Protocols building on Optimism are among its most important stakeholders and they value having a voice in the development of the ecosystem. In Season 3, the Protocol Delegation Program was piloted as a way to enable protocols to participate in governance.
The Protocol Delegation Program temporarily delegates a portion of idle OP from the Governance Fund to value-aligned protocols based on pre-defined criteria. This program was designed to last two Seasons in total, at which point protocols will need to reaffirm their commitment to Optimism governance via their own treasuries.
You can see the original proposal here. You can see the Season 3 delegations here.
The continuation of this program for a second Season must be approved by the Token House in Special Voting Cycle #12a. Protocols participating in the program are permitted to vote on this proposal. If this proposal is renewed by the Token House for a second and final Season:
A total of 5M OP will be available for delegation in Season 4 (the same 5M that was delegated in Season 3)
Delegations to the top 15 protocols based on gas fees will be re-set based on total gas fees generated during Season 3. Any new qualifying protocols will be subject to the same terms outlined in the original post.
The 8 protocols elected to receive delegation during Special Voting Cycle #9b will remain the same.
All participating protocols must have fulfilled the voting participation requirement (>70%) during Season 3.
Please note that all participating protocols will be required to KYC before the start of Season 4 in order to continue to participate in the program. The Foundation will reach out to collect this information according to the same process used for Governance Fund Grants.
If any qualifying protocols opt-out of participating in Season 4, their delegation amount will remain undelegated, with no impact to all other delegation amounts.
As a reminder:
Each protocol receives a flat delegation amount.
Protocols that are Optimism Native receive a multiplier of 1.25x the flat rate.
Protocols that already have an Optimism delegate receive a multiplier of 1.25x the flat rate. Delegates must have identified their protocol affiliation in a delegate commitment posted by 11/9/22 (end of Season 2) and have voted on at least 10 votes through Season 2.
Protocols may receive both multipliers if they meet both criteria.
If any qualifying protocols have misused grant funding in the past, they will not be eligible.
All protocol delegations will be capped at the point at which a protocol reaches a total of 2M delegated OP. If a protocol already has 2M OP in total delegation, they will not be delegated additional OP through this program. If delegation through the program would push a protocol over the 2M total OP delegated, they will only be delegated OP up to the amount at which they reach 2M total OP delegated.
What Does This Mean for Delegates?
The continuation of this program for a second Season must be approved by the Token House in Special Voting Cycle #12a.
(I may be a bit late but) my 2 cents here is that it’s of course concerning to see that more than 10 protocols have been disqualified due to low voting participation and we should try to prevent this issue in the futur.
Maybe establish a “Governance Messenger” (GM) role within the op collective community. GMs would be responsible for sending timely reminders to protocols, ensuring they are aware of the voting deadlines and presenting the key issues at stake. GMs could also engage with protocol communities on platforms such as Discord to facilitate discussions and encourage active participation.
“What do you think?”
We should definitely try to understand why participation wasn’t higher. We hosted an onboarding presentation for participating protocols and I personally DM’d all protocols to alert them to voting cycles (in addition to announcements on Twitter, the forum, discord, and our public governance calendar) and governance events. It may be that we need to do a better job with communication, but there may also be other contributing factors that would be helpful to understand. In any case, the Foundation is currently hiring a Governance Operations Coordinator to help with the responsibilities you describe.
Some first thoughts that come to mind. If I put myself in the shoes of some of these protocols, who probably don’t have the largest of teams, it seems a bit of a large ask to both be building a great product on optimism AND participating in governance in a meaningful manner. Governance is a full-time job, with some non-obvious best practices. However, we want to give protocols governance power because they are key stakeholders. The best known solution to this problem in general is delegation. Perhaps instead of having to delegate to a protocol, we allow the protocol to select a proxy delegate who represents their interests. That proxy would then receive the delegation on the protocol’s behalf.
i get the sentiment @chaselb but think at this stage that’s really just a vector for centralization and more or less stands beside the point of the program.
this program was proposed after months of people saying that protocols should have a seat at the table and participate actively in governance. delegating to some surrogate (who could easily be rounding up several protocol votes) is in my view an abdication of this offer. the goal is engagement and a voice, not producing powerful delegates who may or may not be interacting with the protocols at all
with governance in a more mature state I can imagine some structures like what you’re describing. but as someone involved in both governance and protocol building, the overhead really wasn’t that high this past season. they just needed to do a couple votes, and they were personally given notice.
to @lavande 's point, i think the bigger questions to answer concern what protocols that sought and were given votes want out of optimism governance and what can be done to foster more involvement. observations there should inform potential solutions.
