Governance Fund Charter

The Token House launched in May and has been busy allocating grants from the Governance Fund, which is responsible for 5.4% of the total initial OP token supply. Throughout Season 1 and 2, the Collective has called for more clarity on the purpose of the Governance Fund. This Charter provides guidelines on the purpose and scope of the Governance Fund, as a means of guiding Season 3. These guidelines are subject to change in subsequent Seasons.

Purpose:

The purpose of the Governance Fund is:

• to incentivize sustainable growth of value-aligned projects and communities in the Optimism ecosystem
• to bootstrap the retroactive public goods funding flywheel 29 while the Citizens’ House develops
• to strengthen Token House governance and broadly distribute voting power to value aligned ecosystem participants

Grants

Grants can help the Governance Fund fulfill its purpose by providing OP to incentivize future work. To date, the primary activity of the Governance Fund has been distributing grants.

However, the entirety of the Governance Fund should not be reserved for grants. For Season 3, the Foundation is proposing an elected Grants Council with a budget of 5M OP. If the Grants Council is approved, and continues in future Seasons, Seasonal budgets will be determined by the Token House. If the Token House continues to approve ~5M OP per Season for grants, sustained over the course of 4 years, ~30% of the Governance Fund would go towards grants.

All Governance Fund grants should come with an expectation of future growth-related contributions to the Optimism ecosystem (”work”). The Governance Fund may make grants to support either private or public goods, so long as there is also an expectation of future work. There is a distinct OP allocation, separate of the Governance Fund, dedicated to retroactively funding public goods, without future expectations.

Grant Objectives:

Grow population of values-aligned builders: The Governance Fund should support developers launching novel applications that will draw new users to Optimism. If a Grants Council is approved, a Council sub-committee will support this objective in Season 3.

• Examples of grants aligned with this objective are: builder grants to support future work on new projects, sponsor hackathons and bootcamps, support the creation of technical content, and/or support developer DAOs.

Support small scale initiatives to grow unique users on Optimism: The Governance Fund may also support protocols by incentivizing small scale user growth initiatives. If a Grants Council is approved, a Council sub-committee will support this objective in Season 3. Larger scale partnerships with protocols that have already found product-market fit are better suited to the Partner Fund 16.

• Examples of grants aligned with this objective are: growth experiment grants to support small-scale liquidity mining experiments, provide incentives targeting future usage, and/or to support user education.

Other Initiatives

The Governance Fund may be used to fund a variety of initiatives aimed at strengthening the Optimism community and broadly distributing governance power. Season 3 will continue to focus primarily on grants. As the Token House develops, future Seasons may introduce new proposal types specific to other initiatives. In Special Voting Cycle #9a, the Token House will vote on a proposal to enable a portion of OP from this category to be delegated to value-aligned protocols via the Protocol Delegation Program, but this does not constitute spend.