Proposal to Align OP Token with Superchain Success

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1

Proposal to Align OP Token with Superchain Success

Executive Summary

This proposal authorizes two very important changes:

  • This proposal would implement a buyback program to align the OP token to the Superchain’s success. This proposal would authorize a 12 month program, dedicating 50% of incoming Superchain revenue to buying back OP, beginning in February. This includes the revenue contribution of OP Chains within the Superchain such as Base, Uniswap, and World.

  • This proposal would give the Foundation discretion over managing the remaining ETH treasury on behalf of the Collective, while remaining accountable to Optimism governance. This proposal would enable the Foundation, or a third-party hired thereby, to adaptively manage the remaining Sequencer ETH treasury to generate yield, improve liquidity, and support the Superchain ecosystem. This reduces undue governance overhead that has historically limited our ability to actively, and effectively, manage the ETH treasury. Governance will still retain oversight over important capital allocation parameters, ensuring accountability to stakeholders. See more here.

Motivation

Today, the Optimism Foundation is excited to introduce a proposal to align the OP token with the Superchain’s success. Optimism earns revenue from the Superchain, a network of L2 chains built on the OP Stack that includes Base, Unichain, Ink, World Chain, Soneium, OP Mainnet, and more. These chains all contribute a portion of their sequencer revenue back to Optimism. In the past twelve months, Optimism has collected 5,868 ETH in revenue, 100% of which has been dedicated to a treasury overseen by Optimism governance. As the Superchain expands, so does this treasury.

This proposal introduces a buyback mechanism using 50% of Superchain revenue to buy the OP token. We believe 50% is the right starting point to strike a balance that aligns the OP token with Superchain success while reserving flexibility for alternate uses of ETH.

With this buyback mechanism, OP transitions from a pure governance token to a token that is tightly aligned with the growth of the Superchain. While OP will still retain important governance rights, now Superchain activity will drive buybacks of the OP token. Every transaction across every OP Chain expands the base from which buybacks operate. The more blockspace consumed across the Superchain, the more structural demand flows into OP.

This proposal will also empower the Foundation to actively manage Sequencer ETH, adaptively deploying treasury assets to generate yield, improve ecosystem liquidity, and/or support high-impact growth initiatives without unnecessary governance overhead. In contrast, an overly bureaucratic and/or passive approach to ETH treasury management risks leaving the Superchain ecosystem less competitive relative to peers that adaptively and flexibly deploy capital. Governance will still retain oversight over important capital allocation parameters, ensuring we remain accountable to stakeholders. See more here.

Buyback Specifications

If approved, the Foundation will partner with an OTC provider to execute monthly conversions of ETH to OP. We will initiate this program with an OTC provider due to liquidity requirements that are not currently met by DEX or CEX platforms.

  • You can view sequencer revenue by month here to verify proper conversion.

  • The conversion of ETH to OP with the OTC provider will occur within a predetermined window each month, without regard to conversion price.

  • If any of the following occur, conversion for that month will be paused and rolled over to the next month: (1) the Collective does not generate at least $200,000 equivalent in revenue in a month; (2) the OTC provider cannot or will not execute the conversion under the maximum allowable fee spread, which will be determined in advance between Foundation and the OTC provider; or (3) the conversion cannot occur within the predetermined window for any reason.

  • The Foundation will publish an execution dashboard to track execution data (fills, pacing, pricing, balances).

Initial operations of the buyback mechanism will be executed by the Foundation, subject to predetermined parameters to eliminate any discretion. Over time, this mechanism can move more onchain so that execution takes place without the Foundation. To start, Protocol Upgrade 18 will ensure that all sequencer revenue from other OP Chains is collected onchain.

The purchased OP will be held in the Collective treasury, along with the remaining sequencer ETH, to be managed by the Foundation, or a third party hired thereby, on behalf of the Collective.

  • In the future, repurchased tokens may be directed to a burn mechanism, deployed to fund ecosystem expansion, or distributed to tokenholders who participate in securing the network as interop and sequencer customizations come online throughout 2026.

  • Governance will still retain oversight over important capital allocation parameters, ensuring the Foundation remains accountable to stakeholders and allowing the Superchain to remain credibly neutral. See more here.

The Foundation will begin this process in February using 50% of January’s revenue. This program will continue for the following 11 months and will be re-evaluated at the conclusion of this initial 12 month program.

