[READY] [GF: Phase 1 Proposal] Otterspace

Project name: Otterspace

Author name and contact info: @Lukas (Twitter: https://twitter.com/lukasbfreund; Discord: Lukas B#9835)

This proposal builds on the community feedback we received in an earlier post last month.

I understand that I will be required to provide additional KYC information to the Optimism Foundation to receive this grant: Yes

L2 recipient address: 0x2696170bf5fD36320c3932fd9e85fe5b798385FE

Grant category: Governance Fund Phase 1

Is this proposal applicable to a specific committee? Tooling

Project description:

Otterspace is building a flexible and easy-to-use infrastructure for DAOs to use non-transferable NFTs, which we call Badges. Badges can enable DAOs to perform non-financialized governance, automate permissions (access rights, etc.), manage community-specific reputation/credentials, and create better incentive systems.

Currently, we are in our private Beta with 16 DAO partners, including Radicle, Bankless DAO, Token Engineering Academy and Syndicate, amongst others and our product is deployed on Optimism Mainnet. We are co-authoring a token standard specifically for non-transferable tokens (EIP 4973), are building an open protocol that utilizes the standard and an application that is in service of the protocol.

Today, Badge collections can be designed and manually assigned by a DAO admin to members in the DAO through our easy-to-use app interface. Badges can have expiration dates and artwork specific to the DAOs use case. DAOs can also interact directly with the protocol if they prefer to develop their own front-end.

With the Badges, we enable downstream permissions within Snapshot (used for governance), Guild (used for Badge-gating), and additional integrations with various DAO tooling providers (including Wonderverse, Coordinape, etc.).

You can preview the current version of our product in our product deck.

Soon badges can be earned by completing missions (e.g., by meeting certain on and off-chain requirements), DAOs can view their membership base, and contributors can show off their DAO membership with their own profiles.

Project links:

Additional team member info:

Emily Furlong (@emthemaker)

  • Leading product and community at Otterspace
  • Former Product Lead for creator to fan engagement and support at SoundCloud, Community Lead at Shark DAO, and contributor to Cabin DAO

Ben Dobbrick (@0xbendo)

  • Leading all things commercial, including partnerships, ecosystem growth, and marketing
  • Former early-stage investor and operator in the Future of Work and Web3 space and contributor with PieDAO and SharkDAO

Rahul Rumalla (@rahulrumalla)

  • Leading all technical efforts
  • Former Director of Integrations at SoundCloud – leading developer community, partnerships, and integrations. Previously also Co-Founder/CTO of music Web3 startup https://paperchain.io/

Please link to any previous projects the team has meaningfully contributed to:

As Otterspace, we are currently helping Radicle DAO in the distribution of influence process and providing the non-transferable token technical backbone as part of a Radicle grant. Other examples include Bankless DAO, which plans to use Badges to represent season passes for its community members; Token Engineering Academy, which plans to issue badges to it’s students for the completion of courses and study programs; or Syndicate DAO, which plans to issue badges to its investment syndicate users for achieving certain milestones.

On an individual level, the team members have been active in multiple past projects, such as, for example, Emily being the community lead at SharkDAO, where she implemented a new onboarding process, and at Cabin DAO where she led a Discord revamp; or Rahul as the Co-founder and CTO of https://paperchain.io/.

Relevant usage metrics:

In the first iteration of the Otterspace product (which contained off-chain badges at the time) more than 15,000 badges were created across 9 DAOs in only three months. The current Badge protocol and app are the second iteration of our product, bringing badges on-chain. We recently started onboarding DAOs onto the new product and are currently working with 16 DAOs in our private Beta.

Competitors, peers, or similar projects (please link):

The use cases for non-transferable tokens (NTTs) are abundant, and various organizations are developing NTTs. Similar projects to Otterspace include, for example, MintKudos, which specializes in capturing atomic community contributions on-chain; Rep3 aims to capture on-chain reputation and contribution payments via non-transferable tokens; Noox enables the minting of achievements (predominantly in the DeFi space) on-chain.

