Please read Guide to Season 3: Course Correcting 37 for full context before reading this proposal. The Grants Council will be voted on by the Token House in Special Voting Cycle #9a.
As outlined in Guide to Season 3: Course Correcting 37, the current Governance Fund grants process faces significant challenges. Luckily, there is a lot of room for optimization. Some goals for Season 3 include:
- creating a more streamlined and consistent process for proposers
- setting a pace for grant distributions
- defining a clear scope
- creating accountability via smaller grant sizes and milestone-based distributions
- reducing the workload on delegates so that they have more time to weigh in on high impact votes, better positioning the grants process within the broader responsibilities of Token House governance
In Season 2, the Token House experimented with multiple committees 8, which made non-binding recommendations on proposals within their domain. While committees reduced the workload on non-committee delegates, they introduced new challenges:
- voting cycles became increasingly complex
- proposers became even more confused as they received conflicting recommendations from multiple committees
- multiple committees vying for power created a dynamic that negatively impacted culture, made worse by the lack of enforceable delegate code of conduct
- there werenāt appropriate checks on committee power, including a clear mechanism to remove committee members mid-Season
- several large delegates were prevented from voting for committees due to third-party application errors, which impacted the perceived legitimacy of elections
These challenges are related to specific committee design choices rather than the organizational structure itself. Instead of continuing committees into Season 3, we propose experimenting with a Grants Council to overcome many committee challenges while helping achieve the goals of Season 3.
If this proposal passes:
- All Council members will be subject to the Delegate Code of Conduct 9 and may be off-boarded from the Council at any point during the Season via Token House vote.
- All Reviewers will be subject to re-election if they wish to be a Reviewer for an additional Season (provided the Council were to be approved to continue beyond S3).
- While the Grants Council will reduce the number of delegates directly involved in decision making, this only pertains to grants. Other Season 3 initiatives are aimed at broadening the base of token holders that would hold the Council accountable. A high degree of transparency will be required of Council operations so that non-Council Token Holders are able to provide effective oversight.
In Season 3, Governance Fund grants process will be managed by a Grants Council. The Grants Council will be comprised of 1 Lead and 8 Reviewers and will have full decision making authority as to which grants are made.
Non-Council delegates will no longer vote on each grant proposal. Instead, they will elect Council members and, if the Council continues in future Seasons, approve the Council budget. Throughout the Season, non-Council delegates will serve the important role of oversight on the Council and voting on other proposal types, such as protocol upgrades. There will be a multitude of other activities non-Council delegates will be responsible for in future Seasons.
Council members will be subject to the following checks on their authority:
Council Structure
If approved, there will be 1 Council, comprised of 2 sub-committees. Each sub-committee will have a clear mandate and be tied to a specific grant objective. Sub-committees will be encouraged to create RFPs to incentivize well-aligned grant applications. At the end of Season 3, the Token House will have the chance to evaluate, re-approve, or modify the two sub-committees.
- Goal: maximize the number of developers building on Optimism
- Non-goal: retroactive funding
- Possible RPFs: prospective builder grants for new projects, hackathons, technical content
- Format: proposers receive grants <50k OP, which are locked for a period of 1-year. If access to upfront capital is a blocker for applicants, Optimism may put them in touch with alternative resources to support teams in this position.
- Suggested budget: 850k OP / Season
- Reviewers: 3 (see below)
- Consensus: 2/3 vote required to fund a grant
- Goal: maximize the number of users interacting with applications on Optimism
- Non-goal: retroactive airdrops
- Possible RFPs: small-scale liquidity mining experiments, usage incentives, user education
- Format: proposers receive milestone-based grants <250k OP to pass on directly to their users as incentives for engaging with a protocol, platform, product or service. 40% of the grant will be distributed to the proposer upfront and the remaining 60% will be distributed upon completion of a mid-way point milestone. Completion of all milestones should be achievable in 3-6 months.
- Suggested budget: 4M OP / Season
- Reviewers: 5 (see below)
- Consensus: 3/5 vote required to fund a grant
Builders Sub-Committee:
Growth Experiments Sub-Committee:
Council Responsibilities
All Council members will be required to abide by the Delegate Code of Conduct 9. All Council members will be required to disclose all anticipated conflicts of interest when applying to serve on the Council and all actual conflicts of interest in all written voting rationale where a conflict is present.
- filter and process all grant applications. All grant applicants should receive feedback, even if it will not proceed to Council review.
