Bootstrapping a bi-cameral governance system

Transcript

foreign [Music] [Music] everybody we don't have a lot of time so let's just get started I see some governance nerds in the audience that's good if you're not a governance nerd sorry in advance I'm with the optimism foundation and we're bootstrapping a bicameral governance system so the foundation is stewarding the development of the optimism collectives governance system and we're taking an experimental approach to doing so the biggest experiment that we're going

to run is that the entire system is going to be bicameral what what do I mean when I say that basically that we will have two houses you can think of it as two Dows in in our in our case this is the biggest experiment that we'll be launching and we're excited to launch it by the end of the year so this talk is about why we're doing this why it's designed this way and at a high level how it's going to work so the first thing you need to understand about optimism governance is that there are two houses it basically means there are two different dows the first one is the token house if you've heard people talking about optimism governance so far this is probably what they're talking about the token house launched about a year ago a little over a year

the purpose of the token house is to oversee the protocol and drive ecosystem growth the members of the token house are all op holders and their delegates and the structure is plutocratic and that's okay this house represents the free market and the collective decision making and we think that's an important input to have we'll talk about how we protect against the downsides of plutocracy later and this house is responsible for decisions that affect the economic parameters of the system like inflation and sequencer selection the other house is the citizens house and this structure is non-pluocratic so this is a one Member One vote system and

its primary purpose is to allocate retroactive public goods funding which we refer to as retropgf the members are citizens and they're meant to represent the human stakeholders of the collective and they're selected based on reputation they make decisions that require long-term prioritization over short-term optimization this house exists in MVP form right now they're basically allocating retropgf but not doing uh not responsible for their full set of governance responsibilities this we're going to launch by the end of the year which is very exciting okay so we have two houses and we believe that this creates many benefits the first one is I think the most

obvious and that's that with two houses you can create a system of checks and balances this is just a new version or a different iteration of a proven model so buy and try camera governance systems exists in in the real world than they have for many years um the primary purpose of this is to avoid the common downsides of token-based governance and reduce the concentration of power that typically arises in plutocratic systems we also believe that we can make better decisions as a collective this way by matching the incentives of each constituency set with different types of decisions or different governance responsibilities so token holders will not be will not always be the right

unilateral decision makers especially for non-economic decisions so to play to the strength of each house and also try to avoid gridlock optimism governance responsibilities will be the exclusive responsibility of one or the other house driven by one house while the other house has veto rights and in limited uh instances they'll be a shared responsibility the less obvious benefit of a two-house system is that we can use it to create a flywheel which is how we're eventually going to get to ether's Phoenix so the token house drives ecosystem growth which drives activity on the network

which increases sequencer profits which go to the citizens house to be distributed as retropgf that retropgf supports and sustains Builders and developers that are developing and promoting the adoption of optimism which in turn drives more growth and you understand the circle I think the least appreciated part of this two house system is that the two houses together can bootstrap a sustainable market for retropgf and prove this Axiom that impact equals profit in order for us to have a sustainable retro PDF Market it needs to be reliable and investable and we're not really

there yet so in the meantime the token house and more specifically the governance fund that the token house manages can help to bootstrap this market and that is because they can provide proactive grants that give Builders certainty about the scope and and size of what they need to build while we increase the frequency of retropgf rounds we're not really doing it frequently enough or reliably enough for Builders to for most Builders to build an anticipation of receiving retro pgf but we want to get there eventually investors can also provide Capital to work that's being done in the token house with a with a value that's agreed upon in advance while we work to

increase the results of the increase the accuracy of the results Oracle what I mean when I say results Oracle is basically the ability of the citizens house to allocate retropedia pgf in a way that represents the true impact of the work it's supporting over time the ratio of proactive versus reactive grants that are needed will shift primarily from the token house over to the citizens house until the entire Collective is supported by retropgf so that is really the vision which I don't think everybody understands so this entire thing that I'm talking about today will be supported by retropgf in the future okay so we have two houses uh multiple

benefits and then the entire system is governed as one Collective so the governance responsibilities that are driven by the token house in most cases will have a citizen's house veto and that is primarily to guard against the capture of the token house which is important because it is a plutocratic system the types of responsibilities are protocol upgrades which will be approved by the token house and citizens house can veto and that's because the token house will represent the business interests that depend on the op Stack's functionality so protocols and chains basically the token house is also responsible for sequencer selection sequencers being an important economic actor for op chains and eventually for the super chain and

so those those types of proposals and that those responsibilities will be driven by the token housed with the citizens House of veto treasury management is responsibilities are split across the houses but the token house is solely responsible for directing what we call the governance fund and that is to grow the ecosystem and build the collective and also are responsible for governing inflation adjustments but citizens house will also have a veto um each house has some soft Powers they're responsible for in the case of token house it's rights protections because those pertain to the op token the set of governance responsibilities that will be driven by the citizens house will in some cases have a token

house veto and that's again to prevent against capture of the citizens house or move to consolidate power between the houses the primary responsibility of the citizens house is to basically manage the retropgf fund so that's directed by the citizens house the token house can veto citizens solely make the project level decisions about which projects receive retropgf token house has no veto on that the citizens will also govern the parameters of retropgf so that's things like setting the scope metrics and impact evaluation right now the foundation primarily does this in the future the citizens will do this the citizens houses also responsible for

the allocation of protocol Revenue so this is a huge responsibility by default all Surplus protocol Revenue will be allocated to retropgf that's a huge deal the token house can propose a deviation from the default which the citizens house can veto and then finally the citizens house is responsible for determining the set of criteria that determines citizenship so basically the formula comprised of attestations that determine uh whether or not you qualify to be a member of this house and token house can veto and that's primarily to prevent again against moves to consolidate power in that house um

oh can I just click okay sorry guys okay and then a small set will be shared between both houses and it's mostly around the treasury management so there's a portion of the treasury that's unallocated right now the foundation administers that and eventually both houses will direct that jointly and then the foundation budget will need to be approved by both houses so um our budget was approved uh this year for the first time and that will need to happen annually and then both houses are responsible for some soft Powers mostly around accountability so things like code of conduct enforcement and removal of the directors of the foundation so this is a chart illustrating

everything I just talked about the further furthest columns represent responsibilities that are solely within that house one column in are driven by that house with some veto rights and then the the subset in the middle are the shared responsibilities the system is designed to achieve two governance goals and the first one is capture resistance so we want to ensure that no single party can unilaterally control sensor halt or otherwise extract rent from optimism and the second one is effective resource allocation so we need to achieve credibly neutral and effective resource allocation to support the collective's long-term vision and this requires a

blend of short and long-term thinking so this is basically the current spec of what we think the system is going to look like but it will change on our way to the end state so optimism governance will self-destruct many times between now and then where we iterate and we're not afraid to say this didn't work and we have to try something new so the division of responsibilities between the houses may change manual governance processes are going to be replaced by automated smart defaults this entire system will be more governance minimized over time and the foundation will take ourselves out of our role of Designing and implementing the system this is the last governance responsibility that will come online

will be for the ability of the collective to maintain and sustain the system itself uh and we're not just talking about it we're actually going to do it so season five which is the next season we're going to have our first joint house vote we're going to introduce something called The Law of chains which is really cool and stay tuned for more information about that very soon and we're going to have our first version of the security Council so these are major Milestones to actually implementing this system if this is interesting to you and you want to join the collective you can register to be a delegate at vote.optimism.io I see delegates and audience we need more and we'd love to get your feedback on this design like I said this is kind of the the current

spec but I'm sure it will change based on your feedback so there's a link here to provide it and join the collective [Applause] [Music]