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Vitalik shows support for Optimism’s governance structure and OP gas proposal

The Ethereum co-founder has often advocated for projects to move away from coin voting in DeFi and DeGov, as it will enable smaller holders a chance to truly participate in governance.

Ethereum co-founder Vitalik Buterin has shown support for Optimism’s new governance structure, noting that proposals such as using the OP token for gas fees shows “explicit representation of non-token-holder interests.”

The Ethereum layer-2 scaling solution deployed the first round of its long-awaited OP token airdrop on June 1 as part of its new governance project the “Optimism Collective.”

Optimism’s new governance structure involves two parties dubbed the “Token House” and “Citizens’ House.” The former is composed of OP governance token holders and the latter consists of “soul-bound” non-transferrable citizenship NFT owners.

While it is unclear if Buterin is fully on board with a proposal from June 2 to utilize the OP governance token for gas fees, or just happy that such a discussion was taking place, he noted on Twitter today:

The two parties mostly oversee different objectives with the Token House tasked with project incentives, protocol upgrades and treasury funds, while the Citizens’ House is focused on retroactive public goods funding.

The duo also share governance decisions on network parameters and granting new citizenships to the Citizens’ House, something which Buterin seems to appreciate in this instance.

According to Optimism, the number of citizens in the Citizens’ House will grow over time, and the “mechanism for distributing Citizenships will be determined by the Foundation with input from the Token House.”

On several occasions, Buterin has outlined his thoughts that the crypto sector needs to “move beyond coin voting” in decentralized finance (DeFi) or decentralized governance (DeGov) as it runs the risks of having whale governance token holders dominating the voting process. Buterin argues this can often lead to a short-term focus of the whales approving proposals that intend to pump the price of certain assets.

Such a method can result in small holders and platform users not having a voice in the DeGov process, or what Buterin describes as a lack of non-token-hodler interests.

As for the OP gas fee proposal, which itself was floated in the Optimism governance forum for ideas and feedback yesterday, sentiment among the community appears mixed.

Gas fee proposal: Optimism governance forum

While many offered short and sharp comments of agreement, generally noting that it would give OP more utility, numerous others took the time to clearly outline why they were against the idea.

Related: Balancer launches on Ethereum L2 network Optimism

One member, Kethic, stated, “I don’t think this is a good idea. Burning voting power on a governance structure feels counter productive,” while user Vrede stated:

“Optimism is EVM equivalent. Accepting OP tokens as gas means giving up on EVM equivalence. Moreover, Optimism has to pay fees to Ethereum Mainnet in ETH. How will the OP<->ETH conversion be handled?”

User Massedai said that “this is a premature change to a system that hasn’t started to function yet the way Optimism intended,” suggesting that the project is looking to provide token value via “ecosystem profitability and not quick moves to try and pump a token.”

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Optimism token falls 40%, prompting calls to bar dumpers from airdrops

“Why should Optimism Collective continue rewarding these kinds of mercenary actors who will dump their tokens on first sight? Why should any future airdrops reward these addresses?” an OP governance member argued.

Optimism’s freshly launched governance token, OP, has plunged 40% since peaking at $2.10, leading members of the community to discuss baring those who dumped their tokens from future airdrops.

Cointelegraph reported on Tuesday that the Ethereum layer-2 scaling solution was overwhelmed with demand for the first OP governance token airdrop, as 5% of the token supply was distributed to around 250,000 eligible users.

As per CoinGecko data, the token opened at roughly $1.43 before surging to $2.10, but as more users got their hands on the free airdrop over the day, OP dropped to as low as $1.09 before climbing back to $1.18 at the time of writing, marking a 43% drop.

Following the sharp drop of OP’s price, a member of Optimism’s governance community who goes by OxJohn put forward a proposal in the Optimism governance forum to exclude addresses that dumped 100% of their airdropped tokens. The post garnered a significant amount of attention from the community, pulling in 11,200 views, 305 replies and 595 likes.

OxJohn highlighted several addresses that received at least 32,000 OP tokens and promptly dumped them on the market, arguing that their actions are “counter-productive” to the community and diluted the governance process.

The OP hodler went on to suggest that these accounts should be barred from the next round of OP airdrops with “a public list of accounts that engage in this behavior” excluded. In their view, doing so would see the distribution of governance weight to only those who plan to actively participate.

“Why should Optimism Collective continue rewarding these kind of mercenary actors who will dump their tokens on first sight? Why should any future airdrops reward these addresses?”

The proposal was submitted purely for ideas and feedback and is not close to the stage of being voted on. The reaction from the governance community has been mixed so far. Some users were in complete support, others rejected the idea totally, and some were calling for a more nuanced position.

User Mohammedt75 said, “Very valid points. Incentivize people who care about the longer term and let others who don’t care about the ecosystem pack and get out.”

Mgomes stated that “one of the goals of the airdrop is to incentivize people to use the chain. Even if they plan to dump it is fine, because they have used Optimism and if they liked the chain they will keep using it.“

Member JustinMarx also highlighted an interesting counterpoint, stating that dumpers should not be penalized as “you never know the personal circumstances of someone who dumped their tokens.”

One of the most high-profile Crypto Twitter users to weigh in was Cobie, the co-host of the UpOnly crypto podcast who has nearly 700,000 followers. He responded to the proposal in his typical satirical/mocking manner.

Cobie submitted a lengthy counter-proposal in the forum titled “Extended ineligibility for future airdrops” that was temporarily removed due to being flagged as “inappropriate” but has since been reinstated.

In it, he said that “my lack of support for this proposal is not because I disagree with the sentiment. On the contrary, it is because this proposal does not go far enough.”

“I propose that we, Optimism Collective, cancel the future airdrops of anyone that has sold any token in the last 6 months. These people have a pattern of undesirable behavior, we can consider them ‘potential future sellers’.”

To counter potential future sellers, Cobie suggested issuing them with a debt token and also considering the use of “physical violence” against them.

However, after being prompted to provide a more serious response to the proposal, Cobie highlighted several reasons why he thinks that it’s a bad idea.

Related: ETH/USD trading pair attracts more traders in the first quarter of 2022: Report

He made points such as OP’s early price being irrelevant, sellers having different motives, the possibility to sell and still engage with governance, the token being used as part of customer acquisition costs from Optimism, and the ease of making a new address to avoid restrictions.

“The only people that care are price-speculators, traders and short-term investors. Governance certainly performs the same whether the price is $1.50 or $2. Sure, extensive price changes could make governance attacks on Optimism cheaper, but there is not a single mention of that in the initial proposal.”

“And it is not really a concern given the size of the airdrop or the short-term nature of the sell-pressure from ‘instant dumpers’,” he added.

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