Proposal for Sequencer Fee Rebates on OP Mainnet

Proposals 📃
1

Proposal Type: Rights protection

Executive Summary

The Optimism Foundation requests approval to offer select partners a rebate on the sequencer fees generated by activity they bring to OP Mainnet. Rebates may be used only for activity critical market development partners bring, never to general network activity. Because a rebate is a share of fees that would not exist without the partner, it adds a performance-based incentive to the partnership toolkit without spending OP.

Motivation

Growing OP Mainnet is one of the Collective’s core objectives, and partnerships are one of the most effective ways to do it. Apps and institutions that move real activity onto OP Mainnet bring users, liquidity, and fee revenue. They also make OP Mainnet more valuable for everyone already building on it.

We have seen this work. Since partnering with Optimism, Ether.fi has grown their OP Mainnet TVL to $347M and passed 100,000 cardholders. Optimism now carries roughly 29% of crypto card settlement volume, the largest share of any chain tracked.

Competition for critical market-development partners like these is intense, and shared economic alignment is often part of what closes a deal. The Foundation has been deliberate about how it uses OP for this purpose. As reported in the Year 4 budget update, new OP commitments fell by about a third year over year.

We want to keep raising the bar for using OP in deals. That means having additional tools that cost the Collective less and don’t impact OP in circulation.

Why Sequencer Fee Rebates

A sequencer fee rebate returns part of the fees a partner’s own activity generates on OP Mainnet - effectively a discount on transaction fees. If the partner brings no activity, there are no fees and the rebate costs nothing.

This makes rebates different from token incentives:

  • Funded by new revenue. A rebate is a share of fees that exist only because of the partner. The Collective keeps the rest, so the partner’s activity still adds net revenue.

  • No new OP in circulation. Rebates are paid from fee revenue (ETH), not using OP tokens, so they do not add to circulating OP supply.

Rebates also fit with the buyback program experiment, which directs up to 50% of net Superchain revenue to OP purchases. Since rebates come only from fees a partner adds, the revenue available for buybacks is larger with the partner than without it. Partnerships that grow fee revenue are one of the most direct ways the Collective’s growth benefits the OP token.

Specifications

This proposal authorizes the Foundation to use OP Mainnet sequencer and priority fee revenue to give rebates to partners, under the constraints below.

  1. Attributed activity only: Sequencer revenue rebates apply only to fees from activity a specific partner brings to OP Mainnet. This keeps every rebate funded by revenue the partner created.

  2. Never more than fees generated: Sequencer revenue rebates may not exceed the fees generated by the partner.

  3. Sequencer rebates are selective: They are not offered to every partner or in every deal. They are used only where the overall terms are favorable to Optimism (see below).

  4. Rebates are earned on milestones: Partners must reach defined activity milestones before rebates begin.

  5. Rebates are time-limited: Each agreement has a fixed term.

What we seek in partnership agreements

Beyond the constraints above, the Foundation seeks commitments that make each deal worthwhile for the Collective. Depending on the partner, these may include:

  • Launching or migrating products, assets, or settlement to OP Mainnet

  • Exclusivity or priority for OP Mainnet within a product line or category

  • Minimum activity, volume, or asset levels

  • Liquidity commitments on OP Mainnet

  • Integrations that bring partners’ customers or counterparties onchain

  • Co-marketing and distribution

  • Reporting, verification, and audit rights over attributed activity

  • Termination or clawback rights for manipulation

This list is illustrative, not exhaustive. Not every agreement will include every item; terms will reflect each partner and opportunity.

Reporting and Accountability

Reporting and Accountability

The Optimism Foundation will not publish the terms, number, or identity of individual agreements, as this would heavily weaken Optimism’s future negotiating position. Instead, the Foundation will report on aggregate metrics of the rebate program to provide accountability to the Collective.

Starting with the next annual Collective budget report, the Foundation will report the total rebates paid, as a share of total OP Mainnet sequencer and priority gas revenue, reported in fixed percentage bands.

Action Plan

  • Upon approval, the Foundation may include sequencer fee rebates in partnership agreements, within the constraints above.

  • Rebates may be paid from OP Mainnet sequencer and priority fee revenue and buybacks are calculated on revenue net of rebates

  • Aggregate results are reported in the annual Collective budget report.

  • Any expansion beyond this scope, such as rebates on general network activity, will come back to governance as a new proposal.