Introducing: The Optimism Collective & $OP Airdrop #1

Optimism has released their Airdrop details! Check your eligibility: app.optimism.io/governance The $OP token contract address is: 0x4200000000000000000000000000000000000042 BE VERY CAREFUL WITH SCAMS AND PHISHING ATTACKS. 🔴 POST LIVESTREAM AMA HOSTED BY OPTIMISM: https://twitter.com/optimismPBC/status/1518617022782853120 ------ 📣 THE GRAPH | Graph Day in San Francisco | June 2-5 https://bankless.cc/GraphDay ------ 🚀 SUBSCRIBE TO NEWSLETTER: https://newsletter.banklesshq.com/ 🎙️ SUBSCRIBE TO PODCAST: http://podcast.banklesshq.com/ ------ BANKLESS SPONSOR TOOLS: ⚖️ ARBITRUM | SCALED ETHEREUM https://bankless.cc/Arbitrum ❎ ACROSS | BRIDGE TO LAYER 2 https://bankless.cc/Across 🏦 ALTO IRA | TAX-FREE CRYPTO https://bankless.cc/AltoIRA 👻 AAVE V3 | LEND & BORROW CRYPTO https://bankless.cc/aave ⚡️ LIDO | LIQUID ETH STAKING https://bankless.cc/lido. 🔐 LEDGER | NANO S PLUS WALLET https://bankless.cc/Ledger ----- Topics Covered: 0:00 Intro 7:00 An Unprecedented Moment 12:50 Tokens and Governance 17:30 Plutocracy and Democracy 22:54 Balancing Incentive Games 26:10 The Optimism Foundation 30:02 Decentralizing Identity 33:45 Decentralizing Over Time 42:30 The $OP Token and Airdrop 48:00 Distributing Future Airdrops 53:22 Other Token Distributions 57:35 Retroactive Public Goods Funding 1:04:27 Blockspace Demand 1:07:55 EVM Equivalence & EIP 4844 1:14:11 Justice and Balance 1:16:04 What's Next for Optimism? 1:18:26 Be Optimistic ----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research. Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://newsletter.banklesshq.com/p/bankless-disclosures

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:07Ryan Sean Adams?

  Hey Bankless Nation, welcome to another State of the Nation. David, you know what? I woke up this morning optimistic.

• 0:13David Hoffman?

  Did you?

• 0:13Ryan Sean Adams?

  And I'm optimistic, yes, about this episode. Okay? Because we are talking with optimism today. We originally titled this, we booked this a while ago, we had originally titled this optimism with a bunch of question marks because we had an inkling, we had an idea that optimism was going to launch something on the 26th of April, which is the date of which we're recording. And indeed, just an hour or two prior to us recording, they have launched something. David, what is the thing or the things that optimism has launched? And what are we going to talk about today?

• 0:47David Hoffman?

  Oh my gosh, it is a cannonball of an announcement, which has really, I think, filled the gaps in people's brains about what is the future of these L2s? How are these Layer 2s going to decentralize over time? Because that is, of course, the whole entire point of this crypto revolution is to decentralize as much as we can, decentralize all of the infrastructure. And optimism's post introducing the optimism collective has given more or less the roadmap for decentralizing optimism and giving over responsibility, Ryan, to the community. And they have pioneered a two-house model, a brand-new system of governance, one called the Citizen House, one called the Token House, and also a new model for retroactive public

• 1:29David Hoffman?

  goods funding that's going to make the optimism Layer 2 a pleasant place to live. And so we are going to talk about all of these things with the co-founders of the optimism Layer 2, Ben, Jing, and Carl, the most infectiously optimistic team, I think, that exists in crypto, coming up soon. After this show, right after this show, there is an AMA hosted by the optimism team. There is a link in the show notes to the tweet where you can get that information that is happening at 1:00 PM Pacific Time, what is that, 4:00 PM Eastern Time? Link in the show notes. So after we get all of the high-level questions out of the way in this show right here, there is an AMA Twitter Spaces being hosted by the optimism team right after this.

• 2:11Ryan Sean Adams?

  Guys, there is just so much going on in crypto right now. One other thing before we get in, we have to mention that is going on is Graph Day. Graph Day. This is a conference that is coming up June 2nd, half, actually, three quarters Hackathon, really, and one day of learning. So June 2nd to the 5th. And this is happening in San Francisco. If you're not familiar with the Graph, the Graph is a protocol that is essentially indexing all of Web3. So when you're going to a DeFi user interface, you're probably tapping into the Graph at some level. So if you are looking to network with some people, if you're looking to build in the Web3 ecosystem, if you're looking to learn, launch your career, go

• 2:53Ryan Sean Adams?

  ahead on over to this conference. Fantastic people. Founder of Connect, Arjun is going to be there. Camilla, Cammy Russo from The Defiant is going to be there. A whole bunch of other folks are going to be there as well. Jake.

• 3:07David Hoffman?

  Brooke Brookman.

• 3:08Ryan Sean Adams?

  Brooke Brookman, yeah.

• 3:08David Hoffman?

  Sorry, Jake. He's the guy that pilled us on NFTs. And of course, it's also going to be Kevin Awaki, the Public Goods Maxi, and a bunch of other people that I find particularly inspirational. Right in that bottom left corner is Reese Lindmark, one of my personal heroes in this space.

• 3:21Ryan Sean Adams?

  You know, I wish when Jake pilled us on NFTs, we had a bottom word, David. That was like, that was in 2020. Anyway, that's gone. Now we have new opportunities in crypto, in DeFi. We're about to get into them. But David, got to start with the question I ask you before every State of the Nation, which is this. What is the State of the Nation today?

• 3:38David Hoffman?

  Oh, Ryan, what else could it be other than being optimistic? Because there's nothing, like I said, there's nothing that makes me more optimistic about the future of Ethereum than the combination of Layer 2s and public goods. And that is really the thing that optimism, the optimism team has always emphasized since Genesis, is how do we scale Ethereum while also scaling our values? And that is what I think has instantiated, one of my favorite words, in the optimism Layer 2. The connection between Layer 2 and the value of Layer 2s and funding public goods, and also community empowerment and individual empowerment. As we scale out our networks, we also scale out our human values, which could, you know, it was what a little bit of what we need in this world, Ryan, right now, is a bunch of scaling of values in an optimistic fashion.

• 4:22Ryan Sean Adams?

  Yeah, absolutely. And I also wonder, the narrative that we talked about at the beginning of this year is it's going to be L2 2022, the year of Layer 2s. Actually, that was what we talked about last year. We talked about that. We talked about L2 summer. But now, we've got a year later, I feel like the coming of tokens will usher in a different sort of L2 summer. And it's pretty exciting to see. And I sort of wonder if this is how Ethereum pushes back on some of the alternative Layer 1 narratives that are out there. We'll have to see what the team thinks about that as well. And we are just about to get into it, guys. But before we do, we want to thank the sponsors that made this episode possible.

• 5:00David Hoffman?

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• 5:42David Hoffman?

  If you want to stake your ETH, Terra, Sol, or Matic and get liquidity on your stake, go to lido.fi to get started. That's L-I-D-O dot F-I to get started. The Layer 2 era is upon us. Ethereum's Layer 2 ecosystem is growing every day, and we need bridges to be fast and efficient in order to live a Layer 2 life. Across is the fastest, cheapest, and most secure cross-chain bridge. With Across, you don't have to worry about the long wait times or high fees to get your assets to the chain of your choice. Assets are bridged and available for use almost instantaneously. Across bridges are powered by Uma's Optimistic Oracle to securely transfer tokens from Layer 2 back to Ethereum. A token proposal is being deliberated as we speak in the Across forum, where community members will decide on the token distribution. You can have your part of Across's story by joining the Discord

• 6:27David Hoffman?

  and becoming a co-founder and helping to design the fair, fair launch of Across. If you want to bridge your assets quickly and securely, go to across.to to bridge your assets between Ethereum, Optimism, Arbitrum, or Boba networks.

• 6:41David Hoffman?

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• 7:26David Hoffman?