- approve grants in regular cycles (the Foundation recommends 3 week cycles)
- publish a report outlining grant decisions within 3 days of the end of each cycle
- assess whether grantees have meet pre-defined milestones
- publish periodic milestone updates, as applicable
- ensure ongoing Council operations and performance are transparent to the community
- process and filter applications. Applications that are submitted to the Council database should also be published to the Forum, unless a proposer opts-out of Forum publication
- provision and/or maintain external and internal information about the grants program, and any other resources needed by the Council
- facilitate coordination across sub-committees by scheduling and hosting regular Council meetings
- monitor progress towards milestones and run a process to ensure milestones have been met before milestone-based distributions are made (possibly via a system similar to Radicleās 3)
- prepare regular reports to communicate grant allocations at the end of each cycle and periodic reports to communicate milestone updates from grantees
- submit budget/renewal proposals at the end of the Season, if applicable
- exercise decision-making authority in the event that sub-committees cannot come to consensus on an administrative or operational matter
- commit to spend roughly 30 hours per week on these responsibilities
- have the subject matter expertise required to evaluate advanced proposals. It is recommended that at least one member of each sub-committee have a technical background
- be accessible to grant applicants - within reason - to provide feedback, answer questions, and respond to comments. This should be done via public communication channels whenever possible. It should be clear to grant applicants how to get in touch with the Council
- work with proposers to ensure proposed milestones are clear, measurable, and achievable within the specified timeframe
- maintain a participation rate >70% on Council votes
- document voting rationale for each grant
- provide any information required to publish regular reports and periodic updates in a timely manner
- commit to spend roughly 12 hours a week on these responsibilities
The Grants Council will:
The Council Lead will oversee the general administration of the grants program and will:
Reviewers will vote on grant proposals submitted to their sub-committees and will:
Council Membership
All Grants Council members will receive rewards for their work, which will be allocated from the Councilās 5M OP budget.
- The Foundation will select the initial Council Lead (which is an administrative, non-voting role) via an open application process. If the Council continues in subsequent Seasons, the Foundation may hire a full time contributor to fill this role
- The Council Lead will be compensated 35,000 OP per Season
- 3 elected delegates (there is no minimum voting power requirement)
- Reviewers will each be compensated 14,000 OP per Season
- 5 elected delegates (there is no minimum voting power requirement)
- Reviewers will be compensated 14,000 OP per Season
Lead
Builders Sub-Committee:
Growth Experiments Sub-Committee:
If this proposal passes, additional information will be provided on the Council Lead application and Reviewer election processes. Snapshot votes will be counted manually in the event of third-party application errors.
Council Budget
The Council budget for Season 3 will be 5M OP. Should the Council operate in subsequent Seasons, the budget will be approved by the Token House on a Seasonal basis. As a result, this budget may fluctuate up or down each Season. For more information, please see the Gov Fund Charter 6.
Ecosystem grants will continue to be disbursed by the Foundation, meaning the Council will not operate its own multi-sig wallet at this time. Any budgeted OP that is not distributed at the end of the Season will remain in the Governance Fund.
Implementation and Administration
In Season 3, the Foundation will provide administrative services to the Council consistent with the services described in the Operating Manual 6. This includes reviewing and approving (in its discretion) Council operating expenses for reimbursement, conducting a KYC process on all grant recipients, and administering the multi-sig wallet for grant disbursements. In future Seasons, the Council may control its own multi-sig as the Foundation increasingly decentralizes its role.
Are there any requirements for the council lead or members such as 0.5% voting power or can anyone apply?
Lots to digest here. Some initial feedback from a first read:
Suggested Budget
I see that there is a suggested budget per commitee per season. This is really good. Thank you. One of the biggest problem I have personally had was giving out other peopleās money without an idea of any budget constraints.
This will help.
I would even turn it into budget. Not suggested. Staying in budget should be a requirement. Would really help guide decisions.
Council work
- approve grants in 3 week cycles
I would like to ask for this to be better defined by using some of the learnings we have had.
A typical grant proposalās life looked like this in this season:
- Forum post is created
- Trying to get eyes on it
- Trying to get committee eyes on it
- Somehow it ends up on a vote before even committee had time to deliberate on it
- Forced to vote
I would like to explicitly split the cycles. Have cohorts. Only a specific number of grants go in a cohort, perhaps in a first come first serve basis? Perhaps in a simple application process?
Then the council goes on a 3 weeks round of feedback and back and forth with the proposers to improve their proposal and align it with the interests of optimism.