We believe that the various use cases of NTTs merit specialized solutions and are excited to see multiple organizations pursuing the spread and adoption of this primitive. Nevertheless, our focus differs from the projects mentioned above. In our opinion, other projects in the space tend to focus more on measuring atomic/high-frequency contributions. At the same time, we see ourselves leaning towards higher utility & assurance/lower-frequency use cases. With regard to Optimism specifically, we consider ourselves the most relevant partner at this point as we are Optimism native and based on the NTT-specific token standard EIP-4973 as opposed to the modified ERC-721/ERC-1155s utilized by various similar projects.

Is/will this project be open-sourced?

The Otterspace Protocol is being developed as an open set of smart contracts so that DAOs can compose and integrate pieces into their own tech stack and other app developers can construct custom front-ends. The protocol and code are visible on our Github under https://github.com/otterspace-xyz, and you can read our technical documentation here.

Optimism native?: Yes

Date of deployment/expected deployment on Optimism: 17th of August, 2022

Ecosystem Value Proposition:

What is the problem statement this proposal hopes to solve for the Optimism ecosystem?

The current method of distributing influence in DAOs, often based on fungible token ownership, is problematic because power consolidates in the hands of whales, which runs counter to the philosophy of many DAOs. Optimism itself is planning to counter such a setting via the bicameral governance system from the get-go. Contributors earning their ‘salaries’ in tokens end up selling their influence to cover expenses. Further, the distribution of permissions is also problematic, as it requires manual management. The frequent turnover in DAOs creates overhead for adding and removing permissions from individuals.

How does your proposal offer a value proposition for solving the above problem?

Badges address these issues by enabling non-financial governance, balancing out the fungible token-based governance systems, as intended by Optimism’s bicameral governance system.

Additionally, Badges are especially powerful because they can have utility attached to them – Otterspace is collaborating with multiple DAO tooling providers to integrate the badges across the DAO tooling landscape. Badges can be used for governance (e.g., Snapshot), access permissions (e.g., Clarity, Guild), payments (e.g. Coordinape), and more. Additionally, badges are useful simply to show off reputation, history, and experience.

Why will this solution be a source of growth for the Optimism ecosystem?

The benefits of this collaboration for Optimism are threefold (which are not mutually exclusive):

(i) The Otterspace protocol, app, and token standard (EIP-4973) can facilitate & speed up the building of the Optimism Citizen House by providing its technical backbone. Badges could be used to indicate membership and decision-making in the Citizen House (e.g., through our Snapshot integration). Thereby, Badges benefit the long-term & efficient growth of the Optimism ecosystem.

Additionally, we have been working on governance-related Badge implementations with other DAOs (e.g., Radicle’s distribution of influence workstream). We could assist Optimism in the conceptual design of the Citizen House.

(ii) As an Optimism-first protocol, we want to partner with you to spur further growth of the Optimism ecosystem, especially within the DAO segment. This segment so far has not received much funding from the community compared to DeFi. This has two aspects:

  1. We are working with many DAOs who are not yet on Optimism and could become long-term Optimism enablers.
  2. Through our easy-to-use interface (familiar to Web2 users), we are introducing Optimism on-ramps into our product which will onboard more users into the broader Optimism ecosystem.

(iii) Lastly, we believe that the newly founded Governance Committees could make use of an internal coordination mechanism that utilizes Otterspace Badges. Badges could, for example, be used within a Snapshot strategy to achieve consensus on how to vote on proposals within committees. Additionally, the Badges could delineate membership within the Governance Committee (e.g., Badges for the DeFi Committee).

Has your project previously applied for an OP grant? No

Number of OP tokens requested: 100,000

Did the project apply for or receive OP tokens through the Foundation Partner Fund?: No

If OP tokens were requested from the Foundation Partner Fund, what was the amount?: Not applicable

Proposal for token distribution:

How will the OP tokens be distributed?

70% of the tokens will be used to incentivize user adoption – We will achieve this by converting OP tokens to Eth and dropping $1-3 worth to the Optimism wallets of users who have been added to a Badge allow list. The creation and claiming of Badges is associated with a small gas fee (due to the consensual minting mechanism of EIP-4973, this gas fee is currently required as Badge recipients need to mint the Badge, thereby consenting to it). By dropping a small amount of ETH into the Badge recipients’ wallets, these users can directly claim their Badges and engage. This benefits Optimism by facilitating the onboarding of new users to L2 directly. In the context of some DAOs, this also means that new Web2 users are likely to interact with Optimism as one of their first experiences in Web3 and, due to the ETH drop, can do so easily. For example, Bankless DAO will be implementing Otterspace Badges as their season pass – we expect a significant portion of new Bankless members to be new to Web3.