  That's A-L-T-O-I-R-A dot com slash banklist and start investing in crypto today. Welcome, Bankless Nation, to this very special edition, this optimistic edition of State of the Nation. We are joined by three co-founders of the Optimism Project, the Optimism Layer 2. Sitting in the middle, we have Jing, the Executive Director of the now Optimism Foundation. We'll have to talk about what that is. Sitting on the right, we have the Chief Musician of the Optimism Foundation, Ben. And on the far left, of course, the eternal optimist, the guy that got me into crypto in the first place, Carl Forch, the CTO of OP Labs Public Benefits Corporation. Again, going to talk about what that is, because that is also something new.

• 8:09David Hoffman?

  Guys, thank you so much for coming on this episode of Bankless. I'm sure, like you, we are all here feeling optimistic. But you guys just released a blog post. And in the very beginning of that blog post, you guys say Ethereum sits at an unprecedented moment, and we can't squander this opportunity. Jing, what does this mean? What unprecedented moment are we at? And what could we squander?

• 8:32Speaker 02

  The unprecedented moment is this migration to L2s. And Ethereum enables these new human coordination systems to be designed. It fundamentally changes game theoretic constraints of what people were able to build before. So we have an opportunity here while creating an L2, creating value, generating revenue, to design a new way for all participants of the optimism network to coordinate.

• 9:01David Hoffman?

  And so, you also talk about not wanting to recreate Web 2 incentives. Can you just elaborate on what that means and why that's important?

• 9:11Speaker 02

  Yeah, I mean, I think everyone has seen how the Web 2 incentive structures have played out, where you have revenue, power, influence continuously accruing to this single centralized source. And Web 3 is supposed to reimagine that, yet we still can fall prey to the same pressures of centralization, desires to maximize profit.

• 9:35David Hoffman?

  Is that something you see in the crypto space today?

• 9:38Speaker 02

  Yeah, 100%. Just because you can build new incentive systems doesn't mean everyone is building new incentive systems.

• 9:46David Hoffman?

  Carl, Ben, I wanted to give you guys an opportunity to answer similar questions. Any thoughts about this unprecedented moment on Ethereum's history? Where are we on Ethereum's history when it comes to the network?

• 9:57Speaker 03

  Ooh, when it comes to the network, I mean, we are, the modular blockchain revolution, the kind of, you know, state of the art of the technology is scaling up so fast. And why is it scaling up so fast? It's because there are so many people building on Ethereum, building the core infrastructure, building these incentive systems. Like, this is a movement like we have never seen before. But that is also the case for the entire space at this point. And so, we really don't know how things are going to shake up, right? We definitely could live in a world where we do end up recreating Web 2 incentives.

• 10:33David Hoffman?

  Ben, go for it.

• 10:34Speaker 04

  Can I hit you with my favorite story on this?

• 10:36David Hoffman?

  Please do it.

• 10:37Speaker 04

  Have you guys ever read the Declaration of Independence of Cyberspace?

• 10:41David Hoffman?

  Yes, but I think you might need to refresh my and the listeners' memory.

• 10:45Speaker 04

  So, this was a post written in the 90s by John Perry Barlow that basically was the, I think, you know, is very analogous to like the down the crypto rabbit hole aha moment that we all have, where John Perry Barlow said, "This new cyberspace that we're creating, these networks of information passing are a new realm." And he basically says that, "Beware ye weary giants of flesh and steel, you have no place here," right? And it's a super well-written, super moving sort of call to action. But ultimately, what we have to keep in mind when we read this is that just because the Internet had the ability to do this, doesn't mean that it was going to produce this. And in fact, if you reflect on where the Internet has been taken, right, there's

• 11:28Speaker 04

  a huge amount of negativity about Web 2, which is exactly the thing that Perry Barlow there is talking about being very important. So it's important for us not to do that again. We can make something new, or we can repeat the mistakes of the past.

• 11:41David Hoffman?

  And I think to add on to the Web 2 incentives element, we are seeing the what seems to be just like the nationalizing of the Internet. Now we have like this Facebook country that we're a part of, we have this Twitter country that we're a part of, and all of a sudden, the values of Web 1, where power was really pushed to the margins, has been concentrated back into Web 2. And I think we're also seeing that in our crypto networks as well. And so I think this is what you guys are really getting into with making sure that we can redefine the Internet with Web 3-based incentives. Any comments on that before we go on?

• 12:17Speaker 04

  Too many, but I know Carl has good ones.

• 12:20Speaker 03

  Cool. I was just gonna say that humanity is important. We need to capture and fight for our rights as people and individuals to make sure our networks reflect our values. And we'll talk more.

• 12:31David Hoffman?

  Yeah, we're going to illustrate how we are going to get all of that done in the rest of the show. But first, guys, is there a token that's a part of this story? Is a token relevant here? Are we talking about a token today?

• 12:42Speaker 02

  Yeah, I mean, cars run on gas, but what you want to do is get from point A to point B. So we have a token, but we're trying to get to point B, and it's one small part of the story. But I know that people are really excited about it.

• 12:56David Hoffman?

  Of course, of course.

• 12:58Speaker 04

  Yeah. If you look at all the communications we've done on this, we've tried our damnedest because we know no matter what, the DJs will get out there. But the token is missing the point of this thing. This is about building a new system of governance and funding mechanisms for public goods. It's not about when token, you know, short-term land grab, money grab, you know, pump.

• 13:18David Hoffman?

  Of course, yeah. And in the words of the ENS Dow, "You're airdropped responsibility." And I think that rings true here as well. And part of the way that that responsibility manifests is through this new governance structure that you guys have introduced in your blog post called the optimism collective, the OP collective. Can you guys walk us through the OP collective, the optimism collective, and how that has been structured and what its whole purpose is?

• 13:42Speaker 04

  That's got Carl written all over it.

• 13:46Speaker 03

  What's up? Alright, so, we have been doing governance research, like, this is public goods specifically, public goods research for a long time, and yes, you brought it up. So, the Optimism Collective is a bicameral governance system. We have two co-equal houses, A, the citizens' house, B, the token house. Okay, what is the major difference between these two houses? Well, it actually comes down to the transferability or sellability of the governance rights for each house, right? So, the token house, you of course have these tokens, they're, you know, out there in the world, they're liquid, they're transferable. Then, you have the citizens' house, where these citizenships are identities, they are

• 14:30Speaker 03

  soulbound tokens, as in, you cannot transfer them, you cannot sell them, instead, you can earn them, receive them, give them, etc., right? And, the importance here is that we balance these two houses, right? If we just had tokens, then governance rights would be buyable on the open market, you know, for a cost, but that, when we're talking about a system which is supposed to protect human values, right? Human values are not reflected necessarily in our markets, our markets are extremely unequal, there's a very, you know, I can have one vote in terms of $1, and you can have a bajillion votes in terms of a bajillion dollars, and that would just, that would

• 15:12Speaker 03

  reflect very negatively in how our internet plays out. So, we introduced this token, this citizens' house, and the citizens' house is roughly, right, one person, one, you know, voting power, right? You're not gonna have this thing where you can have, you know, a million X more voting power than someone else, maybe there's some gradient, but it's roughly, you know, equal. And, that is really critical to kind of check the balance, right? Because, it's important, token holders are important, right? They represent the interests of the network insofar as their wallets, right? Everyone wants to not lose money, so there is a valuable incentive system there, but it needs to be balanced by...

• 15:55Speaker 03

  These soulbound tokens, by these identities, by these citizens. And so what we are creating is a really decentralized, decentralized governed network for the people, you know, by the people, right? This is, we're not ready to just say, okay, token governance, that's it. We're actually going to push this thing forward. Now, I will say, I'll keep going. I will say that it is going to take a long time for us to get to the end state. In fact, in our constitution, which you can take a look at, and our vision doc, which you also can take a look at, but in our constitution, there, we have four years to get to a point where this thing is kind of ready to take the training wheels off.

• 16:38Speaker 03

  Right now, distributing identities and citizenships is an unsolved problem, right? Proof of humanity, like various other things, soulbound tokens, transferability. If you read Vitalik's blog post on soulbound, he outlines a lot of the problems that exist in the identity, you know, space. But if we were to fully get to, you know, try to get to the end state today, we would, we'd be left with just the token house. So what we're doing is we created this whole system where we have the foundation, and the optimism foundation will actually steward the governance protocol to its final form as a balanced, decentralized, bottom-up governance system for the people, by the people.

• 17:17Ryan Sean Adams?

