Your Guide To the Wellspring of Regenerative Cryptoeconomics
Since the Optimism Collective launched sixteen months ago, Bankless Publishing has been covering that ecosystem, from tokenization and technology to the Law of Chains and the Optimistic Vision. As part of our work, we’re pleased to curate eight of those articles as part of what we’re calling The hOPe Series. These article are available as free, open edition digital collectibles, helping you to curate writings on one of the most impactful ecosystems in web3.
For the past few months, Bankless Publishing and several other teams across BanklessDAO have been working together to inform our audience about the core tenets anchoring the Optimism Collective, such as the Optimistic Vision and the Impact=Profit ethos.
For those who are just getting up to speed, the Collective is the name given to describe Optimism’s ecosystem, including users, contributors, builders, founders, projects, protocols, and capital. It’s not too much of a stretch to say the Collective's ultimate goal isn’t just to figure out how to sustainably fund public goods in web3, but how to solve some of the great coordination problems in fiat space too. Ambitious, of course, but not impossible.
The Collective is guided by the Optimism Foundation, in tandem with the Token and Citizens’ Houses. For more information on the formation of the Collective, you can check out this article I dropped shortly after Optimism tokenized.
The work being done at BanklessDAO is supported by a grant from the Collective, one of a number of initiatives funded to spread awareness of the Optimistic Vision. This is not the first time BanklessDAO projects have received funding for their Optimism-related work. In fact, several content production teams at the DAO have championed Optimism for well over a year, and have received retroactive grants related to that work.
The Collective’s third retroactive public goods round is happening soon and proactive grants are ongoing. Given that we’ve received both retroactive grants and proactive grants, we thought it’d be helpful to provide a brief overview of the Collective's grants programs.
Optimism Has Multiple Grants Funding Mechanisms
In terms of grants, Optimism is best known for retroactive public goods funding — the material manifestation of the Optimistic Vision, embodied by its core thesis: Impact=Profit. This is the idea that those who create value through public goods should be monetarily rewarded for these efforts.
But retroactive grants are not the only funding mechanism used by the Collective. In addition to funding work that has already contributed to the success of the network, the Collective also runs a comprehensive proactive grants program that pre-aligns grantees with various goals as prioritized by the Optimism Foundation.
In fact, there are four kinds of Collective Grants (discussed further below), but the most radical of these is called Collective Intents. This governance experiment by the Optimism Foundation is underway. In fact, it’s under Intent 3: Spread Awareness of the Optimistic Vision, that BanklessDAO (an Alliance) has sought and received support to create a Global Campaign to Spread the Optimistic Vision (the Mission).
Taken together, the two strands of the Optimism grants program create a model that both rewards those for the great work they’ve done to move the mission of the Collective forward, and incentivizes those within the Collective to contribute expertise to key priorities. Along the way, we all get to participate in a grand experimental playground to learn how best to collectively govern not only individuals and small teams, but large organizations and ecosystems.
Retroactive Public Goods Funding Is Impact=Profit
To understand how Optimism thinks about grant funding, you must internalize Impact=Profit, which simply means people who contribute value to the collective good (impact) should receive funding (profit) in proportion to the significance of their work.
We’ve written at some length about Optimism’s belief in retroactive public goods funding (RetroPGF) on Bankless Publishing and in the Layer 2 Review, but we’ve spent less time discussing how the process actually works. We’ll use RetroPGF Round 2 as an example, but let’s start at a high level.
Optimism has identified three core components of RetroPGF:
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Impact scoping: what should the Collective fund? How is it defined and decided on?
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Impact scoring: how does the Citizens’ House evaluate impact? What units, process, or tools do we use?
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Impact settlement: how does voting work?
The Optimism Foundation currently defines both the scope of the RetroPGF round and how voting works, but over time it plans to cede that authority to the Collective. For now, the Citizens’ House allocates OP tokens within the confines prescribed by the Foundation, but as part of that process, it works on impact scoring. In fact, as part of the debrief on RetroPGF Round 2, the Collective released an article titled RetroPGF2: Learnings & Reflections — a 20,000 word ‘summary’ of what was learned. As you can imagine, it’s dense with detail but also very accessible. The TL;DR is that Optimism identified four main challenges to work on during RetroPGF Round 3:
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How can the Collective gather more high quality data that serves as a “proof of impact” for the evaluation and voting by badgeholders? What structured data could help badgeholders make less impressionistic evaluations?
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How can impact evaluation scale to represent not just the individual experience and impression of badgeholders, but the evaluation of all observed impact within the collective?
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How do we provide better mental models and definitions for impact evaluation? How can we support badgeholders to more effectively collaborate? How do we communicate the core mechanics of retro funding in a way that preserves badgeholder agency?
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How can the Collective provide a better voting experience to Badgeholders? How can the Optimism community create tooling that improves the RetroPGF system for all types of participants?