This allocation would enable us to onboard 20-70k users to Optimism directly over the next 12 months and provide them with enough funds to mint their first badge and experiment with a few other transactions on Optimism. The number of users depends on the speed of DAO adoption and the adoption of badges for different use cases. Higher frequency use cases (such as tracking atomic contributions) may bring more users with potentially less retention. In contrast, higher utility use cases (such as badges for permission management) may bring fewer users but with higher retention. Either is beneficial to the Optimism ecosystem. As badges are still a recent concept, Otterspace will incentivize all use cases and optimize to offer the best solutions to DAOs’ needs. By enabling Badge owners within a community to also create and distribute additional Badges, their adoption can grow organically and use case agnostic within communities. To measure our progress towards this goal, we will track metrics such as # of Badges minted, the conversion rate of Badge-minters to Badge-creators & Badge usage in integrations.

Badges are distributed by DAO/community admins. For the time being, each DAO is selected to participate in the beta after speaking to the Otterspace team. This way, we ensure an alignment between the DAO’s needs and the capabilities of Otterspace. As a provider, we do not plan to prescribe how the badge distribution should work for communities. Nevertheless, we aim to provide helpful content on how, e.g., Sybil resistance can be addressed and ensured in the distribution mechanism and work with partners that offer Sybil-resistance functionalities and can be integrated into the badge distribution flows.

This drop would apply to future users that get added to a Badge’s allow list (only once per wallet and for the first time after this drop mechanism is live). As DAOs may create multiple badges within their community (e.g., representing different contributor levels), this might also include users that already claimed a previous badge at a point in time before the drop mechanism is available.

30% of the tokens will be used to incentivize integration partner adoption – The Otterspace protocol is a public goods infrastructure that can be used by developers across their applications. This part of the token allocation will be used as an incentive to drive developer adoption of Badges across the Optimism ecosystem for use cases such as governance, permission automation, and gating. This is beneficial to Optimism as (i) a non-transferable token infrastructure with high utility (via integrations) will make Optimism more attractive for existing communities on Optimism & future communities evaluating if they should build on layer 2 directly, and (ii) all integrations with the badge infrastructure will also benefit the Optimism DAO itself (e.g., Citizen token holders).

Over what period of time will the tokens be distributed for each initiative?

The tokens will be distributed over the next 9 to 12 months.

Why will incentivized users and liquidity on Optimism remain after incentives dry up?

DAO contributors are likely to remain on Optimism after the incentives run dry as they will have built up a collection of Badges representing a share of their on-chain reputation, and the collection may contain multiple badges with integrations with frequent usage (e.g., badges used in token gating).

DAOs are likely to remain on Optimism as they will have built an on-chain representation of their DAO structure with Badges, and Badges may be used in mission-critical operations (e.g., governance). Thus, moving operational infrastructure to another network would result in considerable friction.

Lastly, given our efforts to incentivize DAO tooling providers to integrate with Otterspace on Optimism, DAOs will find all the DAO tools that they need on Optimism along with the benefits of using them on an L2.

7 Likes

I like the idea of attracting a lot of value-aligned users to Optimism. DAO members clearly understand the values of Optimism and I like the idea of enabling them to do a few transactions here, more than simply minting the badges. Glad to see that a DAO like Bankless would use it as well, there are a lot of future L2 power users in there.

4 Likes

Overall a good proposal, I am biased in saying that we need non-financial reward for DAO engagement.

Could you please share the logic behind converting OP to ETH and then dropping it to users rather than simply dropping OP? Also, are you planning to do this for new users or old/existing as well.?

2 Likes

Thanks for the feedback @OPUser @NathanVDH !

The rationale for dropping ETH to the users’ optimism wallets is that the creation and claiming of badges is associated with a small gas fee (due to the consensual minting mechanism of EIP-4973, this gas fee is currently required as Badge recipients need to mint the Badge, thereby consenting to it). By dropping a small amount of ETH to the Badge recipients’ wallets, these users can directly claim their badges and engage.

This would be particularly useful for DAOs/communities that are engaging users with a more web2 background, as the process of buying ETH, sending it from an exchange to a wallet, and then bridging it to Optimism ahead of claiming a Badge is more complex compared to simply claiming a badge in your wallet on Optimism directly.