  Okay, so I just want to unpack this for a minute. So, um, yeah, that's really cool. And there's, there's so many interesting ideas with this particular, um, with this particular project, what you guys are doing here. So there's this thing called the optimism collective. And previously, David and I have talked about on bankless about layer twos being almost like, mini countries, city-states, states within a federal government, right? So think like California, or like Virginia, or something like a state within the federal government. And so you, at the beginning of your, your, your post and the tweet thread, have this picture of optimism as this like community, as this sprawling, wonderful city space where people make their homes and live. And that's indeed what we're doing.

• 18:01Ryan Sean Adams?

  You guys were talking about the, the great migration from L1 to L2s. We're making Our new homes on these layer twos. And so the optimism collective is this, I guess, state, right? This place where people live. And now what you're doing is you started to introduce words like constitution and governance. Now we have to collectively decide how this state is actually governed. Like, how do we, how do the people who live in the state actually make decisions? And what you're proposing, I want to make sure Bankless listeners get this because this is super unique, is two bodies, right? So in the, in the US, you have like the senate and the house, right? Those are two different bodies. In this system, we have two bodies, one that votes with capital.

• 18:47Ryan Sean Adams?

  That's where the token comes in. That is the, the token house, as you've called it. And the other is a, almost like a one person, one vote sort of thing. The people's house, if you will, the citizens' house. So we have tokens as a primitive, which we've had for a while. And now you're introducing people, individuals as a primitive. And together, these two bodies are going to essentially make governance decisions for this state, for this beautiful city that we're trying to create on layer two. Is that right, Carl?

• 19:21Speaker 03

  Yes, that is absolutely right. And I just want to say that it is on layer two that we're trying to create this, but it is also on the internet more broadly that we are trying to create this. Because right now, we sit at an inflection point, right? We have Elon Musk buying Twitter. We have like, you know, Dolly too, you know, painting amazing artwork, right? Without a human involved, right? There is, this is a moment where the internet is most sorely in need of human representation, identity, and fixing these problems that we, that we have. So like, we need to solve this for crypto because crypto is kind of the, like, the, the governance testbed and the fertile soil for all of these experiments.

• 20:06Speaker 03

  But it is going to be something that affects the entire web, right? This is, this is the revolution.

• 20:12Ryan Sean Adams?

  This is super cool. And so this is something you want to explore. I want to just camp on the Elon Musk thing for a minute because that is the news today, right? So Elon Musk is buying Twitter. Apparently, that is the thing that's going to happen. And people should realize that Twitter governance is essentially, it's just the token house. It's just capital, it's just capital vote. And so who essentially gets to dictate what the rules on Twitter is? The majority of Twitter token holders, shareholders, of which Elon Musk is apparently going to be the majority owner, and he's going to be the guy, right? Our governance for Twitter rests on Elon Musk. What you're proposing is something different. So you'd still have some of that token vote responsibility.

• 20:53Ryan Sean Adams?

  But also, this is as if in the future, right? Not right now, but also individual Twitter users. Everyone, every individual human who had an account also got to vote on the governance process. And I think what you're saying is there's a lot of steps to get there. But that is what you're talking about in making this thing by Camberwell. It's not just token vote, it's not just shareholder vote, where someone like Elon Musk can go like, buy the freaking, like, the state of optimism. We actually also have the individual users of optimism who have a vote in the system. And you think, you think optimism and crypto can export this to the world? Like, export this governance style to Web 2? Am I hearing that correctly?

• 21:34Speaker 02

  If it works, well, we're about to see if it works, I guess. I think a lot of the issues that people take issue with in Web 2, or just the world more broadly, are issues with plutocracy. You have like, direct plutocracy, like Twitter shareholder voting. And then you have indirect plutocracy, where Twitter is governed by its shareholders. And then, you know, some countries' democracy maybe is secretly influenced by the stockholders of various companies lobbying for whatever. So we have a place for plutocracy. The economy of this digital city is still important. But our hypothesis is if we make explicit a place for plutocracy and a place for democracy,

• 22:16Speaker 02

  can, can we draw a cleaner line between the two, where you don't end up having this sneaky plutocracy? Maybe it'll work, maybe it won't. We'll see. We're gonna try, though. That's what Ethereum is for.

• 22:32David Hoffman?

  I think you guys can tell Carl's infectious optimism is why me and so many others have been brought into the fold of Ethereum back in 2017. And guys, there's just one more dynamic I want to drive home about this whole system, just to really, really illustrate this for the listeners. On one side, on the token side, we have this fungible token that is freely tradable and has a market price. On the other side of the spectrum, we have a non-fungible token that is soulbound, as in fixed to the address. These are couldn't be more opposite sides of the spectrum. One side, token, probably going to be on all the DEXs, it's going to be freely tradable, it's going to have a market price. On the other side of the things, we have ERC 721 tokens, maybe it's

• 23:15David Hoffman?

  721, that is frozen inside of the specific Ethereum address of specifically known people. And this like clear barbell, just like pushing out things to the periphery of the possibilities of token designs, I think is really interesting. And something in your guys' blog post that has stuck with me is balancing the short-term and long-term incentives of the system. Can you guys talk about how these two token models, optimizing for two completely different things, balance the short-terms and long-term incentives of the system?

• 23:46Speaker 04

  Sure.

• 23:49Speaker 02

  Yeah, this is, this is kind of what we were trying to examine when looking at how plutocratic systems have shaped out. You have Facebook, for example, making all of these decisions that are great for profit in the short term, but have damaged its reputation, its user base, its just like general ability to succeed sustainably. And if we, if we assume that the token holders of optimism can be modeled similarly to Facebook shareholders, then we want a separate house of people who are more aligned with the long-term interests of the protocol. And so instead of investing capital in the protocol, we want to give these

• 24:33Speaker 02

  non-fungible tokens to people who have invested time, energy, reputation, things beyond capital.

• 24:43Speaker 03

  And there are like fundamental differences between these different kinds of, you know, assets that we're talking about and all of the, you know, systems that we're discussing. But like this, you know, we can look in the real world to see where,

• 25:00Speaker 03

  where identity is sorely needed. And so that is, you know, we had to add in the citizens house.

• 25:06David Hoffman?

  Of course, and you guys are experimenting with this brand new system of governments, which makes sense to me. It seems to pull from history from to model out governance structures, but also use the advantages of a liquid democracy structure that one would find with crypto networks and with smart contracts and with tokens that are permissionlessly and uncensorably available across the internet. And if this goes well, this governance structure can be exported to the rest of Ethereum, all of the layer twos, and hopefully the rest of crypto, because the rest of crypto kind of needs it. And this is hopefully the value add that this governance model can export to the rest of the ecosystem. And that is something that has always drawn me to optimism is its commitment to exporting its innovations

• 25:49David Hoffman?

  towards the rest of the ecosystem. And that is also relevant when we discuss public goods and retroactive public goods funding later in the show. First, though, I want to talk about this very funnily titled section of the announcement titled, "Check out my only F," or excuse me, excuse me, I messed that up. "Check out my OF," as in my, the Optimism Foundation. What is the Optimism Foundation? And what should we be checking out?

• 26:15Speaker 02

  Honestly, we did make an OnlyFans account about a year ago. We were going to expose our testnet endpoints on the OnlyFans account, but.

• 26:25David Hoffman?

  Is that a true story?

• 26:27Speaker 02

  It is a true story. Yeah.

• 26:31Speaker 02

  Maybe we'll put. Node setup information on...

• 26:37Speaker 02

  Anyways, the Optimism Foundation is a steward of the community. It's organizing governance experiments, building up the collective, bootshopping the ecosystem. So if you think of what was previously Optimism PBC, which is now OP Labs, as like the technical right-hand executing on creating the best fucking protocol ever, and then the foundation is building out the ecosystem, it's the go-to-market, it's funding teams external to the PBC to build out other pillars of infrastructure.

• 27:15Ryan Sean Adams?

  That's cool. And so this, the Optimism Foundation is, Carl, you were talking about earlier, that's kind of the bridge-type organization to get us to this fully decentralized system? Okay, so I have some questions about this. So I think people like want to know what it's going to take to be a citizen. So that sounds awesome. I want to become a citizen in the citizen house of optimism. I want my soul-bound NFT. And by the way, again, just for people, if that's a new term, we talked about it twice. I feel like David kind of defined it. But that's an NFT that gets distributed to, say, an optimism address, a public key of some sort, and it can't be moved. So it can't be transferred, can't be sold to the highest bidder.