Then we can go on a council vote period which would be ā¦ dunno ā¦ 2 weeks?
Delegates compensation
I truly think that this is still the biggest elephant in the room. Perhaps itās offtopic to this particular post but all delegates, irrespective of being in the council or not should be compensated.
There is considerable work involved as a delegate even if you are not in a council/committee and the governance process relies on delegates performing that work. Right now itās done pro bono. This is wrong.
lefterisjp: Providing oversight, means reading proposals and making sure the council does its work.
From a theoretical standpoint this is correct, nonetheless human nature doesnāt exactly work like that. Oversight will most likely work based on how things will turn out (instead of spending as much time reading many comments and trying to understand the proposal).
OPUser
New projects with non-trivial amounts of complexity generally require a lot of labor, often by multiple specialized individuals. By locking grant money up for a year it limits the pool of builders to people who can afford to contribute significant amounts of work for free. This works against the goal of āmaximizing the number of developers on Optimism.ā
system: Format: proposers receive milestone-based grants <250k OP to pass on directly to their users as incentives for engaging with a protocol, platform, product or service. 40% of the grant will be distributed to the proposer upfront and the remaining 60% will be distributed upon completion of a mid-way point milestone. Completion of all milestones should be achievable in 3-6 months.
This is a really positive direction to move grant disbursements toward. Itās wonderful to see this. Great job!
system: ā¢ Non-Council delegates will no longer vote on each grant proposal. Instead, they will elect Council members and, if the Council continues in future Seasons, approve the Council budget. Throughout the Season, non-Council delegates will serve the important role of oversight on the Council and voting on other proposal types, such as protocol upgrades.
Given that the OP token has no use other than voting, and will not longer be used for voting very much, is there any thought given to how to continue to support the value proposition of holding OP? Will there be other, non-grants-related votes coming up that wouldnāt fall under the Grants Council? If not, how will engagement with OP holders be encouraged now that voting will become infrequent and based on personal ties vs proposals that can be evaluated?
system: Council Budget The Council budget for Season 3 will be 5M OP.
Another excellent improvement! Without commenting on the correct level, having a budget is likely to raise the bar for submissions as the level of competitiveness increases. Very good addition.
system:
Is this a linear vest, a 1-year cliff, or some other arrangement? Thanks in advance for answering!
GFXlabs:
This is another very real and important point. Whatās a governance token without governance? This proposal effectively diminishes (or even nullifies) the role of delegates.
GFXlabs:
gm! This is an important question.
The Token House is responsible for a broad set of governance decisions listed in the Operating Manual 2 under āValid Proposal Types.ā
To date, the Token House has only focused on the first proposal type ā allocations from the GovFund. But the Token House is also responsible for protocol upgrades, inflation adjustments, treasury appropriations / Foundation budget, and Director removal. These responsibilities are super important to the future of Optimism.
These additional proposal types will come online as we continue to iterate through seasons. Notably, Season 3 will include the first vote on a protocol upgrade for the upcoming Bedrock release.
As a personal opinion, Iād also add that the voting power to establish grants council budgets, membership, renewal, scope, etc is a much higher-leverage decision that voting on individual grants themselves.
mboyle: Locking up builder grants for a year really decreases the utility of a grant. Could someone elaborate on what the thinking is behind this?
Our goal here is to create long-term incentive alignment between the team and Optimism ā not to fund up-front operational costs.
If access to capital is a blocker for a team to keep building, Optimism can help put them in touch with additional guidance or resources. The builder grants council will get instructions on the right way to support teams in this position.
GFXlabs: system: Is this a linear vest, a 1-year cliff, or some other arrangement? Thanks in advance for answering!
The lockup here is a 1-year cliff
Return of the Councils
Councils are a step in the right direction. There was too much conflict between members and committees in making decisions. Instead empowering individuals to be on grant councils and trusting their decisions, removes a lot of the obstacles involved.
Along as there is a clear path for reviewers to be off-boarded if necessary, then this is a good step forward. We want to clarify that if reviewers arenāt pulling their weight, then other team members or token holders should be able to follow an outlined process to remove them.
Accountability
Using a tool like Questbook 3 for public accountability will help here. Itās a public and transparent tool for everyone to track grant updates and see grant distribution. They are free to use and can be split into sub-committees as mentioned in the proposal. You can see it being proposed in Compound too.
