What is the Incentive to build on Optimism with the current grant system in place?

[Bob]

Hi everyone,

First off I’d just like to say that I’m a fan of the project as a whole and please do not read this in a negative tone. DAOs and governance in general is a tricky beast, and I am very impressed with how the system works thus far. Unfortunately it just doesn’t seem like this system of grants will suit a project like Tidus Wallet (the project I am a part of), and many projects for that matter going into the future.

We all know what grants are supposed to be for, and the main three I am aware of under Optimism besides specific mission applications are: Builder’s Grant, Growth Experiments, and retroPGF.

I’m just extremely perplexed by the whole process. We were under the impression that a builder’s grant is a grant to ‘build’.

We(Tidus) say we’ll build XYZ(for Optimism), Grant is paid out once we do X then Y, then Z. The grant is used to build and only rewarded when something is built. Optimism grants are time-locked for an entire year. (perhaps I’m missing some details)

BUT, if OP goes to .75 cents in a year we just built something for a year and our grant is now 1/4 of the size when we started, but my build obligation is the same. I don’t think anyone would mind if it was in small increments, but we are offering a larger upgrade.

Okay. Well maybe apply for a different type of grant right? Well, we can’t apply for a ‘growth experiment’ grant because you can’t apply grant money to operations, only distribution to users. (found this out on first application attempt)

Finally there is retroPGF, where you build something, or support something on OP, but hope to get granted some money as retro, not going to go into who deserves what etc… and all the politics of that, but that’s probably the only grant a project like ours could reasonably hope for.

Really appreciate Optimism’s commitment to governance, and the crypto space in general, but I hope you guys can see how bad a decision this would be for a project like us on the other end of this process. I regret to have had to pull our grant application(really wanted to work on the OP stack). We can’t risk getting nothing a year after building. We’re just a bootstrapped wallet that has fought to build through the last cycle and we will have to look elsewhere for integration. Thanks again for all your help.

-Bob

[0xR]

Greetings Bob,

Short intro

I am a web3 governance/DAO researcher and participant. I can relate as many others have indicated on various social platforms there is a poor user experience towards how Optimism’s Collective governance, grants, and investment arms/branches/circles operate. Therefore, I am currently doing a series of co-writing to simplify Optimism’s current governance system and its future iterations.

From what I currently understand through my research Optimism Collective / Foundation is using various funds(treasuries) to distribute its capital (OP tokens) to people and organizations that are value-aligned.

On the Lock-up period

Yes, Optimism Foundation is using vesting periods (Token lockups) to regulate the overall market price and to try to promote long-term commitment. As with many other capital freeze-ups, there are market risks such as price fluctuations that affect future monetary values. However, I did read that there might be an Optimism Foundation fund that is dedicated to larger projects and might not be mandatory to lock up 100% of the token amounts. This fund is the Partner fund.

See the application form here: New Project Grant Request

Disclaimer: As I am still mapping the optimistic governance culture, realms, and rules. I will tag @brichis As I believe Brichis might have a better answer for your specific case.

Bless 0xR

[brichis]

Thank you for tagging me @0xR!

GM @Bob! You can find more information about the Grant Policies here. In the last season, projects were able to delegate their tokens and utilize the governance power associated with their OP. However, I believe this is valuable feedback for Season 5, so please feel free to contribute any comments regarding aspects you would like to see changed for the next season here. Have a great weekend!