• 27:59Ryan Sean Adams?

  It is stuck there in place. So it's sort of matching one ETH address, one individual. How do you distribute something like this? How does someone become a citizen in the citizen house?

• 28:11Speaker 03

  That is a great question. So this is the subject of a large portion of our governance experiments. So I'm going to be relatively high-level, but it's going to be iterated on and kind of fleshed out over time. However, the rough intuition for how to become a citizen is to get involved with the optimism community, right? If you move to a city, you are a citizen of that city, right? You live in there, you're in a neighborhood, and you're going about your daily life. If you come to optimism, oftentimes you're going to be a part of a various, you know, different optimism communities, right? There are these, you know, different pockets of optimism

• 28:52Speaker 03

  users with different interests and different friend groups. So you move into a neighborhood within optimism. And we call these different neighborhoods, quote, like opcos. So they're like optimism communities, or, you know, companies, or, you know, whatever. And so we are going to be, at least for our next experiment, allowing these different communities to distribute citizens to all of the people who are within their community. And those citizens will now have these soulbound NFTs. And maybe we can even make it so that citizens give to other citizens. So at a high level, if you know something called a web of trust, what we're going to be doing is we're seeding the web of trust on-chain with the most active, you know, optimism communities, opcos, and then

• 29:36Speaker 03

  we, they will distribute their citizens. And we can, in the long term, have some kind of dispute mechanism to make sure that one citizen is one identity as opposed to one identity having five citizens, citizenships.

• 29:49Ryan Sean Adams?

  So there are some difficult, like, problems to solve here, right? Which is like the big problem facing all of cryptos. How do we actually recognize individuals? How do we solve the decentralized identity problem? That's not something that we're going to be able to solve overnight, is it? So what are the first steps of this? Is it mostly manual web of trust style? And then hopefully, over time, as we develop better protocols for decentralized identity, optimism would begin implementing that across its city?

• 30:17Speaker 03

  Yes, absolutely. So it is going to start out with a kind of seed trust. Because in reality, right, if you, you need to, you need to start somewhere when it comes to identity systems in these webs of trust. So you start out with that little seed, and then you grow it over time. And so we're just going to be naturally growing this community. Yeah, it may start out as, you know, a few hundred, maybe a few thousand, but, you know, we can, I could absolutely imagine this thing getting to 100,000 citizens, a million citizens, 300, you know, 300 million citizens, whatever, right? Like, this is, we're talking internet-scale identity systems that we're going to all be, you know, existing in. And of course, very importantly, not only is the identity system important, but privacy preserving. It needs to be privacy preserving.

• 31:03David Hoffman?

  In the article that I put out on Bankless yesterday, I talked about how Ethereum seems to be developing in all directions at once. And so, as you guys are pioneering the world of Layer 2s and Layer 2 governance, other people are pioneering in the ways of decentralized identity. And as soon as they figure that out, you guys can plug that right into the identity system, but they gotta figure that out first. And of course, that is an area of active development of Ethereum. Jane, do you want to say something before I ask my next question?

• 31:31Speaker 02

  Yeah, I was just gonna say that we're a generalized scaling solution, and there's many kinds of projects that have different kinds of users. So, when thinking about how to distribute citizenship, or what kinds of behaviors to value, or even how to distribute tokens, we decided that it was really best left up to the projects themselves. If we prioritize something like TVL, then projects like AVE may have far greater preference over projects like Perpetual. If we prioritize transactions than the other way around. And so, each project itself knows what they themselves need to do to garner usage on their own applications. And same with the citizenships. Each project knows which of

• 32:13Speaker 02

  their community members would best represent the community's interests in the greater optimism governance.

• 32:20David Hoffman?

  And the way that I've modeled this out of my head, I understand this in my head, is Uniswap had this fantastic opportunity of pioneering the retroactive airdrop. But as an ecosystem, we only have one bullet in the chamber for the good, untainted retroactive airdrop. So continuing to do retroactive airdrops, you know, people have been doing activity on all the Layer 2s for a while now, farming the retroactive airdrop. And so we know that instead of doing retroactive airdrops, we need to have proactive, community-oriented, community-led decisions, where the legitimacy and the neutrality of these token distributions is up to the community. And so, this will be a little teaser for what's going on in the second half of the show, but there's just not one airdrop. There are multiple

• 33:05David Hoffman?

  airdrops. So if the people who are checking their account balances right now are not satisfied with the number that they see, there are things that you can do.

• 33:13Speaker 02

  They better be fucking satisfied.

• 33:14David Hoffman?

  There are things that you can do.

• 33:17Speaker 02

  It's free money.

• 33:19David Hoffman?

  It's a fantastic point, but there are going to be things that people can do to work for the protocol if the community deems it legitimate. Guys, I want to keep on going on this topic of unpacking the optimism foundation, right? And so I think a lot of long-term listeners will remember the Maker Foundation, which was this semi-centralized entity, centralized for a while, that eventually dissolved into what is currently the Maker Dow. And this is probably the right framing, but there is an extra step here where we have the Optimism Public Benefits Corporation, the newly spawned Optimism Foundation, and also the newly spawned Optimism Citizens House of the Optimism Collective. Can you guys talk about how these things relate to each other and how responsibility

• 34:03David Hoffman?

  is being oriented from one organization to the next and how this goes into the future?

• 34:12Speaker 02

  Yeah, I mean, we're, oh, sorry. Oh, okay. I mean, we're still figuring everything out. We have some incredible board members who've done this before. Among the board members is Eva Baylin, who's the executive director of the Graff Foundation, Abby Titcomb, who's on the board of the Radical Foundation, and Brian Avella, who's a general counsel to the Maker Dow Foundation. So he's seen those governance experiments through their highs and lows and all the way eventually till dissolution. I think for now, we're just focused on doing the best we can to grow the ecosystem and grow it sustainably.

• 34:53Speaker 02

  I think it would be really awesome one day if we had a structure similar to Maker Dow, where they really are operating in decentralization nirvana. But it took them a decade to get there, and I imagine it'll take us a similar amount of time.

• 35:10David Hoffman?

  Okay, so what is happening to the current Optimism Public Benefits Corporation? The corporation that up until recently Jing and Ben were a part of, but no longer? What's the long-term fate of that?

• 35:23Speaker 02

  Same. I think that we're all, I mean, what is a company? It's just like a temporary vessel to organize people, payroll, equity, compensation, to organize towards a singular mission. Right now, we're envisioning the split of responsibilities as the OP Labs PBC is focused on the engineering roadmap, the direction of the protocol. So Carl's still the CTO there, and Liam Horn, fucking Chad, is now the new CEO of OP Labs. He was formerly the CEO of L4, which was the sort of like premier state channels development company in Ethereum, if you guys remember his prior work.

• 36:04Speaker 02

  He's also a co-founder of ETH Global, which completely changed the game of how new founders enter crypto. Ben and I at the foundation, we're going to be focused on more high-level direction-setting, governance, grant-making, things like that. Imagine like an aggressive EF.

• 36:30David Hoffman?

  An aggressive EF is music to my ears, Jing. Okay, so just to, here's how I understand this. The Optimism PBC renamed to the Optimism Labs is the protocol side of optimism development. The citizens and the token holders, they're great, but the protocol specialists are the protocol specialists, and you can't replace those. So those are going to Optimism Labs. You guys, Jing and Ben, are going to Optimism Foundation, along with some other key members in the community that were not previously a part of the optimism team, members like Ava and Abby and Brian. And so you guys are joining other people and kind of also diluting the previous membership

• 37:13David Hoffman?

  of Optimism PBC with the creation of Optimism Foundation, with other members, other leaders of the community who have done this sort of thing before. And then we also have the Optimism Token House, the on-chain version of this whole thing, as in eventually the Optimism Foundation will slowly morph as we solve identity into the optimism collective, the citizen house of the optimism collective. And is that the whole roadmap for this whole thing? That's the decentralization path of optimism?