As pointed out by @NathanVDH (and please correct me if I misunderstood your comment), this small starting balance would also set these users up to do more transactions on Optimism as they are already onboarded to the network then.

This drop would apply to future users that get added to a Badge’s allow list (only once per wallet and for the first time after this drop mechanism is live). As DAOs may create multiple badges within their community (e.g., representing different contributor levels), this might also include users that already claimed a previous badge at a point in time before the drop mechanism is available.

We’re interested in your, and the community’s, thoughts on this as well :slight_smile:

3 Likes

We greatly appreciate the feedback we’ve received over the last weeks. As per the Operating Manual v 0.2.0, I’m sharing a summary of the community input and the changes which we implemented in the proposal:

Feedback on the previous post, during MCon, and on this proposal:

  • We were asked to clarify the specific collaboration opportunities → We added & clarified our suggestion to (i) provide the technical backbone for the citizen house, (ii) for Badges to serve as an on-ramp of DAOs, and DAO contributors onto Optimism, and (iii) the suggestion to use Badges, along with Snapshot, to support the work of the Governance Committees

  • We were asked to clarify the current state of our product → We added information on our (i) private beta (v2), (ii) past usage data from v1, (iii) some of the DAO partners in our private beta (e.g., Radicle DAO or Bankless), (iv) our product deck, and (v) information on what the following product versions include (earning badges by completing missions)

  • It was suggested to us to consolidate the wording around badges/SBTs/NTTs for simplicity → We consolidated the wording on using Badges

  • We were asked to clarify the rationale behind dropping ETH to users instead of OP → We added a section to outline this rationale (facilitating the user activation and on-ramp to Optimism, particularly for users with web2 backgrounds) and clarified the benefits for Optimism

I love the Otterspace proposal. One question is how it would “mesh with’ this exert from the OP Governance Overview, regarding soulboubd NFTs:

“The Collective will establish a Citizens’ House to facilitate and govern a process to distribute retroactive public goods funding. Citizenship will be conferred by “soulbound (opens new window)” non-transferrable NFTs, and the set of citizens will grow over time. The mechanism for distributing Citizenships will be determined by the Foundation with input from the Token House.“

2 Likes

Thanks for the comment @Ovetta

In our understanding, the exact process for how the distribution of the non-transferable NFTs for the Citizen House would work is not yet determined, however, we are in contact with @bobby to understand the requirements and see how we can support it. Otterspace could provide the technical backbone for this, the creation and minting of Badges. Once the Badges are distributed, the retroactive public goods funding decisions could, for example, be made via Snapshot, using Badges as the voting weight.

1 Like

We really like the proposal and would like to formally endorse this.

“I am an Optimism Delegate (Delegate Commitments - #3 by Juanbug) with sufficient voting power and l believe this proposal is ready to move to a vote.”

3 Likes

Awesome then, thanks for the clarification! This looks great to me. I’d like to also formally endorse this proposal.

“I am an Optimism Delegate Delegate Commitments - #50 by NathanVDH with sufficient voting power and l believe this proposal is ready to move to a vote.”

2 Likes

Could you explain how the strategy behind the ETH purchase will be and how you are going to avoid the farmeo of this airdrop?

2 Likes

Thanks, @Defi_LATAM_axlvaz for the question. To clarify, this is how I understand your questions and what I’m responding to (please correct me if I misunderstood part of your question).

1. How will we purchase the ETH? (If you were referring to why we plan to purchase ETH, may I point you to our response above to OPUser’s question?)

We consider the following aspects as relevant: the frequency of swapping, the time period over which the swapping will take place and the amount swapped each time.

Concerning the frequency and time period, we plan to swap OP into ETH at regular intervals and, therefore, not all at once. As we plan to distribute the tokens over a period of 12 months, we will likely follow a monthly/bi-weekly swapping schedule. In the first months, we will swap less OP into ETH and then increase this monthly swapped amount as the user base grows.

This way, we should receive, on average, a reasonable exchange rate without exerting any significant impact on the liquidity or the price of the underlying assets.

2. How are we going to avoid the ETH being farmed in this Airdrop (e.g., programmatically draining the account of ETH)?

We consider the following aspects relevant for this question: how the ETH is distributed, who gets access to the badge allow list & airdrop, and how much ETH is exposed at a given time.

