Thank you to the Foundation for taking the time to address the lack of alignment with OP tokenholders. Recognizing that tokenholders – who finance the ongoing development of Optimism through dilution – need a stronger value proposition is a positive step forward.
That being said, this proposal needs significant work before going to a vote, and we would actively urge voters to oppose it as it is currently written.
First, this is effectively two proposals and need to be split accordingly for discussion and voting: one proposal to initiate a buyback program and one proposal to give Foundation more control over the ETH that is owned by Optimism governance. We trust that these will be voted upon individually once it is time for the proposals to be posted onchain.
Buyback Proposal:
We don’t believe it makes sense to initiate a buyback program while ongoing OP emissions are financing everything from business development to grants. It is financially self cancelling and value destructive.
There is no capital benefit to issuing 100 OP and buying back 10 OP vs reducing issuance to 90 OP. It is financially simpler to reduce supply pressure in other ways, like using sequencer fees to cover 10% of all expenses this year, 20% next year, and so on until the need to emit OP becomes trivial.
Other policies could be considered to lower supply growth as well, but creating a buyback program while relying on emissions for financing will signal to the market that Optimism is financially unsophisticated and is a poor steward of capital.
As written, the buyback proposal’s execution plan is also not well considered.
This signals that Optimism – a chain built on decentralized finance use cases – cannot even trade its own token on its own network. Why even have a chain with a DeFi ecosystem if it can’t support $500k-$1m in OP purchases? Even if OTC can be more efficient – which is not obvious – it is not worth saying Optimism can’t support relatively low levels of economic activity. Why would a project deploy to such a chain?
We must eat our own cooking if we expect anyone else to do so.
A separate concern is that OTC purchases are hard for governance to audit and don’t directly impact quoted prices. It also creates an appearance that the buyback program is designed to benefit specific tokenholders who may want to unload their OP, rather than transparent purchases on the open market. Whether that would be the case is immaterial – it will have the appearance of backdoor funneling project funds to favored parties that has become so typical in crypto. It will break trust to use OTC, and we cannot support it in any execution plan.
To the extent that we could support a buyback proposal, it would need to have a more thoughtful execution plan that is transparent, signals a belief in Optimism as a venue for transactions in OP and other assets, and minimizes corruption risk.
But overall, we would prefer to see more focus on crafting and publishing a business plan to get Optimism to financial sustainability. That’s the real challenge that Optimism Foundation/Labs leadership needs to address, and a buyback does nothing to address this, and may in fact make it worse.
Foundation Discretion Over ETH Treasury:
This moves in the wrong direction. Foundation should instead be turning over the ETH to governance, not seeking more control. The Optimism Foundation has consistently shown itself to be a poor manager of these assets.
ETH sat idle, without any staking or utilization until a Feb 2025 proposal. While the proposal was welcome to finally mobilize governance’s assets, Optimism Foundation appeared completely in the dark about the most basic terms of the first staking agreement – most notably believing yield was ~1.25% higher than it actually was.
Ultimately, approval was given to stake 60% of the L1 ETH with institutional stakers, but that was only fully executed in November 2025, indicating that Foundation moves slowly on execution and does not prioritize ETH utilization.
This historic underperformance, willingness to leave assets idle, and opaque selection process for staking providers makes Foundation an especially poor choice to have discretion over surplus ETH not required for operations.
Facts and history make it clear that governance is not the obstacle to Foundation taking action. It is typically Optimism Foundation that is the obstacle to governance action.
We oppose giving Foundation any further discretion over surplus ETH, and would recommend instead that the ETH be fully put under the control of the governance contract.
Our hope is that the Foundation will do the following:
- Break this into two separate proposals so they are not bundled.
- Withdraw the buyback plan.
- If dead-set on initiating a buyback plan, revise the mechanisms to both utilize Optimism’s own financial infrastructure and lower the risk of unreported self-dealing or corruption.
- Withdraw the plan for Foundation to have discretion over the ETH treasury, and instead put it under the control of the governance contract.