• 37:46Speaker 04

  Pretty good summary, pretty good summary. Two, two small things I would add. One, OP Labs, not Optimism Labs. Another, another one that I would add is, um, one thing that you mentioned is that the protocol experts are the protocol experts. So that is something I very much agree with and I would push back on. So it's definitely the case that the group of, you know, almost forty incredible protocol experts and, you know, executives that we've put together, um, at the PBC are definitely incredible intact cohesive group. And it's amazing to see them like run as a unit. It is also the case though, that we need to decentralize the development of protocols as we go forward too. And especially for an approach like us, which is all centered

• 38:28Speaker 04

  around EVM equivalents, which says that anybody who's participating in the Ethereum stack at large should be able to participate in the optimism stack. It is important to have the protocol development that moves beyond just one single organization. So part of, you know, a key responsibility of the citizens is going to be distributing public goods funding retroactively to the people that are building these important Ethereum protocols. And that need not just be, you know, OP Labs. That's like a big community, right? There's so many, so many important people in that ecosystem that should be rewarded.

• 39:01David Hoffman?

  Awesome. I think that this makes a ton of sense as a path towards decentralization of optimism, of course. All right, guys and Bankless listeners, that was all the vegetables, I'd say. But coming up in a second, we gotta get to the candy. We gotta get to the dessert. So we gotta talk about the token. Who got the token? How was the token distributed? What is the token even called? Uh, and also the future for the future airdrops of the optimism token, because this was airdrop number one going out today, but airdrops two, three, four plus are also on the menu. And that menu is the candy, the dessert, which is coming next, right after we get to some of these fantastic sponsors that make the show possible. Aave is the leading decentralized liquidity protocol.

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• 42:14David Hoffman?

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• 42:25Ryan Sean Adams?

  Hey guys, welcome back. We are here with the optimism team, having some fun during the break. You know, what's also going to be fun is token talk. So in this post, you guys also announced, of course, we're talking about both houses. One of these houses is the citizens' house, the other is the token house. So with the token house, of course, there must be a token associated with it. And so I believe there has been the announcement of the release of the token. Can you talk about the token itself? Also an airdrop, okay, airdrop number one. What are some of the high level details that that people should know about here, Carl?

• 43:05Speaker 03

  Alrighty, so airdrop number one, we took, we took, we thought really hard. How are we going to make this airdrop super fair, like actually fair, like give it to the people, you know, that kind of fair, give it to as many people as possible. We wanted to make it a wide distribution. So the way that we did this is we came up with, oh, thank you, now I don't have to read it from my phone. No, just kidding. Anyway.

• 43:33Speaker 03

  The way that we did this was we said, okay, let's take five categories, I believe, six categories, five, six categories, where each category representing a different like Ethereum behavior that we wanted to see and that would identify people that, you know, definitely either they're in the optimism community or we know that they should be in the optimism community. So how did this work out? Well, of course, we were going to give to optimism. Users, that's users that, you know, used optimism like one time. They may have gone in, checked something out and left. But then we also decided, okay, let's actually give more to repeat optimism users.

• 44:14Speaker 03

  Now notably, if you are an optimism user, you're also a repeat optimism user. So you get both of those airdrops. That's the sum of those two. Or, oh whoops, yes, the other way around. LOL. Great. So those are the optimism side of things. But then we said, okay, let's get the Ethereum users as well. So we said, okay, DAO voters, that's, you know, people who use different DAOs. Multi-sig signers, we know them, they are, you know, the power users of Ethereum. And Gitcoin donors, that's the kind of, you know, public goods ecosystem focused people that we know build a strong community that is long-term sustainable. As well as people.

• 44:53David Hoffman?

  Wait, Gitcoin donators who donated to optimism? Or Gitcoin donators across the board?

• 44:58Speaker 03

  Gitcoin donators across the board on L1. Now notably, that does not include folks on ZK sync, which, you know, we'll, we'll, we'll see.

• 45:08Speaker 03

  Anyway, the, um, the priced out of ETH is another one where we said, okay, if people are on Ethereum and they use bridges, that means that they're kind of like exploring the Layer 2 ecosystem, they're exploring various alternatives. Maybe they need lower fees. And those are the kinds of people that can come to optimism because we got low fees for you. So the fun thing, this gets a little bit more fun. So if you get two of these categories, then you get, you know, uh, category A, the payout there, plus the category B, the payout there. But if you get four, five, or even six of these categories, then you start getting bonuses, major bonuses, and they are pretty significant. Now, just if you are like, oh man, I'm an optimism user.

• 45:50Speaker 03

  I really want to, you know, get, I should get tons of bonuses. Well, you do because you're automatically qualified, right? You're a repeat optimism user, you got two of those bonuses already. Makes it a lot easier for you to get the rest of the four. So anyway, um, yeah, give to the optimism users, give to the Ethereum community, give to everybody, everyone's happy.

• 46:09Speaker 02

  Well, the initial airdrop is also what seeds who can vote in governance. So we thought, what kind of person do we want to have making decisions on behalf of the protocol? And so it was people who care about scalability, but still care about Ethereum, so those who've been priced out, people who give a fuck about our values. So people who donate to public goods like Gitcoin, people who are entrusted with community treasuries like multi-sig signers, or people who voted in other governance projects before. And then finally, people who give a fuck about us, people who've used us, the OGs, as well as the newer people who've entered the system.

• 46:53Ryan Sean Adams?

  I did, one of my favorite categories here, Jing, is that actually that last one priced out of ETH, because it's kind of an answer to the like, a lot of the debate, maybe the FUD, maybe the angst, the anger coming from users who like felt priced out, that ETH is only a whale chain, sort of people, and to the extent that's true. And here's optimism also rewarding that group. If you bridge to Polygon, Gnosis Chain, Arbitrum, Solana, you're priced out of ETH, here's some governance, here's some responsibility for you, welcome to the city.

• 47:29Speaker 02

  Yeah, I've got to give a shout out to Framework, one of our investors, for helping us with that one. We were thinking about maybe people who've used a lot of, like, big gas guzzlers, but you're right, that prioritizes whales.

• 47:44David Hoffman?

  Guys, I want to also talk about the holistic distribution. So that was the tokens for the particular users who have engaged in particular activities, but there's also just the greater distribution of the token at large. And so I'm going to ask Ryan to pull up this graphic that I just sent him in Zoom, which talks about the token allocation across retroactive public goods funders, the ecosystem fund, the airdrops, the sugar zaddies, AKA investors, and also the core contributors. And so can we talk about the total supply of tokens that were given out to users right now? As in airdrop number one, the one that everyone is clamoring about, the one that everyone is checking their addresses to see how much they got?

• 48:26David Hoffman?

  How much of the total token supply was given out in airdrop number one?

• 48:30Speaker 02

  5%.

• 48:32David Hoffman?

  And is that going to be the way it is for future airdrops? Or how is that determined?

• 48:37Speaker 02

  I think a lot of it is, so we have a pretty big chunk allocated to projects for them to distribute to their users. We have a whole thing we're gonna announce with a fancy shit. And then for user airdrops, I think we just wanna see what happens after the first airdrop, see if these are the kinds of people that are making good decisions in governance. Are they creating more activity? Do they care? Should we adjust the parameters anyhow? We'll see. But that entire chunk of the pie chart is for the users.

• 49:12David Hoffman?

  Okay, it looks like 19% total percent of the token supply of optimism is going to be airdropped to users, including the 5%. So there's 14% left. 5% got airdropped today, not yet claimable. 14% is left for future airdrops. Some going to the apps on optimism, perhaps apps like Synthetix and Lyra that have been there for a long time, perhaps future apps, perhaps future users. I think it might be up to governance? Is that right? Who determines the allocation of future airdrops?

• 49:46Speaker 02

  A lot of it will be up to governance. The foundation will do analytics, write up proposals, but it's up to the governance to decide. We, I mean, the token is a governance token. This is ownership in the protocol. It's not an instrument for speculation. It's literal ownership. And so we wanna be careful about, or at least intentional about how these future airdrops are distributed. So we don't know today what that will look like.

• 50:16Speaker 04

  Yeah, I think, and the name of the game here is like iteration, right? There is no way in which you can do the perfect thing once and it all go right, especially for something as ambitious and bold as is deemed necessary by this mass migration to L2 that's going on. Like, we have huge lofty goals, and to fulfill them, we need to be able to iterate and improve on things. And so, yeah, maybe it's a little untantilizing because people wanna know when airdrop 2, when airdrop 3, when airdrop 4, but that's not how we do things here. We iterate.