This is iterative governance in action, which is what makes the work being done at Optimism so exciting.
How RetroPGF Rounds Are Run
Let’s take RetroPGF Round 2 as an example. The round was first announced via a Mirror post which sketched out the rough contours of the program. There were six parts to the process:
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Citizens’ House badgeholders are selected according to predefined criteria. For RPGF Round 3, those who wish to express interest in becoming a badgeholder can signal their intent on this Forum post (like I did!).
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Applications open, at which time anyone can nominate a person or project for RetroPGF. Self nomination is also allowed, and as we saw in Round 2, necessary — as many of the ecosystem’s most important public goods projects didn’t receive a nomination from a third party.
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Nominated people and projects must create a profile detailing information about their project, its impact, and the team.
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Badgeholders review and vote on the nominated projects who created a profile, results are announced, and selected projects rejoice!
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Projects who wish to receive the RetroPGF grants must complete a KYC process to receive the OP tokens.
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The Collective does a thorough debrief and analysis, as seen in the RetroPGF Round 2 Learning & Reflections.
RetroPGF Round 2 saw 10 million OP tokens distributed to 195 projects. For RetroPGF Round 3, the Collective is going to distribute 30 million OP tokens across four categories: the OP Stack; Collective Governance; Developer Ecosystem; and End User Experience & Adoption.
Although the exact dates of RetroPGF Round 3 are yet to be announced, you can subscribe to Optimism’s RetroPGF Newsletter to get the latest updates! RetroPGF has the potential to change the world, but only if you support the effort by nominating worthy projects that create public goods and contribute to the collective economy.
Optimism Also Funds Proactive Grants
In addition to its famous RetroPGF rounds, the Collective also has four different funding mechanisms for proactive grants:
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Grants Council. The Grants Council is elected by the Token House and tasked with supporting Collective Intent 2: Innovate on Novel Applications. Within that, two categories of grants are currently open for builders and growth experiments. Applications for these grants are evaluated on the 5-week cycles we detailed in this article. More information about applying for this type of grant can be found on the Grants Council’s CharmVerse page.
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Token House Missions. Token House Missions are proposed by contributors to the Collective and should align with a Collective Intent. For example, BanklessDAO’s proposed Mission was under Intent 3: Spread Awareness of the Optimistic Vision, but other eligible Intents are Intent 1: Progress Towards Technical Decentralization and Intent 4: Governance Accessibility. Intent 2 is overseen by the Grants Council and is not part of the Token House Missions. Missions should be completed within a Season. This video is very helpful to understand how to submit a Mission proposal.
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Foundation Missions. Foundation Missions are much narrower in scope but also ongoing. You can find a list of ongoing Foundation Missions on their GitHub. Applicants must reply as a comment on GitHub. As with Token House missions, this video is very helpful in explaining how the Foundation evaluates Requests for Proposals/Missions. Foundation Missions have a specific OP bounty attached to each Mission.
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The Partner Fund. The Partner Fund is operated by the Foundation and is geared towards large grants for ecosystem partners who have demonstrated success, including providing funding to scale or deploy on Optimism. Grants under the Partner Fund are ongoing and applications open.
Combined, these four grant programs work to move the mission of the Collective forward through an experimental, iterative approach to guided work. We can expect the Collective to change some of the parameters for Season 5 based upon the learning from Season 4.
Granting Us The Opportunity to Contribute to the Greater Good
The Optimism Collective has created a playbook to meet a grand end goal: solve the world’s major coordination problems through a new kind of economic model that seeks to compensate people for their measurable positive impact on the common good.
Anchored in Impact=Profit and proactive grants that seek out experimentation on the edges of what we think is possible, the Collective has provided us with a clean slate for reimagining how to govern, together. But the key to all of this lies within the members of the Collective who themselves need to heed the call of Ether’s Phoenix, to rise up and take advantage of the opportunities presented by the Collective. The Collective gives us the chance to contribute to the greater good, but the good becomes great when we collectively decide to take action.
Author Bio
Hiro Kennelly is a writer and shipper at Bankless Publishing, building at BanklessDAO, an Associate at Bankless Consulting, and is now and forever a DAOpunk.
Editor Bio
Trewkat is a writer, editor, and designer at BanklessDAO. She’s interested in learning about crypto and NFTs, with a particular focus on how best to communicate this knowledge to others.
Designer Bio
Tonytad is a graphic designer who has worked locally and internationally with organisations and firms on over 200 projects, which includes branding, logos, flyers, cards, and covers.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.
This post does not contain financial advice, only educational information. By reading this article, you agree and affirm the above, as well as that you are not being solicited to make a financial decision, and that you in no way are receiving any fiduciary projection, promise, or tacit inference of your ability to achieve financial gains.
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