that most proposals are a mixed bag, with very few high-quality projects I’d be excited to support without reservations. Since Optimism is a new collective & ecosystem, I have been very lenient as I’ve thought it’s OK to give mediocre or unproven protocols the benefit of doubt. Of course, over the 4 cycles I have become gradually more strict about my votes. For Season 2, I’ll only be voting for proposals by a) protocols that have proven themselves over a reasonable period of time (e.g. >1 year); b) have a very clear case for incentivizing usage directly on Optimism, and c) a co-incentives program with an amount you can safely match (I don’t want to see a $5M market cap project asking for 500,000 OP). Of course, there can be exceptional proposals which contribute to the Optimism ecosystem another way. I realize this is going to be unpopular, and I’m going to receive some hate mail, but that’s OK. I believe granting of $OP tokens through Gov Fund must be earned, rather than being a bet. There are other funds like the Seed Fund or RPGF that may be more appropriate for a lot of proposals.

I also continue to be very uncomfortable granting OP tokens and building an ecosystem while Optimism is a de-facto centralized sidechain, just with 7 days of social disputes available. I’d like to see Optimism urgently have a) permissionless fraud proofs, b) decentralized contract upgradability, including emergency.

I’d only be truly comfortable when we also have decentralized sequencers and economic sustainability for $OP.

I’m not going to do anything drastic like protest by voting everything Against, however I’ll be much more careful with my votes until Optimism itself is in an acceptable place. I’d like to see the OP Labs and Optimism Foundation teams provide a detailed roadmap update on where they are with the above-mentioned decentralization goals.

I generally agree with the learnings and steps being taken for Season 2 and look forward to participating in the discussions during the Reflection Period ™. I also hope to see some accountability and results data for previously approved proposals around this time.

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I’ll definitely update this as we go through the reflection period, but my initial guidelines for supporting Gov Fund projects from Season 2 onwards are such:

  • Been live for over 1 year on other networks and has demonstrated adequate product-market fit, no dodgy history and such
  • Live on Optimism and seen some initial traction
  • Directly incentivizes lasting usage of the Optimism network, and onboarding new users
  • Temporary incentives attracting mercenary farmers and the like are discouraged
  • Co-incentives are a huge bonus, but the amount asked must be at most ~1% of the project’s token’s market cap. So, projects should request an amount of OP commensurate with their market cap.
  • Not all projects fit these criteria, so subjective judgment will be used - but the project must directly benefit the Optimism ecosystem in some way or other

If Optimism grows too big without proofs and decentralized contract upgradability, I might consider proposing a longer pause. Something like, say, $XB in TVL is unreasonable for today’s Optimism’s de-facto centralized setup.

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I see I made the right decision delegating my tokens to you.

Without more sentiment like this, I’m concerned this experiment will be remembered as something that failed due to “Yes men” or ineptitude.

I also worry about never truly decentralizing, or if we do, that it’ll be too little too late. Optimism’s core values must reflect Ethereum’s.

Thanks for addressing these issues!

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These are some of the guidelines I’ll follow for Season 2:

  • Doesn’t directly increase TVL and related economic metrics, to minimize regulatory and security risk. Note: this will likely disqualify most DeFi proposals.
  • Related to the above, projects should not come with significant regulatory risk.
  • Been live for over 1 year on other networks and has demonstrated adequate product-market fit, no dodgy history and such
  • Live on Optimism and seen some initial traction
  • Directly incentivizes lasting usage of the Optimism network, and onboarding new users
  • Temporary incentives attracting mercenary farmers and the like are discouraged
  • Co-incentives are a huge bonus, but the amount asked must be at most ~1% of the project’s token’s market cap. So, projects should request an amount of OP commensurate with their market cap.
  • Not all projects fit these criteria, so subjective judgment will be used - but the project must directly benefit the Optimism ecosystem in some way or other
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As the voting is now live, I’ll be following the guidelines I mentioned above; however I’ll be more lenient as the TVL growth has cooled down. This is in part due to a less valuable $OP, but also many blockbuster incentives like Uniswap, Synthetix or Rocket Pool taking longer than I had anticipated to roll out. I’ve also seen positive reaction from the Optimism teams about prioritizing decentralization. I’ll be focusing more on the type of applications that generate sticky user activity without affecting TVL much, and take the TVL intensive proposals on a case-by-case basis. Needless to say, I’ll defer to committees’ opinion on most projects.

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Thanks @polynya. Please do continue putting some healthy pressure on our goal to decentralize.

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I have followed all committee recommendations for this cycle. I didn’t find any egregious proposals or risk of excessive TVL growth; neither any exceptional proposals for the ones vetoed by committees. I understand this was the first cycle with committees - I’m sure the recommendations will come on a more timely manner from the next cycle with better coordination. Overall, I’m happy with the committees’ work - their recommendations are clear, concise, and well considered.

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I have completed voting on Cycle 7. Things were quite smooth this cycle, and hopefully it’ll be perfect next one with timely recommendations from the Tooling committee. I voted with committee recommendations, except for Overtime. I also abstained from Dope Wars and Safe.

We’re going through a quiet time in the industry right now, and the incentives aren’t having much of an effect in incentivizing user growth. On the bright side, this has also calmed my fears of too much growth with centralization concerns - for now. Nevertheless, even without growth, it’s still a useful mechanism for distributing OP to enthusiast users and decentralizing the token house.

Now that we are 7 cycles and over a quarter in, I’d request commitees to start considering the results of previous incentives in greater depth. E.g. we don’t want to be approving the same type of incentives and/or same type of protocols if they are proving to be ineffective.

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Hey great thread, I was intrigued about your Overtime vote.

I would love to know why you went against the committee recommendation. Specially if you see any technical stuff I missed or if it was simply because you like the project.

Big fan btw.

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Comment here: [REVIEW] [GF: Phase 1, Voting Cycle 7] Overtime Markets - #54 by polynya

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For projects that have already received a grant before (whether through Gov or Partners Fund) - the repeat proposal has to be exceptional IMO. I don’t think the second proposal basically repeating the first one makes much sense. Here are my thoughts on the exceptions where a second grant may work:

  • The first grant was wildly successful and the protocol continues to grow with no slowdown: in this case, a substantially smaller grant (let’s say, <50% of the first) to continue incentives might be justified
  • Some amount of time has passed since the first grant, and there’s a strong reason to restart incentives (something like - the protocol managed to retain most of the growth the incentives brought, but there are new opportunities on the horizon worth capitalizing on for more growth)
  • A new approach with new methods & goals. E.g. the first grant was about liquidity incentives. With that bootstrapped, the second grant can be about achieving something different, e.g. improving the user experience, direct marketing to onboard users to Optimism, etc.

Likewise, as I mentioned previously, committees should also consider the effectiveness of similar types of proposals. E.g. if DEX A & DEX B ran some type of liquidity mining, and it was of limited benefit, then it doesn’t make sense granting DEX C with the same type of grant. At Cycle 8, 9, and going forward, we have to start being more selective about the grants, and targeting the types of programs that lead to sustained adoption and activity across a diversity of usecases. Also, being mindful of what the bottlenecks are. E.g. there’s plenty of liquidity on Optimism now given it’s early state, but not enough users & other usecases to leverage this.

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