• 50:49Speaker 02

  I think the question to, like, who will be included in airdrop 2, 3, 4? My teammates might get mad at me for saying this, but we're trying to create, again, this like... Body of citizens that give many fucks about the protocol. So if you think about equity as at a company, who do you give equity to? You give equity to new entrants into the system. So that's airdrop number one. You give performance bonus increases to people who've been performing really well. People who are aligned with the values of the collective that are doing things that contribute to the goodness of the whole. So don't spin up your bots. We're weeding actively bot behavior out.

• 51:34Speaker 02

  Focus on finding your niche, your pocket of projects or communities with an optimism that you want to contribute to and make some legitimate, organic contributions.

• 51:44Speaker 03

  Yeah, and the part of this is about having many different governance mechanisms, which are all distributing tokens and making sure that every kind of corner is caught, right? As you said before, the original kind of OG Uniswap airdrop took the crypto by storm, crypto by storm, and really changed the game for how, you know, how people interact with airdrops and made people started farming and it's kind of crazy. You go on Discord and there's like 50 million people in your Discord office space or something and really it's five people with a bajillion bots, right? It is gnarly out there. But you know what? You know what that says?

• 52:28Speaker 03

  That says that there is latent productive energy that people want to get involved and be in the community and contribute. They want to give by creating tons of bots. But soon, they will be able to give not by creating tons of bots, but by creating tons of public goods, right? This entire mechanism is based around a new form of internet ownership, governance, etc. That is wide scale, that is wide, everyone can participate, everyone can get involved, and incentivizes productive, pro-social, happy-for-everybody behavior.

• 53:05David Hoffman?

  Love it, guys. Okay, so that was the 19% of the airdrop supply of the total pie chart. But we got a lot of that pie chart left to cover. Yeah, was that math? 71%? I'm bad at math. 81%. 19% in addition to the 19% going to the users, there's 19 more percent going to the core contributors. Who are they?

• 53:29Speaker 04

  That's us. That's Optimism Equity holders.

• 53:31David Hoffman?

  Love it. Okay, people on the Optimism team, people that founded Optimism, employees of Optimism. Okay, also, retroactive public goods funding, a whopping 20%, the second largest supply of the token supply going to retroactive public goods funding. What's that?

• 53:48Speaker 04

  Okay, so retroactive public goods funding is a whole nother podcast that I don't know if we've done yet, but we should do, right? But there's so much to go over here. It's something that we've worked on with Vitalik and with others, and it put a lot of iteration into figuring out what this thing is. In a nutshell, I think very core to our story over the past, you know, several years now, has been trying to figure out, basically, how to avoid these incentives of Web 2 all over again, right? So one of the things that is pretty unique to Optimism, that we've fought really hard for it every step of the way, is that everything that we do be open sourced, right? We do not sit here and write a bunch of code behind closed doors and license it up. Everything we do is MIT

• 54:31Speaker 04

  license, it's EVM equivalent, it's free to use and free to contribute to. The reality is that we're in a fortunate position to have been able to do that, but it does not come without its challenges. And so a core mission for us is to make creating public goods profitable, right? And the model that we have for this is called retroactive public goods funding. So you can read, you know, a lot about this. Maybe I'll give a summary. Does that make sense?

• 54:59David Hoffman?

  Sure, yeah. Well, actually, no, we're gonna save that retroactive public goods funding for the very end, because I'm also super hyped about it. And we're also gonna quickly talk about EVM equivalents. So that was retroactive public goods funding. Again, 19% for the user airdrop, 19% for the core contributor, the Optimism founders and equity holders and employees, 20% for retroactive public goods funding to pioneer the Star Trek future that's coming. That's what that means to me. And then, okay, ecosystem fund, 25%. That is the biggest chunk of this whole entire pie chart. Ecosystem fund, what is that?

• 55:33Speaker 04

  You want to talk about it? You want me to? So, ecosystem fund is partially about growth, right? So, there's a few different things that are going on here. And truthfully, there was so much information to get out that we have a whole blog post on a lot of this planned for next week that we'll talk more about this. But I think the important things to understand is that, of course, you do want to incentivize the growth on the network, and there's different components here that will help us do that. Some of that is for the optimism foundation and for us to do as basically business development. A big chunk of it is for the governance systems to be doing, and some of it is also to start seeding new things on optimism. So, not just growing things that already exist, but bringing new things onto the platform.

• 56:17Speaker 04

  Because the reality is, when you open up a system like L2 that really, really, really scales, you're going to have new things that you just couldn't do on L1. And so, it doesn't make sense to just liquidity mine a bunch of forks that go onto optimism because fundamentally, L2 unlocks new things to be done. And so, we have to incentivize that a little differently. So, yeah, there's a lot to be said here. We're going to have a whole post on this next week that talks a little bit about it more, but it's all very exciting stuff.

• 56:42David Hoffman?

  And I think this is a good time to remind the listeners, the viewers who are watching the livestream, that there is an AMA happening right after this to pick the brains of the panelists that you guys see here. All right, guys, very, very last section, Sugarzatties, the investors, 17%. Pretty sure that's just Chris Dixon at A16Z, maybe Vance Spencer from Framework and a few other VCs. Anything else we talked about there?

• 57:05Speaker 04

  Paradigms, child laborers. No, I'm just kidding.

• 57:07David Hoffman?

  Paradigm as well. Okay, all right, that is the complete 100% distribution of the OP token as it stands today. Thank you, guys, for letting us, for walking us through that. And of course, now I do want to get to retroactive public goods funding and EVM equivalents, the thing that really is the cherry on the cake that excites me the most. The way that I've explained retroactive public goods funding, the model I have it for my head, in my head, is if we have some sort of capital, if we've got money on our hands, we can wad up that money into a ball and chuck it into the future, and you make people go and build for it. And of course, in the same way that we are using governance to iteratively determine

• 57:48David Hoffman?

  the future airdrops, we can also use governance to iteratively determine who gets that money of cash. And the idea of chucking it into the future is a model for illustrating how you are giving assurances to people who are interested in public goods, interested in building public goods, but haven't been given the assurances that they will actually get money from doing this. And this is the novel mechanism that what you guys said pioneered with Vitalik and the optimism team and what is really is unique to the optimism ethos that I really get excited about. How do you guys like that metaphor of chucking money into the future to give assurances that people can actually build something? How does that land with you guys and what would you add to that?

• 58:30Speaker 04

  It is a great analogy. It's hilarious one that we haven't... It's interesting, the retroactive does not make me think of throwing into the future, but I get it and so it makes sense.

• 58:38David Hoffman?

  In the future, it will be retroactive.

• 58:41Speaker 04

  Right, exactly, right. And it's true. And that basically speaks to something that we talk about a lot with RPGF, which is that you need assurances as to what is going to be funded in the future, right? You're not going to do it super blindly. You don't want to do it without some sort of guidance. I think the addition that I would make here is that if you throw a bunch of money into the future, it won't just be people that are going to build public goods that will follow it. There are also investors that want to follow it. And so if you look at what current public funding models are, they're basically grants, right, which is basically chucking money at someone now and telling them to work into the future to do it, right? But the problem is that grants are not a great way of allocating resources.

• 59:23Speaker 04

  There's lots of problems with them. It's hard for a centralized grant given entity to figure it out. And prediction is just in general, an incredibly, incredibly challenging problem. So part of the long-term vision for how retroactive public goods funding goes is that you allow there to be a market, right? So you basically say, okay, it's too hard for us to figure out how public goods should, you know, get grants upfront. We can figure it out after. That's a much easier problem. But also the people probably want to be paid now, right? Some of these people, you know, need a salary. And so the idea is that you defer that part of the problem to a much more efficient mechanism, the marketplace. And so we imagine a world in which you can literally invest in a public goods project

• 1:00:05Speaker 04

  that you believe will have an impact, that will get them money now to create that public good, and you will all get money retroactively in the future.

• 1:00:13Speaker 02

  Maybe.

• 1:00:15Speaker 04

  If that pays off.

• 1:00:17David Hoffman?

  If you are deemed to have provided utility to the ecosystem by the community.

