[DRAFT PROPOSAL]: Protocol Delegation Program

Please read Guide to Season 3: Course Correcting 26 for full context before reading this proposal.

The Protocol Delegation Program will be voted on by the Token House in Special Voting Cycle #9a.

Protocols building on Optimism are among its most important stakeholders and they value having a voice in the development of this ecosystem. Throughout Season 1 & 2, protocols have repeatedly expressed this interest by requesting that they be able to self-delegate grants as an means to participate in Token House governance. Self-delegation of grants has historically been discouraged.

After much debate, delegates have requested a comprehensive and consistent approach to protocol delegation. This proposal presents a more incentive-aligned way for protocols to get involved in governance in Seasons 3 and 4.

The Protocol Delegation Program would delegate a portion of idle OP from the Governance Fund to value-aligned protocols based on the objective criteria outlined below. This is an experimental program in which delegations are meant to last two Seasons in total, at which point protocols will need to reaffirm their commitment to Optimism governance via their own treasuries. The continuation of this program for a second Season will be voted on in the Special Voting Cycle following Season 3.

If this proposal is approved by the Token House:

• A total of 5M OP (or not more 1/3 of the active votable supply, defined as the average executed voting power in Voting Cycle #8) would be delegated across 20 protocols, using idle tokens in the Other Initiatives category of the Governance Fund. Delegations will be made pro-rata at the beginning of each Season, for a maximum of 2 Seasons, according to the below criteria:

  • total gas fees generated on Optimism during the proceeding Season

• Protocol delegations will be capped at the point at which a protocol reaches a total of 2M delegated OP. The cap is on total OP delegated. If a protocol already has 2M OP in delegation, they will not be delegated additional OP through this program. Any OP that is not delegated due to this restriction will be re-allocated on a pro-rata basis among the remaining protocols.

• Only protocols that maintain >70% voting participation rate will be eligible for renewal for a subsequent Season of delegation.

• Protocol delegates will be subject to the Delegate Code of Conduct 9. Protocols will be contacted before delegation occurs and given the opportunity to opt-out if they aren’t able to meet the requirements or do not wish to participate. Any protocol that the Token House finds to be in severe violation of the Delegate Code of Conduct will have their Protocol Delegate Program delegations removed.