Retro Funding: on Memecoins and Onchain GM

I’d like to open a discussion on the inclusion of memecoins and simple onchain applications, like ones that allow you to post “gm” onchain, in the Retro Funding Onchain Builder Program.

To recap: The Onchain Builders program rewards projects, that have deployed their own contracts on the Superchain, with monthly Retro Funding rewards based on measurable onchain impact like transactions, gas fee contributions, TVL and unique user interactions. Dive into the docs here.

The Dilemma

We’re observing a rise in projects like memecoins and onchain GM applications performing quite well by certain metrics, notably user adoption. You can find current RF Onchain Builder results here.
These projects are garnering significant engagement, but they also raise a critical question: should Retro Funding reward these types of projects, and if so, how generously?

Arguments Against Rewarding Them:

  1. Perceived Lack of Long-Term Value: One might argue that these projects don’t contribute meaningful, long-term value to the ecosystem. They might be fun or trendy, but they don’t advance the ecosystem’s value and bring us closer to …
  2. Limited Innovation: Compared to other applications that push boundaries, memecoins and simple apps are less innovative. We might risk incentivizing more of these low-effort projects if they receive significant rewards.
  3. Airdrop Farming Concerns: There’s a concern that such projects are often used by users to farm airdrops, rather than contributing to genuine, sustainable growth.

Arguments in Favor:

  1. Meeting User Demand: These projects clearly fulfill a demand. The high usage indicates that users find value in them, and ignoring this demand could mean missing out on what users actually want. A big factor here is the rise of “mini apps” which make fun, straightforward actions onchain more enticing to users.
  2. User Base Growth: Memecoins and onchain GM apps might serve as entry points for new users, introducing them to the ecosystem. This can have long-term benefits as these users eventually explore more complex aspects of the blockchain.
  3. Differentiation: Right now the market for onchain applications is fairly immature, with the dominant players like DEXs or lending markets, heavily benefiting from degen behavior that is not very different in motivation to memecoins. When the market matures, we should naturally see what we consider as “more valueble applications” winning out.

Request for Feedback

I’d love to hear the community’s thoughts on this. Should Retro Funding continue to reward these projects? If so, how do we balance rewarding user engagement with incentivizing long-term, innovative contributions?

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This is my personal opinion and does not represent the Grants Council.

1. Misaligned Reward Proportionality

Retro Funding is supposed to reward impact, but there’s a clear difference between:

  • Surface metrics: high tx counts from low-effort interactions
  • Substantive contributions: long-term value creation

Tap to GM receiving 25k aprox OP/month, comparable to almost 6 months of GC Expert reviewer compensation. This undermines the legitimacy of governance labor. At that point, being GC Reviewer is effectively just the memecoin’s exit liquidity… unless GC sells first.

Worse, this trend could compromise gov security over time. If left unchecked, GM could climb into the top 40 delegates by year’s end not because of contribution, but because of token farming.

2. Yes, They’re Fun, But Not Valuable

Sure, memecoins and GM apps:

  • Help onboard new users
  • Signal user interest

But should they be top-tier Retro Funding recipients? Not unless they clearly drive deeper engagement: participation in governance, dev onboarding, DeFi usage, etc.

3. Incentive Distortion Is Real

Consistently rewarding memetics with 20k–30k OP/month invites a wave of copy-paste spam. Yes, onchain engagement matters, yes this could help the “cold start” of a chain but not if it becomes unsustainable.

I’m not saying memcoins should go to other ecosystem, I’m just saying Governance shouldn’t be incentivizing it. Maybe being a milenial is the new boomer.

I’m also wondering how this help the Collective Intent on Season 7. As a reminder:

The expected impact of RF Onchain Builders is: Drive cross chain asset transfers by growing the Superchain economy and growing the adoption of interop among onchain builders.

Tap to GM isnt even looking to be interoperable:

0 tvl, 0 interoperability.

4. Bonus Information: Top Retro Recipients & Interoperability Mismatch

A quick glance at some of the largest recipients reveals another issue: Retro Funding rewards projects that don’t align with the Superchain’s interoperability goals something the Grants Council explicitly enforces.

  • AAVE – 140k OP
    Not interoperable, and cannot be, since it lacks its own asset. GC denied a grant on this basis.
  • Uniswap – 200k OP
    Deployed on Base, Lisk, and Bob—none are green in the Superchain registry. No interoperable return.
  • Aerodrome (Base) – 200k OP
    Same issue as Uniswap. No commitment to Superchain standards.
  • PancakeSwap (Base) – 116,272 OP
    Same.
  • Moonwell (Base) – 115,196 OP
    Same.

To clarify is not the projects commitment, is the Chain where they are deployed the issue.

I’d love to see how much direct interoperable TVL this OP generated for the Collective. When I say direct is how these OP were used to incentivize or promote TVL growth.

For context: during Season 7, the Grants Council required all projects to either be interoperable or offer co-incentives when deploying to “orange” chains. Maybe RF should add these conditions.

3 Likes

I would love to focus rewards on more “useful” projects but how do we do that without some kind of arbitrary criteria?

I think some issues are that 1) rewards metrics benefit projects like this 2) the rewards being given out are more than the gas fees generated

Both of these things leads to weird dynamics that make projects like these earn much more than the gas fees they generate.

3 Likes

This is my personal opinion and does not represent the Grants Council nor the GovNerds.

I think @Gonna.eth said it better and more eloquently; my personal take is that the focus should be in “profit = impact”.

I don’t think memecoins and GM apps are inherently “bad intended” and that they can be valuable, but I also think that due their own nature, they could “gamify” metrics, which in turn, can make them appear as “more valuable” to the ecosystem than they really are (from a “numeric” point of view).

2 Likes