• 1:00:22Speaker 04

  Yes. Oh, Carl, Carl, can you say the word, the equation?

• 1:00:24Speaker 03

  Oh, of course, of course. So I mean, impact equals profit, right? We want to make positive impact to the collective result in profit to the individual, right? That means that if I do something good, that it comes back to me. And it's really, it's as simple as like a kind of fundamental principle of reciprocity, being something that is good for everyone. You don't want to live in a world where everyone's cutthroat, you know, backstabbing each other. Guess what? We're not going to get anywhere in that world. We want to live in a world where we are working together and we know that we will be recognized for our positive impact. Why is that good? Because when I make a positive impact to the world, everyone benefits. It raises all boats, right? We are in this together fundamentally.

• 1:01:09Speaker 03

  We are social creatures, and so we have to raise ourselves up. And we can do this in a bottom-up, like decentralized way. It doesn't have to be this top-down, like, ah, you get, you know, this. No, this is an allocation that comes from us to, back to ourselves. It's an investment in ourselves as a decentralized ecosystem.

• 1:01:29David Hoffman?

  So we started off this whole show talking about losing, just dropping the incentives of Web 2 and recreating human incentives in Web 3. Is this really the key unlock to getting that done, retroactive public goods funding?

• 1:01:44Speaker 02

  First, I wanted to mention that this is not a novel mechanism that we pioneered. It's been talked about by many people for a long time. We're just experimenting with it.

• 1:01:55Speaker 02

  It's one of many mechanisms that we're thinking through. And I think the path for experimentation on retroactive public goods funding, retroPGF, is the most clear. The hypothesis is people invest in venture capital because of the possibility of an exit. And so if we provide the exit for a not-for-profit project, then the whole ecosystem that's been built around startups generally would also exist for nonprofit startups. I think that this is important to the Web3 ethos. Everything that we use has been built by open-source teams. We used to be a nonprofit.

• 1:02:38Speaker 02

  It was really difficult to operate because you might get a big grant check this year. You don't know if you're going to get it next year. Sometimes with researching on like net new technologies, you don't know when the research is going to be done. You don't know when the deadline is. And it's also really difficult to recruit talent. Even people who don't give fucks about getting rich do give fucks about fairness. And they want at least some share in the upside that they are creating for this massive ecosystem. So if we want the brilliant people, like the people in the Geth team, the people who built Hardhat, Ether is JS,

• 1:03:21Speaker 02

  to also do the same for the optimism ecosystem, then we would want them to be rewarded appropriately.

• 1:03:29David Hoffman?

  And the idea here is the sheer innovation power of Silicon Valley. What if we could redirect that into building out public goods? And I'm pretty sure I just heard Kevin Iwaki somewhere say the words, "Public goods are goods." I'm pretty sure that's what he just said.

• 1:03:47Speaker 02

  True, that's true.

• 1:03:49David Hoffman?

  And the idea here is we can take the upside opportunity that everyone is so often chasing in this world of crypto and redirecting that into, again, what Kevin Wawaki calls regen finance. So instead of being degens, we can naturally turn them into regenerative finance, allowing our degeneracy to fund public goods for a more sustainable future. But there's one element left to talk about, and there's a graphic that is, I really, really love that you guys put in your tweet thread, talking about the cycle of positive feedback loop of retroactive public goods funding, but also what is something we have not yet talked about, which is the demand for optimism block space.

• 1:04:32David Hoffman?

  And so it's something I wrote forever ago, was an article titled "How Transaction Ordering Can Save Humanity." It was just when I was just beginning to wrap my head around what the hell you guys were up to. And the idea is that we can use demand for block space. As we all know, here's, okay, here's the meme about, that I actually came up with this morning, because as I was preparing for the show. "Ether is a great currency. I think it's, hope potentially, the next currency for the world. Currency and money is a great public good, and when demand for Ethereum block space gets turned into burning ether and making it more scarce, making it a better money, the whole world benefits.

• 1:05:11David Hoffman?

  Optimism, when demand for optimism block space occurs, that turns into funding for retroactive public goods funding. So we can have more wads of cash, throwing more cash into the future to incentivize public goods funding, and that makes optimism, the layer two, a more fun place to be. Nation-states that have good roads, good bridges, good airports, good plumbing, good telecommunications, they are just pleasant countries to live in. They have good public goods, they have good resources, and that makes it easier to innovate and develop on, in these countries. In the same way with layer twos, as we talked about earlier, the layer twos are states. And if we can fund our infrastructure to be better and more pleasant, that makes that

• 1:05:56David Hoffman?

  place a more pleasant place to live." Increasing the block space for optimism layer two. And when there's more fees generated by the optimism layer two, that can go into more funding for public goods on optimism, generated by what you guys called MEVA, MEV auctions. MEV is a kind of a very dense subject. We don't have time to go into the MEV today in this show, but there's plenty of previous Bankless shows that we've done about that to understand MEV. Guys, did I summarize it all right? Is that kind of the virtuous cycle here?

• 1:06:31Speaker 04

  Very, very, very well summarized, both by yourself and this diagram, applause. I think the only thing we'd add, just because the MEV word can be a little, acronym can be a little scary for folks sometimes. This is not equivalent to you're going to get sandwiched to fund public goods. It's not the same thing as that. And in fact, one very important part of decentralizing the basically rights to control block space is that you want, and this is related to the long-term incentive alignment, is you want that block space to be good. So there are ways that you can structure an L2 that can basically afford different parties, like the sequencer, an ability to be extremely extractive. But don't believe the FUD if you hear that's going to happen on optimism,

• 1:07:15Speaker 04

  because long-term alignment means that you want something that isn't so extractive that it drives users away. Because in the long term, you don't just want a maximally extractive L2, you want a sustainable L2. So anyway, that's just a little bit more on the sustainability part of that to dispel any latent MEV FUD that you might hear. And it's all great stuff.

• 1:07:39David Hoffman?

  And just to tie this section off, something that I've been teasing a lot in my writing on Bankless on Monday and some of my Twitter activities, my mind has been invaded by this concept called EVM equivalence. And the idea here is that optimism has been working towards making not an EVM-compatible layer two, which is what people are used to, but an EVM-equivalent layer two. The nuance behind that is that it's just, it's the values and the actual Ethereum layer one starts to bleed into the layer two. The difference between the layer one and the layer two starts to blur. There's going to be a post I'm writing on Wednesday about this on the Bankless Newsletter to go into more detail. It's a very complex topic. It's been very challenging for me to understand.

• 1:08:21David Hoffman?

  But the difference is, is that the point is, is that the optimism layer two, because it's EVM equivalent, whenever it produces something good, whenever some public goods funding thing works, because of the equivalence, it is so easily transferable to the rest of Ethereum. It can go back to the layer one, it can go up to other layer twos. And so these public goods that optimism are generating via retroactive public goods funding and the things that these new Silicon Valley of the Web3 world build on optimism, they get immediately and freely transferable to the rest of the ecosystem. And that, guys, that is something I think is just so beautiful. And again, how I think that we go from where we are now, where we're going to be dominated by climate change and war,

• 1:09:06David Hoffman?

  to a Star Trek future. Any further comments? I guess I'm taking the show from you guys. Any further comments?

• 1:09:10Speaker 04

  You are. Save some for me, man. What the heck? No, I mean, you hit the nail on the head. I think, you know, the only thing that I could add to it is sort of how it relates to, you know, our journey at optimism. And I think basically, when we look back, it was not obvious at the time, but it's basically been a progressive journey towards the EVM equivalence. So we started out building Plasma, which was a layer two of Ethereum, so it was an extension, but it was a completely different codebase. It couldn't run a smart contract, so it didn't even make sense for it to be EVM equivalent, right? Then we moved to a rollup and we said, okay, we can finally run contracts. And we sort of partially used the Ethereum codebase, but we were not EVM equivalent. Time and time again, what we learned is that the public good of the Ethereum scaling,

• 1:09:55Speaker 04

  the Ethereum technology stack itself, things like the Ethereum virtual machine, and smart contracts, and the wallet tooling, and how developers, you know, write code. All of these things are being built up on top of Ethereum. And so staying EVM equivalent for us has been a revelation in basically contributing back to the public good that we're already building on top of in the first place. So yeah, you said it all. Maybe there's one last thing we can add.