That is a valid point and active participation in gov does take significant amount of time, one way to tackle is to take approach similar to Uniswap.
Form a multi-sig of community member, voted by their dao, and they will participate on behalf of the protocol.
Hi everyone, as the representative of one of the three remaining elected protocols I wanted to share my thoughts about how the last Season went for the Programme.
I think that the overall concept of the Protocol Delegation Program is one that is needed to ensure that a disconnect doesn’t build between the Token House and those who build in the Collective. Like @jackanorak already mentioned above, the program has assisted in providing more variety of viewpoints and participants, and I think that the option of letting protocols choose a delegate would just consolidate the current structures even more, which goes against the ideas of the Collective.
Now for the harsh part: Despite the idea of protocol delegation being a great one, I believe there were a few points that limited its potential:
Lack of protocol-significant votes in the Token House: In this season, protocol delegates only had two votes, one for suspending a delegate and a ratification of the Bedrock upgrade. I already shared my thoughts about these in my delegate update thread, but basically both of these votes did not really need input from anyone representing a protocol. This isn’t because of this season being unusually quiet, but rather because of my next point:
Delegation of funding decisions to the Grants Council and Citizen House: Full disclaimer, as an individual delegate I am in favour of both of these initiatives. However, the decision to take these votes away from the Token House has meant that the delegation of votes of this initiative has done very little in helping Protocols have their say in the vast majority of governance decisions happening this season. The only way to have any say would be to talk personally with the members of both groups, which is a very time intensive task which might not even have a considerable outcome and won’t help you hit 70% participation.
No significant benefits for protocol delegates outside of idealistic ones: Finally, it’s also worth noting that unless you already care about Optimistic governance, there was very little incentive to devote time and manpower to assist with governance. Protocol delegates didn’t have a say on funding either upcoming projects or rewarding existing ones, and they are the only major delegating power to be excluded from retroactive delegation rewards. Considering the opportunity cost of participating in governance, many protocols might have preferred being disqualified over spedning precious opportunity cost volunteering.
If the Optimism Collective wishes to get Protocols more actively involved, I believe these three points have to be addressed in one way or another. I personally have a couple of ideas, but I would rather let other governance members take the initiative to decide what actions could be taken. However, I think that in its current state the Protocol Delegation Programme is not ready for Season 4, especially since the Foundation will be requesting a KYC from now on from all future members, which will discourage even more protocols from participating and also introduce an additional risk for those who are.
Thanks for providing your perspective as a protocol participating in the program! To address the areas for improvement you cited:
Lack of protocol-significant votes in the Token House:
As you mentioned, this season, protocol delegates only had two votes: one for suspending a delegate and a ratification of the Bedrock upgrade.
The Bedrock Upgrade, and all other Protocol Upgrades, are of critical relevance to the protocols building on Optimism.
Since your concerns seem primarily related to lack of involvement in funding votes, this should be addressed in the upcoming Reflection Period and Season 4, as outlined below.
In this Reflection Period, delegates will be asked to vote on:
Protocol Delegation Program Renewal
Intent Budgets (including Grants Council Renewal)
Treasury Appropriations (annual Foundation budget approval)
In Season 4, delegates will be asked to approval rank Proposed Missions, a new mechanism to allocate the Governance Fund.
No significant benefits for protocol delegates outside of idealistic ones:
Since this concern seems to be primarily about incentives, I’d like to clarify that protocols participating in the Protocol Delegation Program were not outright excluded from receiving retroactive delegation rewards. All delegates receiving delegation at >0.25% voting power were eligible. We excluded delegations made by the Foundation in this calculation (so as to not disadvantage other delegates), but you’ll see that both 0x and PoolCollective still qualified for rewards based on their delegation levels excluding Foundation delegations.
Let’s hope that the new proposal types are sufficient to hold interest of other Protocol Delegates. Personally, I will do my best to ensure the involvement of the ParaSwap DAO on this season as well
Thank you for the clarification, I missed those two protocols being nominated. While this is a good start, I feel that we could be seeing some survivorship bias if we focus on the 2 projects out of 22 that managed to be eligible for this. As you mentioned, these two protocols received these rewards despite of the program, as opposed to thanks to their participation.
I hope I am not coming across as too negative with these comments, I am just hoping to understand why 60% of all protocols (and 63% of elected protocols) disquilified from lack of participation despite clear communications and updates about governance. I don’t think that the requirements of this Season were particularly challenging for protocol delegates (only 2 votes in a similar time window), so I hope that with harsher time requirements this issue does not worsen. Perhaps with the introduction of Trust Tiers we won’t even have to worry about that, as Protocols might try to pursue higher tiers through this participation!
