Please read Guide to Season 3: Course Correcting 31 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 31, 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 5, 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 weren’t 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:

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:
- All Council members will be subject to the Delegate Code of Conduct 8 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.

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.

Builders Sub-Committee:
- 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
Growth Experiments Sub-Committee:
- 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

Council Responsibilities

All Council members will be required to abide by the Delegate Code of Conduct 8. 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.

The Grants Council will:
- 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
The Council Lead will oversee the general administration of the grants program and will:
- 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 Radicle’s 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
Reviewers will vote on grant proposals submitted to their sub-committees and will:
- 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

Council Membership

All Grants Council members will receive rewards for their work, which will be allocated from the Council’s 5M OP budget.

Lead
- 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
Builders Sub-Committee:
- 3 elected delegates (there is no minimum voting power requirement)
- Reviewers will each be compensated 14,000 OP per Season
Growth Experiments Sub-Committee:
- 5 elected delegates (there is no minimum voting power requirement)
- Reviewers will be compensated 14,000 OP per Season

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 3.

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 5. 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.

[DRAFT PROPOSAL]: Moving to a Grants Council