[Ready] [GF: Phase 1 Proposal] Messari

Some thought on this proposal and the counter-proposal from DefiLllama.

  1. It is true that Messari provides substantial value through their experience with reporting crypto ecosystems and their wide and influential audience. Being covered by Messari is a value in itself. Even though DefiLlama is a big brand in the crypto space (DeFi in particular) they’re not known yet for their reports, the quality of the work is more uncertain
  2. However, from the OP perspective the more coverage, the better. And more entities covering the Optimism ecosystem from different perspectives, the better. In that sense Messari and DefiLlama proposals are not mutually exclusive and thouldn’t be treated like this-or-that. Why not both?
  3. Even though the coverage in both services provides value for the OP ecosystem, it provides comparable (if not bigger) value to those services as well:
    1. The data and the reports will be available within those services exclusively and will attract lots of users, especially from within the OP community.
    2. Those services hold copyrights to those reports and can reuse them.
    3. While preparing the reports, those services build unique in-house know-how.

Given that, I believe that even though Optimism Collective might incentivise those services to cover the OP ecosystem, it should not be expected to cover full costs of such coverage. Dunno what is the standard in other ecosystems but I believe that something like a 50/50 split of costs between the service and OP would be fair at the beginning (and should be expected to decrease later on if those reports gain popularity). And if OP is covering all the production costs, it should also hold all the copyrights to the produced reports and probably should consider doing such reports internally - providing licences, even for free, to all the interested parties to include their reports within their own services.

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100% to internal resources not in the spirit of the fund designed to promote usage and liquidity.

Appreciate the thoughts @kaereste on that 3rd points some clarifications:

  1. While more users on our site reading the report is great, we don’t have ads that would subsidize the cost of the reports
  2. We don’t keep these reports exclusively on our site. We encourage projects to share them far and wide whether hosting on their site, distributing on newsletters, etc. Our goal is to get as many eyeballs on the reports as possible. Which is also why we enable 3rd parties such as Bloomberg and S&P to redistribute them for free.
  3. Analyst expertise is also great and it enables us to provide additional value-add over time but again there’s no direct monetization form that that can subsidize the costs of these reports.

Messari Protocol Services exists as a business unit separately from the Enterprise (paywalled) portion and is therefore reliant entirely on grants to fund the significant resources that go into this work. If we were to only request 50% of the cost, this frankly wouldn’t be sustainable at all.

We have put a lot of thought into the pricing and feel we’ve been able to leverage our size and expertise having done this for over 30 DAOs to minimize costs as much as possible. For reference, this is the budget for the financial reporting arms of other DAOs:

  • MakerDAO has a Strategic Finance team doing their reporting for $1.3 million/year.
  • Aave is spending $1.5m on similar services

We recognize this is not apples to apples and these scopes are broader than just reporting/analytics but I think it showcases the substantial work that goes into these types of services.

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1. Presentation

We are an officially recognized Tooling Governance Committee, responsible for assessing proposals related to tooling and infrastructure (wallets, bridges etc.).

2. About the project

Messari is a research and data analysis company with a mission to organize and contextualize information in the crypto space.
Messari has become a reputable name in the ecosystem as an aggregator of information, data and research. With a high volume of daily visits, their website offers a data platform for graphs and advanced metrics for cryptoassets, offering a free tier and paid subscriptions.

Similar OP Governance proposals:

  • DeFillama reports - 182.5K OP tokens (as a counter-offer to Messari’s proposal, see original post here).

3. About the following

The proposal was published on October 20, with a good level of interaction and questions from some committee members.

4. About the proposal valuation

  • Added value (good to bad): seems to be good. A pending issue for the ecosystem is governance and ecosystem reports. These data help the members of the governance to be updated.
  • Impact or expected usage (high to low): medium. These reports would have a positive impact on the Optimism ecosystem, not only because they keep governance members up to date, but also because they can attract new players to the governance. The Optimism Collective would have a wider reach.
  • Current Status [Development stage/Open Source?] (early to ready): ready. Messari has already produced 2 reports for Optimism governance: State of Optimism Governance and **Governance Fund Observations. also developed 4 subgraphs of the important Optimism protocols Aave v3 , Curve , Uniswap v3 2, QiDAO.
  • Expenditure plan and distribution (appropriate to inappropriate): standard. The OP tokens will be used to fund internal resources. Which include: Research, data science and marketing. The proposal has a brief description of how the funds will be used.
  • Amount requested (high to low): high. the amount requested is 365k token OP considering other similar proposals made by reputable DeFi analysts at the moment.

5. FINAL RECOMMENDATION: Abstain

We believe Messari is a great product and has a great reputation in the ecosystem. There is no doubt that their reports add a lot to the ecosystem.

However, we have some dilemmas with their proposals, since, as Messari themselves clarify that optimism would be hiring a “service”.

On the other hand, in case it is contracted as a service, we believe it should go through another governance process.

Finally, the appearance of a counter-proposal reaffirms that it would be appropriate for governance to more calmly define the appropriate approach for this type of service and what it implies, considering the offers on the table.

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Thanks for putting these thoughts together. While we do view this as an “investor relations service” there is still a public goods infrastructure component we feel fits into the Governance Fund. As the docs state:

The Token House is welcome to consider any and all proposals which would drive growth or address a gap in the Optimism ecosystem, including public goods projects.