How the ETH is distributed:

Our product & engineering teams are currently looking into the trade-offs associated with either airdropping the tokens, using a relayer contract, or meta transactions, all to enable robust & easy adoption and onboarding of users. At the time of writing, we consider the airdrop to be the best approach. The event triggering an airdrop would be an address added to the badge allow list for the first time and only once per address across all badges.
Given this, we believe that beyond ensuring the safety of the technical implementation, two additional control handles exist for us: (i) Who gets access to a badge allow list & airdrop & (ii) how much ETH is exposed at a given time.

Who gets access to the badge allow list & airdrop:

During our ongoing private Beta, we are personally in touch with representatives of all DAOs using Otterspace, and using Otterspace is subject to going through our onboarding & screening. Therefore, we currently have influence on who gets access to a badge allow list as we work with them directly.

Once we open up the product and enable any DAO to start using the app, we will retain a screening process and make the airdrop subject to approval. Any DAO could use Otterspace, but in order to benefit from the Airdrop we would first need to speak to and screen the DAO representatives, to ensure that they represent the DAO that they claim. We would then only enable the airdrop for organizations that we have screened to ensure that only entities that we deem trustworthy have access to airdropped ETH. Our product is tailored towards DAO workstream leads and coordinators issuing badges. These individuals typically would know the individuals to whom they issue badges, thereby acting as a web of trust.

How much ETH is exposed at a given time:

In addition to ensuring that trustworthy DAO representatives use the badge allow list & the airdrop, we also plan to limit the exposure of ETH. The ETH will be primarily kept in the Otterspace Gnosis Safe, and the contract that controls the airdrop will be “topped up” periodically to ensure that at any given time, only the ETH amount necessary to serve the new incoming user base is in the contract and thereby exposed to potential threats.

This is the working state of our considerations on ensuring the safety and correct allocation of the token grant. We appreciate all feedback on this and will keep the Optimism community updated on our progress as we go (provided the approval of the grant).

1 Like

Proposal looking good!

Do you have a product demo video that you can link since it’s hard to assess the product without actually being a DAO admin.

Also how would you say you differ from Galaxy which also allows to issue badges based on on & off-chain criteria?

1 Like

Good Proposal, but imo a bit early to ask for a grant. Let them proof themselves a bit first. Good luck!

Thanks @cryptotesters for the comment.

I’ve recorded a product demo video here, so you can get a feeling for what we are building.

Concerning Galaxy/Galxe, we differ on the technical and the use case side. Technically, Galxe is using mostly ERC-721 NFTs, which are transferable. However, as far as I’m aware, Galxe are also experimenting with some modified ERC-721s that are non-transferable. Nevertheless, we believe that non-transferable NFTs need their own standard for longer-term adoption, hence why we are involved with EIP-4973.

With regard to the use cases, we see some similarities between Galxe and Rabbithole, as both are focused on capturing web3 user achievements for user acquisition (in the case of Galxe, predominantly users for DeFi apps & protocols). On the other hand, we are explicitly focused on DAOs and higher-assurance cases such as badges representing roles within a community & enabling the associated permissions (e.g., access permissions or governance). If we look at DAOs outer layers (i.e., new people coming in), Rabbithole and Galxe may focus on that layer, whereas Otterspace focuses on the inner operations layer. Considering collaboration opportunities, we reckon that Optimism can acquire new users, particularly in the DeFi or NFT trading space with Galxe. Whereas with Otterspace, Optimism can acquire more DAOs and DAO contributors.

While Otterspace badges are currently distributed to contributors using manual attestation, we are also working on capturing on-/off-chain activities and expect this functionality to go live later this year.

2 Likes

Great proposal. Room for many innovations in the space, and all user accretive tech should be welcome at Optimism imo.

2 Likes

Thanks that was helpful!

What kind of use cases are you imagining DAOs will choose to go for with your infrastructure?

Does your product have some easy integrations e.g “Include all token voters/snapshot voters/LP’s etc. on allowlist, or off-chain e.g allow Twitter followers, Discourse members to mint” ?

Or is it all manual uploading of addresses that the DAO admin has handpicked beforehand?

I have voted against this proposal.
My reason for voting against is OP will be sold.

I refer to…

1 Like