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Optimism Governance

Optimism governance.

Low TVL compared to Arbitrum. Airdrop structured to inventivise continuous brigding. Not using all air drop incentive in one big bang.

Future​

Big experiment is how effective social goods economics will impact flywheel for growth (Virtous Circle). Questions that will be answered in time.

  • What will be governed
  • Revenue share between L1 and L2
  • Impact of experimental Governance strategy
  • Political impact having one vote vs business proportional influence

If successful undoubtably will probably influence others that follow.

Governance​

Optimism collective governed by two different houses:

Token House​

This is the

Votes on:

  • Protocol upgrades
  • Project incentives

Return money to equity investors

Citizen House​

To be launched later in 2022

Soul bound non-transferable one of one NFT. Solve volume voting problem.

Votes on Distribute Retroactive Goods Funding with revenue generated from:

  • Transaction fees
  • Sequencer auctions

Air Drop​

5% of initial supply 267k addresses

Alpha Qualification

  • users
  • bridge users
  • gitcoin doners
  • snapshot voters
  • multisig signers

VC Investors​

Initially lead by Paradigm at 1.6 billion valuation.

What is the play to get return on investment?

  • What is the expected cost of experiment?

  • What time frame for discovery?

  • Token vs Equity, which is better investment?

  • Equity you believe most value will accrue to the token.

  • 10 valuation * 2 - 2.5 to get fully diluted network value?

Uniswap Comparison​

Example Uniswap (initial equity) distribute tokens to the organisation that owns the equity (Uniswap labs or Optimism Collective)

The Organisation is issued with 30 to 40% of tokens (not more than 50%)

For VC dependent of equity investment gain a proportion of the token share.

Value accrue is swap fees with Uniswap and that value will accrue to the token.

Layer 2 Tokens​

What does a token do for a Layer two?

An OP token is just a Governance token, transaction fees get paid in Ethereum. Ensures long term alignment with Ethereum Community.

Not trying to ditract from ETH.

View point - Very early stages, increasing network capacity. Footprint to reach customers. Increasing network demand and blockspace.

With EIP-1559 it rolls back to Eth to settle so value accrues there.

Net positive for ETH as users remain on chain which is better than another L1.

  • Polygon
  • Arbitrum
  • Starkware

Economic Flywheel​

By identifying the maximumm number of ways to reward long term loyal behaviours and taking a long term value creation view over short riches. The Optimism team has engineered a great flywheel of increasing value creation.

Positive Homeostasis

  • transactions fees
  • auctioning sequence transactions

Growing ecosystem grows demand, which grows ecosystem resources that inventivise building additional public benefit

  • Blockspace becomes more valuable
  • Funding more public goods

Flywheel -

  • Demand for OP blockspace, drives...
  • generation of sequencer revenue, which drives...
  • funding via Retroactive Votes, which drives...
  • value to users and builders, which drives...
  • more demand for blockspace

Compared to Uniswap that had a One and Done airdrop. Optimism's strategy has 14% is reserved for future airdrops, maintains ability to shape it will get competitive, keeps powder dry to incentivise future:

  • Partnerships
  • Business Development
  • Referral Programs
Cautionary Tale

Mint of WiFi left protocol without native token to act as reserves to stave of competition

Potential strategy: the 10-15% remaining can be awarded to key community contibutors in circa 3% increments as makes sense to fuel futher development.