Misc
Grant reports
Since the council will be voting on grants instead of token holders, they should provide reports that inform the community on the protocol, what they hope to achieve and why they were funded simply and concisely. If OPLabs has a template in mind, it would be great to share it.
Transparency
Aave, balancer, and Uniswap have good processes to keep grant information transparent. We should take inspiration from them. Documenting processes and grants in one place such as a notion page or questbook would be a good start.
Delegate compensation
Is a 1-year cliff fair? 50% released after 6 months, and the rest released after another 6 months.
Itās a privilege to be paid retroactively, but waiting one year is a long time. Organizations like ours donāt have an issue with this, but this might deter individual delegates from getting involved.
Process
I agree with @lefterisjp here. Some form of grant waves would be easier, so both proposers and reviewers have a concrete plan to follow. Season 2 was a bit messy when it came to reviewing grants.
Bobbay_StableLab:
I also think this is not correct. Delegates do work now and they should be compensated for their service now. If I gave my employees their salary with an 1-year lockup I would not have any employees.
No one raised it earlier, so I assumed people were in support of it. I was trying to find a middle option. Ideally, I would prefer to see all members paid monthly similar to a salary, or when the season is complete (similar to Season 2).
I donāt see the need for any lock up.
lefterisjp: I would like to explicitly split the cycles. Have cohorts. Only a specific number of grants go in a cohort, perhaps in a first come first serve basis? Perhaps in a simple application process? Then the council goes on a 3 weeks round of feedback and back and forth with the proposers to improve their proposal and align it with the interests of optimism.
Iāll add to this process weekly calls for proposers to talk about their projects and plans.
While I think this council is a good idea, we need a proposal filter. We should act like a Congress, with elected Representatives to filter the proposals, and an elected Senate to bring their expertise when the final proposal is ready and needs to be overseen by experienced people in the field.
I would like to see this council as a house of representatives, engaged with the projects, giving feedback, reaching out to developers, and pushing optimism forward.
And then people like SNX Ambassadors, Linda, Quix, Katie, Scott, Polynya, Lefteris, and basically all the big delegates to work as a Senate that gathers on the last week, reads very well-polished proposals passed by the representatives and give their pass to vote or to come back to representatives.
Iām trying to include big brains here without wasting their precious time.
About these 2 things:
system:
system: Reviewers will each be compensated 14,000 OP per Season (subject to a 1-year lockup)
As a committee member, Iāve worked 3 to 4 daily hs on this because Iām passionate about public goods and I feel is the only way to progress as a society. But passion doesnāt pay the bills sadly. The ā1-year lockupā should at least be 1-year vesting with monthly unlocks. 833 OP to 1000OP monthly unlocks and 2000 OP to 6000 OP last unlock sounds better. Even if they donāt sell, they can LP, yield, farm, etc while working on this.
On the other side Iām trying to figure out how this will work:
system: Possible RPFs: prospective builder grants for new projects, hackathons, technical content
Ok perfect I make a hackathon proposal, (the last one here in Argentina by The Graph had 40 devs if Iām not mistaken). I get funds approved on January 2023, and I receive 20k $OP, awesome! but
system: Format: proposers receive grants <50k OP, which is locked for a period of 1-year
- I canāt use them for 1 year?
- do I coordinate the hackathon for 2024?
- What does it mean locked? do you vest them in a contract? do you send it to my multisig and I have a 1-year restriction not to sell them?
- If I use $OP as a hackathon price do I send the prices one year later?
Lastly, EthernautDAO got a developer grant approved to maximize the number of developers building on Optimism. And this is what the Builders sub-committee will be doing. But someone has to promote this thing. My job since this grant was approved is to look for projects that want to be native or integrated with optimism, reach out and say āHi we can pay one of your devs to train a new dev (web2 senior) and you can use this new build force to integrate your project to Optimismā and we are having amazing positive feedback from this projects and starting to coordinate everything but someone has to go and nock this doors. Call it marketing, integrator, or partnership searcher I think is missing on the builderās committee.
Please read all this as constructive feedback I would love to express all these ideas with positive vibes but I am not an English native speaker as you can see.
In agreeance with decreasing the lock-up period / providing a vesting schedule instead. Personally would support more of a rolling 3 week vesting schedule after each voting cycle has passed to receive payment for council members.
