[Special Voting Cycle #9a]: Protocol Delegation Program

Please read Guide to Season 3: Course Correcting for full context before reading this proposal.

Protocols building on Optimism are among its most important stakeholders and they value having a voice in the development of this ecosystem. Throughout Season 1 & 2, protocols have repeatedly expressed this interest by requesting that they be able to self-delegate grants as a means to participate in Token House governance. Self-delegation of grants has historically been discouraged. This proposal presents a more incentive-aligned way for protocols to get involved in governance in Seasons 3 and 4.

The Protocol Delegation Program would temporarily delegate a portion of idle OP from the Governance Fund to value-aligned protocols based on the criteria outlined below. This is an experimental program in which delegations are meant to last two Seasons in total, at which point protocols will need to reaffirm their commitment to Optimism governance via their own treasuries. The continuation of this program for a second Season will be voted on in the Special Voting Cycle following Season 3.

If this proposal is approved by the Token House:

  • A total of 5M OP (or not more 1/3 of the active votable supply, defined as the average executed voting power in Voting Cycle #8) would be delegated across as many as 23 protocols, using idle tokens in the Other Initiatives category of the Governance Fund. Delegations will be made at the beginning of each Season, for a maximum of 2 Seasons.

  • Delegation:

    • Each protocol will receive a flat delegation amount
    • Protocols that are Optimism Native will receive a multiplier of 1.25x the flat rate
    • Protocols that already have an Optimism delegate will 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
  • Protocols:

    • 15 protocols will be selected based on the below criteria. This criteria, while imperfect, was designed to be simple, objective, not easily gameable, and applicable across protocols:

      • total gas fees generated on Optimism during the proceeding Season
    • If any qualifying protocols have misused grant funding in the past, they will not be eligible.

  • To broaden the stakeholders that are represented and to take into account factors that cannot easily be quantified or standardized, protocols will be able to self-nominate themselves for one of 8 additional spots in the program. Self-nominations would run from Dec 21st - January 11th and the Token House would vote on the 8 protocols to be added to the program during Special Voting Cycle #9b. A template and additional details will be provided if this proposal passes.

  • 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.

  • All protocols must opt-in to participating in the program by submitting a delegate commitment on the Forum and agreeing to abide by the Delegate Code of Conduct. Only protocols that maintain a >70% voting participation rate during Season 3 will be eligible for renewal for a subsequent Season of delegation.

  • Protocol delegates will be subject to the Delegate Code of Conduct. Any protocol that the Token House finds to be in severe violation of the Delegate Code of Conduct will have their Protocol Delegate Program delegations removed.

You can view discussions on the original draft proposal here

31 Likes

Agreed with most of all these points above; however, I would caution against the below:

While understandable to reward those who were there since the beginning, rewarding certain projects more because of being Optimism Native and having Optimism delegates, works against the principles of decentralization. In fact, it can have the opposite effect of promoting aspects of centralization such as moat-building and moral hazards.

I agree with everything except for the boosts to the Optimism Native + OP delegates for the reason that they work against the principles of decentralization and introduce centralization risks.

16 Likes

Being an optimism native project should be rewarded. They have intentionally made OP their home and even though they can and should branch out, most upcoming projects will focus on OP.

I am undecided on providing a multiplier for Optimism delegates, but I think it’s fine to provide a multiplier(x1.25) for a native project.

Glad to see this in place too.

3 Likes

I agree optimism native should be recognized.

I don’t see the point though in having a recognized delegate. This would give extra votes to projects that already have delegates working for them. Does not make much sense. In fact it sounds unfair.

5 Likes

One edit: The multiplier for having been active in Optimism governance to date has been reduced so that both multipliers are 1.25x

  • Protocols that are Optimism Native will receive a multiplier of 1.25x the flat rate
  • Protocols that already have an Optimism delegate will receive a multiplier of 1.25x the flat rate.
  • Protocols may receive both multipliers, if they meet both criteria
2 Likes

Edited as this concern was addressed in @lavande’s original post.

This is a great idea - and am excited to empower more protocols, further decentralizing control.

1 Like

The below aspect of the Protocol Delegation Program takes this into account and should address your concerns:

  • 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.
2 Likes

Ah, I feel like a fool now.

The miseries of having to read in Governance.

Thanks @lavande !

2 Likes

The below bullet has been added, as it was included in the draft proposal but inadvertently omitted from this post and it is an important condition of the program.

2 Likes

I agreei n this sounds like good ide.

We really appreciate the Optimism community’s dedication to iterating on process and try new approaches. However, we don’t feel that the proposed setup solves the issues mentioned in https://gov.optimism.io/t/guide-to-season-3-course-correcting/3942. While we value diversity in experience/perspective and hope that new delegates continue to get involved in governance, it isn’t clear to us that protocols generating the most revenue for the ecosystem today are necessarily the best governance participants, or that they would have the capacity to participate in governance thoughtfully. Furthermore, we think several votes could pose as conflicts of interest for these protocols, and therefore the 70% participation rate may not be achievable, if protocols are acting honestly. A passage in the Delegate Code of Conduct mentions abstaining from votes for competitors, however there may be a lot of gray area around the term “competitor” for protocols engaging in votes.

If the following modifications were made, we believe the proposal would more likely achieve the desired outcomes:

  • Protocols submit delegate commitments, just as other delegates did prior to the airdrop, to indicate interest and capacity to engage in governance
  • The 70% participation rate should explicitly mention how we deal with conflicts of interest (and make sure not to incentivize conflict of interest voting), and give more guidance around what constitutes a “competitor”
  • Protocols are chosen by other metrics instead of or in addition to gas fees generated that are more indicative of their ability to participate in governance (e.g. monthly active users)
4 Likes

Voted For

The delegation lifespan is for two seasons after which the protocols would have to acquire more delegation power to continue to participate in governance could be a great way to get them involved

I voted for this though I still don’t think the existing delegate multiplier is a good idea. But in general I tend to agree it would be good to see the protocols that are in Optimism have a vote in its governance.

Snapshot vote - passed

2 Likes

Can we get a final list of the protocols that will be getting the 2 million delegated? Plz and ty!

3 Likes