Impact summary

  • Buybacks: Based on last year’s Superchain revenue, a comparable allocation would have resulted in approximately 2.7k ETH used for buybacks, or roughly $8M in OP at prevailing prices.

  • Adaptive ETH treasury management: The Foundation will continue to manage ETH staking on behalf of the Collective. As of 1/6/26, the Collective has earned 80.03 ETH in yield and will continue to work with Etherfi as the strategic Liquid Staking partner on OP Mainnet, selected via public RFP. This proposal will give the Foundation more flexibility in managing the ETH treasury to generate outcomes that benefit the entire Collective.

Governance Process

  • This proposal will go to vote in Special Voting Cycle #47 and will be subject to Joint House approval at a 60% approval threshold. During Season 9, the Foundation will update the Operating Manual with additional proposal types to support Capital Allocation 2.0.

  • This proposal would approve the removal of the now outdated “Sequencer ETH: Passive Management” proposal type from the Operating Manual, as the removal of any proposal type requires governance removal.

Action Plan

If this proposal is approved:

  • The Foundation will promptly enter into an agreement with an OTC provider to execute the conversion of January sequencer revenue and begin publicly confirming monthly execution.

  • The Foundation will actively manage the remaining ETH and OP Treasury, or hire a third party to do so, reporting regular updates to the community.

  • “Sequencer ETH: Passive Management” will be removed from the Operating Manual.

Any important updates or substantial deviations in execution will be noted by the Foundation as a comment on this post.

9 Likes
4

I strongly suggest splitting this into two separate proposals:

  1. OP buyback mechanism
  2. Foundation discretionary management of the ETH treasury

These are fundamentally different policy decisions and deserve independent discussion, signaling, and voting.

The buyback proposal materially changes OP’s economic narrative and will naturally bias delegate sentiment. The treasury management proposal, on the other hand, is about governance structure, delegation of authority, and accountability over ETH that, frankly, has been poorly utilized since inception.

Bundling them together creates a risk where:

Delegates support the proposal primarily due to expected OP price appreciation from buybacks.

As a consequence, the Foundation is granted significantly expanded discretionary power without that authority being evaluated on its own merits.

Even if one agrees with improving treasury management, that conversation should happen without the emotional or speculative pressure of a buyback narrative attached.

Please separate these proposals so the Collective can:

  1. Debate buybacks on their own economic and philosophical merits.
  2. Independently evaluate whether, how, and under what constraints discretionary ETH management should be expanded.

This would lead to a clearer mandate, better governance hygiene, and more credible outcomes for both decisions.

6 Likes
5

I’m excited by this proposal. I’d like to engage with the buyback part of this proposal:

If liquidity requirements weren’t an issue, could this proposal pursue an open, onchain, and possibly more efficient solution instead? There’s a good bit of prior art here, and while the world may not be ready for TWAMMs, a dutch auction if done right could efficiently and fairly arrive at an optimal price for the Collective’s ETH. So why not a dutch auction smart contract that receives the monthly tranche of ETH and allows bidders to buy as much of it as they’d like w/ their OP?

How would this work and can I see a smart contract PoC?

To illustrate the idea using the dashboard for December data: we’d send 82.95 of the 165.9 ETH in revenue to December’s auction contract. Auction begins at some high OP/ETH exchange rate. As time passes, the exchange rate goes lower and lower until some bidder is incentivized to buy. She can purchase up to 82.95 ETH with her OP, but could purchase 1 ETH, or .1 ETH, etc, leaving the rest for other bidders. The auction continues, and the exchange rate slowly decreases, until all ETH has been purchased with OP! I wrote a quick PoC here, and would be happy to expand/secure it (factory pattern? algorithmic or oracle-based determination of start price? that’s my bag baby…)

A few possible benefits to doing this on-chain come to mind: no reliance on centralized OTC providers. No overhead or reliance on Foundation updating spreadsheets, etc. Maybe even creates demand for OP for auction participation? I’m no Mises, but I hope it’s not too late to explore on-chain solutions to convert treasury ETH into OP. I expect the DAB would love to help here, and I’d personally love to discuss more.

2 Likes
6

I agree with @Gonna.eth’s comment.

At the same time, I also have a question to the proposal as it is now:

If approved, the buy-back would be evaluated and re-considered after the initial 12 months.

What would happen to the Foundation’s discretionary management of the ETH treasury at that point? Would that also be up for re-evaluation - ie. would there be a new joint house vote on that as well?

7

Yearn already have this in production so it’s simple to do it.