A clear gap in the Optimism ecosystem has been governance accountability which we are planning to directly address in our recurring governance reporting. These aren’t just one-off reports but we’ll be open-sourcing the entire data layer to enable others to extract valuable insights from and build on over time.

In terms of driving growth, it’s pretty clear how accessing over 250k crypto natives and 1 million active users across three of the largest research platforms in the world will get Optimism in front of nearly every major financial institution and large corporate who are not only getting smart on crypto but increasingly committing resources to partner with and even interact on chain with various protocols.

Lastly, we feel the counter-proposal shouldn’t be swaying the decision here as it was a last-minute copy/paste attempt to provide services we’ve spent over a year building with a team of ~50 employees working full-time in our Protocol Services arm. Not only is there no experience having done any type of long-form financial reporting or governance research but no detail was given as to who would be producing these reports nor any insight into the reach they would receive.

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I feel this proposal is better suited to Partner Fund or RPGF. While there’s no doubt Messari’s reports are valuable to Optimism as a whole, they are also valuable to Messari, and it doesn’t quite fit with Governance Fund’s spirit at this time of directly incentivizing usage and building applications & tooling on Optimism. I’ll follow the Tooling Committee recommendation and Abstain, for now, but will be monitoring feedback here.

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Voted against - This was a tough one because I am a big supporter of Messari and personally find their platform very useful. However, I don’t believe this request is aligned with the purpose of the governance fund (see below). I understand that this is open to interpretation, but this proposal seems better suited for the retroactive public goods funding program imo. Thank you to the Messari team and I hope to see you in a different grant pipeline.

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Thanks for the thoughts @polynya and @katie in terms of grants pipeline it still feels like this fits under:

proposals which would drive growth or address a gap in the Optimism ecosystem, including public goods projects.

While we went ahead and started the work to showcase our work to the DAO and make the deliverables more concrete, much of it would still be future work continuing to build out the data infrastructure and actually producing the reports. The resource expenditure is also significant enough where we wouldn’t be able to follow through on the entirety of this work and then hope to receive funding retroactively.

Lastly, there have been other non-protocol related tooling and information initiatives funded through the Governance Fund (Bankless Academy, Agora, Karma) that feel like are good comparables for thinking about our proposal.

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Voted Against

This is better suited for RPGF or partner grant.

Shared similar comment on Defillama proposal too.

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During the community call the OP Foundation explicitly stated that the Governance Fund was the right pipeline for us to be applying (reasons stated above)

We ask that you reconsider @katie @polynya @SEED_LATAM_Joxes @OPUser

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Changed my vote to abstain based on the guidance provided in the community call.

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I disagree with the OF in this regard, then; I’ll keep my vote as Abstain. As I’ve stated in other places, IMO, we should be focusing on tooling, UX & non-liquidity-mining grants at this time. I’d recommend Messari to be in touch with OF for a Partner Fund grant.

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I voted abstain on this proposal consistent with the Tooling committee recommendation. I believe this would be beneficial work for the Optimism ecosystem since I’m a fan of Messari’s work but the token amount requested is quite high. I had stated the same thoughts on this earlier in the thread and it seems like the pricing reference got updated in response to the OP token price movement but the amount charged for the work itself did not get adjusted. Now when comparing to a reputable counter-offer, it makes it difficult for me to get to a yes.

Thank you for the tag.

I was in the call and after thinking this through decided to go vote against. Any project seeking grant from Gov fund can submit a proposal to the token house; public good, private funding, dev work or user incentive and any other type of token use falls under gov grant and OF said the same thing during the call.

I am not judging the quality produced by Messari but my major concern is need and importance. At this stage of gov, to me, accounting of fund is more important than the state of gov.

With new guideline in place, I would be happy to abstain or vote in favor given that number of token is more competitive or proposal is more aligned towards fund accountability.

Reiterating my earlier comments on the counteroffer, while we’re big fans of DL I don’t believe their proposal was anything more than a last-minute copy/paste attempt to derail our efforts.

We’ve spent over a year building this offering with a team of ~50 employees working full-time in our Protocol Services arm. In contrast, they have zero experience having done any type of long-form financial reporting or governance research and provided no detail as to who would be producing these reports nor any insight into the distribution they would get.

Between the open-source subgraphs and free data dashboards, there is definitely a component of tooling and UX. For example we have a Velodrome page charting TVL, trading volume, revenue, liquidity added/removed from both the macro level and on an individual pool basis.

I am voting against the messari proposal at this time. The tooling recommendation was to abstain and each delegate to decide on their own.

Based on the feedback given by messari here and the description of the service I don’t see the value by hiring messari to do these reports for optimism at this time.

But I ask to come again in the future with a revised proposal that may make more sense for optimism as a whole.

Note: I edited the answer to remove reference to LLama as this is not what drove the decision and gave the wrong impression.

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To clarify, my decision was not primarily driven by the counter offer. My initial comments on pricing were from before the counter offer was shared. I mentioned in the earlier post, the amount appeared to be adjusted based on the OP token price but the amount charged for the work didn’t have an adjustment so wasn’t able to get to a yes before.