I have made multiple posts about decentralization and potential solutions towards them. I have also complained a lot about $OP’s tokenomics, but haven’t written a post about it. The truth is a retroactive change to token allocations etc is extremely unlikely to happen. But here, in the comfort of my communication thread, I thought I could at least run a thought experiment.
As I see it, there are three significant problems with $OP:
- At least 37% allocated to insiders (investors, team) is excessive, enough to dominate governance votes, or future consensus protocols if implemented
- Arbitrary yearly cliffs for both team and investors. Normally not a big issue, but given the huge allocation, it’ll weigh heavily.
- RPGF is extremely dilutionary
- Ecosystem fund is relatively ineffective (for reasons mentioned above)
In an ideal world, here are some approaches:
- While it’s too late now, ideally <33% to insiders (incl. partners) would work
- Teams should have releases per performance. For example, instead of arbitrarily releasing a lot of OP to team next month, it should be after fraud proofs are live etc. Governance can vote on this. The four year thing is common practice for traditional startups, but the investors don’t really make sense. It’s much better for the market to find a fair price early than a 4 year shadow hanging over the token.
- This one has a simple solution - RPGF should be earned. I.e. instead of significantly diluting excisting tokenholders, simply have it as a % of sequencer/MEV revenues. This will be fully sustainable.
- Likewise with Ecosystem Fund, instead of an arbitrarily huge 25% - allocate smaller amounts upon analysis where it actually makes sense.
For both 3) and 4), and airdrops, it’s acceptable in the early days to distribute tokens, but it’s now nearly a year, and we still have >100% hyperinflation to look forward to over the next 4 years, which will just kill confidence in $OP over the long term. Maybe after 5 years $OP will emerge as a relatively well distributed, sustainable token, but that’s an eternity in crypto, and I fear it may be too late.
Anyway, these are just my thoughts, it’s probably too late to make drastic decisions like burning 40% of intended supply which I allude to above, but maybe future projects can have more sustainable distributions.
PS: I forgot that I had done a post on sustainability ideas for $OP - Economic sustainability ideas for $OP - 
General - Optimism Collective