Per Dhannteās suggestion on a Congress-esque structure, I think it would be great to involve delegates not on the Grants Council in this manner. Instead of having the Council decide which proposals to review, non-Council delegates would be able to have a higher threshold requirement for general support / against for passing along a proposal to the Council. This would require a larger majority of delegate support and actively involve them in approving proposal review. A maximum amount of support votes could be implemented.
ie. There are 10 proposals requesting review. All non-Council delegates have 5 āsupportā votes per cycle. Delegate A may support proposals 1,2,3,4,6. Delegate B supports proposals 2,4,7,8,9. Delegate A can whip support and have Delegate B drop their support for proposal 9 and instead support proposal 1.
Delegate A receives more backing to pass proposal 1 to the Council and Delegate B receives Delegate Aās support on a different proposal to back next cycle.
Regardless of final method, itās definitely important we focus on not spreading our Council too thin and having too many proposals to review and approve per cycle. I think non-Council delegate will play a key role in that sense and oversight for the Council.
Thanks for putting this together. We are still in an experimental stage so its good to give all options a fair trial.
I am concerned that this could lead to a decrease in participation as "protocol upgrades, inflation adjustments, treasury appropriations / Foundation budget, and Director removal " proposals are few and far between. I am not denying the importance of those votes just the frequency in which they occur. I realize there is also the important role of oversight on the Council by non-Council delegates and hopefully this will encourage frequent constructive participation by community members and delegates.
One suggestion would be we add one reserve/substitute reviewer per sub-committee. This will come in handy when a conflict of interest arises or if a council member is unfit or unavailable for a cycle.
Another would be
commit to spend roughly 12 hours a week on these responsibilities
Increase the responsibilities by phrasing it~ commit to spend roughly 2 hours a day on these responsibilities.
Coz it wouldnāt be helpful if reviewers are MIA for 4 days of the week as itās there roll to provide feedback, answer questions and respond to comments.
There is considerable work involved as a delegate even if you are not in a council/committee and the governance process relies on delegates performing that work. Right now itās done pro bono. This is wrong.
lefterisjp: There is considerable work involved as a delegate even if you are not in a council/committee and the governance process relies on delegates performing that work. Right now itās done pro bono. This is wrong.
I agree but unless I didnāt understand the change proposed I donāt think this matters in the future. Most of the work is to be done by the Council, delegates will just oversight (no need to spend much time reading grant proposals and so on since they will not vote on them anymore, they will only oversight).
system: Non-Council delegates will no longer vote on each grant proposal. Instead, they will elect Council members and, if the Council continues in future Seasons, approve the Council budget. Throughout the Season, non-Council delegates will serve the important role of oversight on the Council and voting on other proposal types, such as protocol upgrades.
I donāt completely dislike this kind of solution since it provides the relief delegates wanted but from a decentralization perspective this is bad. Anyway, I hope the best for the Grants Council since the responsibility is much higher for them. It was an interesting experiment.
Prometheus: delegates will just oversight (no need to spend much time reading grant proposals and so on since they will not vote on them anymore, they will only oversight).
Providing oversight, means reading proposals and making sure the council does its work.
Not to mention about all the rest of the work that governance should be doing (apart from grants). Keeping up with these forums alone is a job on its own
- Locking for one year reflect that individual is not here for quick money
- Push the myopic community away and focus on long term sustainable governance.
Lots to digest here. Some initial feedback from a first read:
Suggested Budget
I see that there is a suggested budget per commitee per season. This is really good. Thank you. One of the biggest problem I have personally had was giving out other peopleās money without an idea of any budget constraints.
This will help.
I would even turn it into budget. Not suggested. Staying in budget should be a requirement. Would really help guide decisions.
Council work
- approve grants in 3 week cycles
I would like to ask for this to be better defined by using some of the learnings we have had.
A typical grant proposalās life looked like this in this season:
- Forum post is created
- Trying to get eyes on it
- Trying to get committee eyes on it
- Somehow it ends up on a vote before even committee had time to deliberate on it
- Forced to vote
I would like to explicitly split the cycles. Have cohorts. Only a specific number of grants go in a cohort, perhaps in a first come first serve basis? Perhaps in a simple application process?
Then the council goes on a 3 weeks round of feedback and back and forth with the proposers to improve their proposal and align it with the interests of optimism.
Then we can go on a council vote period which would be ā¦ dunno ā¦ 2 weeks?
Delegates compensation
I truly think that this is still the biggest elephant in the room. Perhaps itās offtopic to this particular post but all delegates, irrespective of being in the council or not should be compensated.
There is considerable work involved as a delegate even if you are not in a council/committee and the governance process relies on delegates performing that work. Right now itās done pro bono. This is wrong.