Voting Cycles, Reflective Periods, and Incentive Alignment Drive Decentralized Decision Making
Article and Cover Art by Trewkat | Edited by Hiro Kennelly
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.
Unless you are brand new to blockchains or have been hiding out in a cave, it’s safe to assume you’ve heard of Optimism, a Layer 2 scaling solution for the Ethereum blockchain. Optimism launched in January 2021 as Optimistic Ethereum, an EVM-compatible Layer 2 blockchain, and then transitioned to an EVM-equivalent chain in late 2021, at the same time changing the name of the network to Optimism:
We were a bit hesitant at first, but we’ve come around to embrace the name. It’s short and sweet, and it rolls off the tongue. But more than anything else, Optimism represents who we are as people: we’re Optimists. We work with the conviction that the platforms we build will be used to change the world for the better.
A Little Ray of Sunshine
In April 2022, Optimism announced the launch of the Optimism Collective, “a large-scale experiment in digital democratic governance, built to drive rapid and sustainable growth of a decentralized ecosystem, and stewarded by the newly formed Optimism Foundation.” From launch, the governance plan for the Optimism Collective was to have two separate voting houses: the Citizens’ House and the Token House. While the Citizens’ House did not launch until later, it was announced from the beginning that membership would be conferred rather than be linked to token ownership and that this group — known as OP Citizens — would be responsible for stewarding Optimism’s retroactive public goods funding, now in its third round.
Meanwhile, the Token House was brought to life with the first airdrop of the OP token in May 2022. Token House members are known as OP Holders, and while anyone holding OP tokens may vote, there must first be a delegation of the tokens to enact the voting power. Holders can choose to delegate to their own address and therefore cast their own votes on proposals, or to delegate to another address, in which case that delegate will vote with the power of all tokens under their delegation.
Things Can Only Get Better
The Optimism approach to governance is one of continual improvement. Again, this ethos was baked into the very first iteration of the Optimism Collective. While the Optimism Foundation was established to steward the initial governance model, there is a Working Constitution, which “will remain in effect no more than four years from the date of its adoption. After that, authority over governance will be ceded to a permanent Bedrock Constitution (that incorporates the lessons of the Collective’s prior governance experiments).”
If you’re familiar with the concept of retroactive public goods funding (RPGF), you’ll know it’s based on the fundamental principle that “it’s easier to agree on what was useful than what will be useful.” In other words, it’s with the benefit of hindsight that we’re best able to assess the impact and value of our actions. Although Optimism’s documentation doesn’t explicitly make a connection between the application of this idea to RPGF and its governance approach, it seems to have permeated the Collective consciousness. Openly allowing the governance experiment to play out, assessing and improving, and then after a time making more permanent decisions about what works for the community, is in many ways preferable to the more cemented alternative in which early actions tend to become somehow ‘wrong or right’ with the passage of time.
Time After Time
The OPerating Manual of the Optimism Collective is the best place to get all the details about the iterative process of the Token House governance cycles and structure. Like many DAOs, the Collective surfaces ideas through a proposal process, which then can be voted on by Token House delegates. Unlike some DAOs which have an ad hoc or ‘as necessary’ voting cycle, the Optimism Collective has a neat and tidy schedule that is designed to optimise the time and energy of delegates.
According to the Manual, all Token House proposals progress in a five-week cycle. It’s so specific as to state that each of these governance weeks starts on Thursday at 7pm UTC and finishes the following Wednesday at the same time. The first three weeks are purely for feedback and review, and there are clear guidelines about proposal titling and formatting and expectations about providing answers to delegates’ comments.
The rigour doesn’t stop there. Only those proposals that receive explicit approval from four delegates who act for >0.25% of the current votable token supply are allowed to proceed to a broader vote. There is no room for ambiguity here; each delegate uses the same templated statement to signal their approval in the comments, but the approval is for the proposal to move to a vote rather than endorsement of the proposal itself.
Thank U, Next
Proposals that make it through the feedback and review process are subject to an onchain vote in weeks four and five. Proposals that don’t make it can be resubmitted in the next five-week cycle. For the voting round, all delegates may vote with the voting power established via a snapshot at the start of the period. There are different quorum and approval thresholds set for various proposal types, but quorum is measured as a percentage of the total votable (delegated) OP supply, and approval is the percentage of approval votes as part of the overall total, not including those that abstain.
A Hard Day’s Night
Each five-week cycle occurs within a longer season, and between seasons there is an aptly named Reflection Period. This is dedicated time for delegates to provide input on what worked and what didn’t, without the distraction of voting on current proposals. The Optimism Foundation takes on the role of collecting feedback and developing a special set of proposals which address the issues raised. It’s important to note that this process is inherently positive and completed in the spirit of improvement that drives everything the Collective does.
To date, the Token House has completed three seasons and is in Season 4. This fourth season introduces Collective Intents — short term goals which are intended to focus the Collective’s efforts and budgets. There are four Intents: Technical Decentralization, Innovate on Novel Applications, Spread Awareness of the Optimistic Vision, and Governance Accessibility. This diagram illustrates the proposed pathways through which the Token House will achieve each Intent:
How it All Comes Together. Source: Optimism Collective Governance Forum
We Are the World
The spirit and intent of the Optimism Collective shines through in all that it does. Rewarding contributions to the Ethereum and Optimism ecosystem through retroactive public goods funding is just one facet of the work being done to scale Ethereum and design a more open and decentralised future for all.
Another huge body of work to come out of the Optimism Foundation is the Collective DAO Archives, an open-source library of policies and governance processes from 20 different DAOs. This goldmine is the work of Justine Humenansky, who also distilled the findings from the research into 10 categories, each with a key takeaway. You can see Justine present her findings in this video taken at ETHDenver 2023, view the slides from the presentation, or read the full Twitter thread for the highlights:
She organized the results of her research into 10 categories: voting, strategy, treasury, accountability, organizational, contributors, path to decentralization, policy, tooling, & concerns.
This presentation highlights takeaways from each category.
— Optimism (✨🔴_🔴✨) (@optimismFND) March 2, 2023
Praise You
You may have noticed I’ve been singing the praises of the Optimism Collective and its governance, so for transparency, I will confirm that this article is written as part of BanklessDAO’s Mission Proposal towards Intent 3: Spread Awareness of the Optimistic Vision. The wonderful part though, and what made this so easy to write, is that it only takes a moment to capture the vision once you choose to look. I invite you to see for yourself the positive work taking place through the Optimism Collective and find your opportunity to contribute to the chorus of praise for Ethereum’s most optimistic Layer 2.
Author/Designer 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.
Editor 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.
BanklessDAO is an education and media engine dedicated to helping individuals achieve financial independence.
Bankless Publishing is always accepting submissions for publication. We’d love to read your work, so please submit your article here!
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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