The Optimism Collective & Public Good
Firstly, let’s understand why there is a need to form a collective. It is primarily because of these two reasons:
- Blockchains are finding it difficult to scale without compromising on Decentralization or Security (The infamous Blockchain Trilemma: A widely held belief that decentralized networks can only provide two of three benefits at any given time with respect to decentralization, security, and scalability.)
- Solve for Plutocratic behaviour prevalent in the blockchains that claim to have solved for Scalability
So what is The Optimism Collective?
At the outset, it is an experiment to solve scalability issues *optimistically*. How so? The collective is united by the mindset that Impact is equal to Profit; meaning that an individual who adds positive value to a public good should be rewarded with profits. This way we end up promoting behaviour to generate public good.
This is outlined in detail in their vision statement here.
Next, let’s understand the structure of Optimism Collective to help us understand how it will be governed.
The collective will be governed by two houses equally:
- Token House: It will be responsible for handling the incentives, upgrades, and treasury funds. Basically, responsible for the short term goals
- Citizen House: It will be responsible for designing a public goods funding process that will lead to the distribution of power to the citizens, away from centralized or plutocratic mechanisms. Basically, responsible for the long term goals
In steady-state, this is how the flywheel will operate:
Step 1: At genesis, Users buy OP (OP is the token name) based on the vision & idea.
Step 2: Revenue is generated as users buy more OP
Step 3: This revenue is collected in a Public Goods Funding Vault
Step 4: This vault is used for funding projects to be built on the chain for Public Good
Step 5: This attracts more users to buy the tokens
Initially, the Ecosystem Fund (More on that below) will be used to fund multiple projects. This will be necessary as enough revenue won’t be generated only through token sales.
Later, it will be expected that the tokens provide the revenue. (Retail and Institutional Investors will pitch in)
Moving on, it becomes imperative to understand the Tokenomics of the collective broadly.
- Ecosystem Fund (25%): It is an in-house startup/project incubation program
- Retro Public Goods Funding (20%): Mechanism to reward those who are building public goods. More here.
- Airdrops (19%): It is basically dropping free money to selective people. Who are these selective folks? Users who have contributed to the Optimism chain early and helped build community and the public good. The details of which are here.
- Core Contributors (19%): Folks who continuously have and are working to ensure the existence of the collective
- Sugar Xaddies (17%): Investors of the Optimistic Foundation
Now that we have broadly understood the allocation of the funds, let’s dive into the Distribution details.
- The Token is inflationary. Meaning the supply is not fixed. At start, the total supply will be ~4.3B, which will inflate at the rate of 2% per year
- 64% of the tokens (Apart from the ones reserved for Investors and Core Contributors) will be distributed over time to the community
- The distribution of the funds will be made in the following manner:
- Year 1: 30% of the initial token supply
- Year 2: 15% of the initial token supply
- Year 3: 10% of the initial token supply
- Year 4: 4% of the initial token supply
It is a long journey from the current governance structures on the Ethereum blockchain, to what the Collective is proposing. This initiative needs a strong driver to ensure the necessary efforts are required to attain the end objective.
Optimism Foundation is that driver. It is a group of Web 3 stalwarts with the mission to attain the objectives of the collective. If you want to know more about the Foundation, check this out.
That’s all for now! We are very curious to know how the Optimism Collective will shape up.
References Link (That helped us write this piece):
https://twitter.com/optimismpbc/status/1519001562345005057?s=24&t=3_-tmCA-3qJUOFruz1TDjA
https://www.optimism.io/vision
https://optimism.mirror.xyz/gQWKlrDqHzdKPsB1iUnI-cVN3v0NvsWnazK7ajlt1fI
https://optimism.mirror.xyz/x4LGFwa6RJ_opOaCOwr_VGk04Lp3of41H8ynWaFB27E
https://medium.com/ethereum-optimism/retroactive-public-goods-funding-33c9b7d00f0c
https://www.gemini.com/cryptopedia/blockchain-trilemma-decentralization-scalability-definition
https://community.optimism.io/docs/governance/airdrop-1/#global-filtering-criteria