Feedback from participating protocols, based on 12 / 23 responses
75% of respondents had participated in Optimism governance in some capacity before the program. 67% of respondents plan to remain active, with 58% of respondents indicating they are more likely to participate in governance after participating in the program. 30% said the program had no impact on their likelihood of participation, but every protocol that indicated “No Impact” was participating prior to the start of the program. 1 protocol said they are less likely to participate following the program. Several protocols said they’d like to see the program extended beyond two Seasons and extended to more protocols.
Reasons given for not participating more:
Unsure of how to add value and engage beyond voting
It was challenging to keep on top of information across multiple platforms (especially with other full time jobs)
To address some of the feedback as to what would make the program more successful, if renewed:
We will do another onboarding session at the start of the program and will also work with protocols to create some guidelines on how best to engage as a protocol delegate. Thanks for the suggestion @Oxytocin
We will create one group chat for all participating protocols, so protocols can help each other onboard and for more streamlined announcements and Q&A
The Protocol Delegation Program aims to recognize important stakeholders and allow them to participate in governance because protocols, as the proposal puts it, “value having a voice in the development of the ecosystem.” However, 60% of eligible protocols, which were delegated tokens, did not participate in governance and were subsequently disqualified from Season 4 token allocation. Although protocols may have perceived last season’s voting proposals as relatively uninteresting (an Optimism upgrade and a delegate suspension), they are given two seasons to participate in voting. Therefore, protocols lack interest in protocol governance participation, and we do not believe the current requirements to be eligible for the Protocol Delegation program benefit Optimism.
We agree that giving a 1.25x multiplier to Optimism native protocols and ongoing participants in the Protocol Delegation Program is a strong idea. These multipliers further incentivize protocols interested in Optimism governance. Some changes that the Optimism Team should consider are delegating tokens to protocols that participate in forums, discussion, and governance even without tokens. This change shifts the governance power from prominent protocols distant from the ecosystem’s well-being to active community members.
Only 12 out of 23 participating protocols provided feedback for Optimism governance. Lavande stated that the primary reason protocols did not participate was a lack of clarity on how to add value and time constraints around other obligations. Asking protocols to create a branch in their team for governance, having the Optimism governance team ping these deadlines to protocols, and funneling more time into protocol governance isn’t a reasonable allocation of resources or tokens.
Therefore, we will be voting against this proposal at its current stage.
Sincerely, the Carnegie Mellon Blockchain Governance Team
ty @Oxytocin for putting all these thoughts together in a coherent and succinct way and @lavande for your helpful clarifications/responses.
wanted to share my POV to your three points raised (in a less succinct but hopefully still coherent way):
Lack of protocol-significant votes in the Token House: I don’t agree that either of those votes did not need input from anyone representing a protocol.
For suspending a delegate, I believe that it’s a decision relevant for all delegates to indicate that they are willing to uphold each other to the expectations we all agreed to - these social norms are not enforceable on-chain so I believe off-chain enforcement in this manner is necessary.
For ratifying the Bedrock upgrade, fundamental changes to Optimism itself certainly impact protocols current and future development - I felt that it was implied from the Bedrock upgrade forum post that a buffer was built in to ensure that impact protocols had time to make sure they were ready for the changes to come.
Delegation of funding decisions to the Grants Council and Citizen House: While funding decisions did represent (and probably will continue to represent) a large portion of governance decisions, as a representative of a protocol, I’m not sure those are even decisions that a protocol should be involved in or really have much impact on a protocol so fully delegating those decisions to a Grants Council and Citizen House is a great decision.
For the first point, these funding decisions feel more likely to have conflicts of interest (for example one lending protocol delegate voting against a team requesting funding to build a competing lending protocol) in ways that could be hard to establish/prove.
For the second point, which teams within the Optimism ecosystem gets funding doesn’t really impact a protocol as much as say the Bedrock upgrade has and as such, those are decisions that feel less pertinent and thus less important for a protocol - I personally believe that not all delegates should need to be involved in all governance decisions, only the ones that impact them or would benefit from the skillset/perspective they bring so as a protocol delegate, I’d prefer to not need to weigh in on every grant proposal. I think that the votes in the current special cycle are a good balance of giving protocol delegates some say in how funding decisions are made but not overwhelm them with every decision.
No significant benefit for protocol delegates outside of idealistic ones: Building on my thoughts about the previous two points, I believe that there are important decisions wrt Optimism stack development that would bring significant benefit or hinderance to protocols that their delegates are incentivized to participate in. As an example, if there is a vote that removes an opcode or changes how timestamps are synchronized, that could have massive impact on the protocols that teams would need to adjust to and thus participating in governance to voice support for or against would be a very tangible benefit.