• 1:10:22Speaker 04

  Shout out to EIP4844. So, one big way that we're contributing back right now is a new EIP that will cut call data costs way down. And what that means is it will cut rollup costs way, way, way down. So, shout out to EIP4844. This is going to be a huge deal, and we are making it happen. So, this is one of the biggest projects that we've ever done that is actually writing in an EVM equivalent codebase. It's writing on Geth, but it is not writing the Optimus L2. It is writing the L1 software. This is going to be a huge public good. It will help all rollups, and we're excited about it. Anything you want to add, Carl?

• 1:10:56Speaker 03

  Oh, first thing.

• 1:10:58Speaker 02

  We have continuously been lowering fees over the past year, and it's still not enough for people. So, why you should care about EIP4844 is that it reduces fees by two orders of magnitude. So, instead of fees on the order of magnitude of a dollar, it'll be cents. So, this also doesn't just benefit us, even though we're the ones that are developing it. This benefits all rollups, Optimistic and ZK alike.

• 1:11:29Speaker 03

  Yeah, and so, just to tie it back to the thing that we talked about originally, which is like the whole houses and like the whole governance system. What is this future internet thing that we want to live in? One key thing in the future is we need to preserve the right to exit. That means the right to fork, the right to take the code and repurpose it, right? We are not building the Optimism Collective so that, you know, the Optimism Collective can be the number one thing, even though, you know, it would be lovely if that happens, of course. But, we are building it so that humanity can take the code, take the things, and use it to move forward in general, right?

• 1:12:11Speaker 03

  Like, everything that we do is, it's about upgrading civilization, right? That's like at the end of the day. So, writing open source software, making it forkable, making it privacy preserving, all these things are protecting individual rights for the collective good. And so, that's, you know, that's why it's so important to be building EVM equivalent and working together to press, push forward the state of technology.

• 1:12:37Ryan Sean Adams?

  Well said. Upgrading humanity, upgrading civilization. Guys, I just have a just a couple just tie off questions as you're talking about. So this EIP 4844, okay, this is the new 1559, 1559 that we're excited about talking about for like years before it actually happened. Then it happened last August. How many years are we going to be talking about 4844? Do you guys have a tease on that? Is it going to be years or can this be measured in months? I'm not looking for like a hard forked date here, but I'm just trying to get a sense of when this EIP is coming in general, because we haven't talked about it on Bankless yet.

• 1:13:13Speaker 02

  We have to just respect the Ethereum governance process here. There's so many things that many, many people have been working on for a long time that need to happen. We are just trying to make or contribute what we can to the process, which is building out a prototype, proving that it works, getting it audited, so that whenever governance is ready to include 4844, there's no other obstacles.

• 1:13:38Ryan Sean Adams?

  Okay, amazing. Well, we are hopeful for that. We want to do a show all about that. You guys should come back for it. Carl, you wanted to add something, sorry.

• 1:13:44Speaker 03

  Oh, I was just gonna say that Vitalik designed EIP 4844 to be very, very, very minimal. So it's, it's, it's easy, you know?

• 1:13:51Ryan Sean Adams?

  Awesome. Good job. Easy, easy.

• 1:13:54Speaker 03

  Easy.

• 1:13:55Ryan Sean Adams?

  The other question that just sprung to mind for me, and in the first part of the show, it was super refreshing to hear you guys talk about the, the token house, the Capitol house, as like the, the plutocracy. Because I don't think that like, I don't think that any, like many other token ecosystems actually think of it. It's the quiet part that you don't say out loud. It is. And we've been saying out loud for a while.

• 1:14:20Speaker 02

  We say a little too much out loud.

• 1:14:22Ryan Sean Adams?

  I just, I think it's the right amount because you have to counteract the rest of the industry. When people talk, start talking about decentralized governance and it's token vote, I'm like, what the hell is, what do you mean decentralized governance, right? This is like, you know, capital equals vote. It's not quite decentralized. So I think that's super refreshing. But one thing I was curious about is like, if you're talking about a given governance proposal or something, and you've got the token house voting and then the citizen house voting, who has more weight? Or is it sort of 50/50, like plutocracy and citizens? How does that get divided for any single governance vote?

• 1:14:57Speaker 04

  Yeah, so of course, the goal is for these houses to be co-equal. So if you look at the diagram that we pulled up pretty early on in the collective, that contains like a, you know, our current working model for where the basically distribution of responsibility falls. So there's some things that are governed jointly by both houses. There's some things that are just the citizens' house, other things that are just the token house. In general, this is something that is going to require iteration, right? And that's why we have the foundation and that's why we have a constitution that very explicitly lays out a, you know, a practice of iteration and evolution. Because we're going to have to be tweaking those parameters, for sure.

• 1:15:34Ryan Sean Adams?

  Amazing. Well, thank you guys so much for joining us today. I think we probably have one last question to wrap this show up. And this is a really exciting day, I think, for the city of optimism, let's say, the state of optimism. It's, what's next? So what's happening next with optimism? Obviously, today's a big day.

• 1:15:53David Hoffman?

  AMA?

• 1:15:54Ryan Sean Adams?

  AMA is definitely happening like sequentially next. But after that, when I'm talking about like, long-term picture, it sounds like people can check their, whether they received airdrop one today. It sounds like the actual distribution of airdrop one, if I'm reading the post correctly, is going to happen sometime this quarter, in Q2. So sometime, call it May or June. And then, what happens after that?

• 1:16:20Speaker 04

  You want to take it?

• 1:16:23Speaker 02

  Sure. Well, we published a bunch of content today about what we said we're going to do. So we have to go and do all of the things that we published today. But generally, I think this is a good reminder to everyone that everything is in flux. It is still incredibly early. The product that you see today is one that's constantly being iterated upon. The experience today will be very different from the experience two years from now. So while we build out the governance and the collective and the ecosystem, we'll be continuously making the protocol more secure, more decentralized, making it cheaper and easier to use. So that's what's next. We've got some full plates.

• 1:17:05David Hoffman?

  Amazing. Well, that sounds like a layer two summer.

• 1:17:08Speaker 04

  Can I add one more thing? I'm cutting you off.

• 1:17:10David Hoffman?

  Go ahead.

• 1:17:10Speaker 04

  Okay, actually, two things. Okay, one, just three, four things, five things. Three things.

• 1:17:15David Hoffman?

  Just get them all out.

• 1:17:16Speaker 04

  One on the technical front, obviously, we have a path to decentralization on the like, you know, technical architectural side that we put out about a month ago. So I just wanted to take a second to show that. I just wanted to say one thing that Carl has really like absolutely pilled me on being like a very awesome thing that's going to be coming about in the next few years is basically the interactions between the optimism collective and, you know, and basically DAOs and communities within optimism, but also those beyond. So I think that this is something that really, we are just starting to scratch the surface with the sort of reemergence of DAOs in the forefront, is the interaction between these DAOs. So what I'm like personally, maybe one of the things I'm most excited for is to see the relationship between the optimism collective's governance and the governance systems both

• 1:18:01Speaker 04

  on it and within the broader Ethereum community. I think that's going to be really interesting to see some collective coordination, mutually beneficial things.

• 1:18:11David Hoffman?

  All right, guys. I think one last question for you guys. One last thing.

• 1:18:16David Hoffman?

  Are you feeling optimistic?

• 1:18:18Speaker 02

  Fuck, yes.

• 1:18:19Speaker 04

  Yes.

• 1:18:21Speaker 02

  I know chat told me not to swear, but very optimistic. Stay optimistic, y'all.

• 1:18:27David Hoffman?

  Awesome, guys. Thank you so much for coming on the show. You guys, again, the infectious energy of your whole team has proliferated out and made me plenty optimistic. And hopefully the viewers, the chat, the listeners are feeling a little bit more optimistic as well. Because while we are faced with some very large problems in this world, problems that seem to be outside of the scale of our current institutions to be able to handle, maybe, may, just maybe, we have a bright path forward that we can actually see. We actually see the steps. First, we get everyone onto layer two. We get the block rewards funding retroactive public goods. We make our networks better. And then those public goods, those retroactive

• 1:19:08David Hoffman?

  public goods go from being about Ethereum to about the whole world. And that is, that is something that I wake up every single day. I'm like, man, I don't actually have to be so bearish about the future of this world. So thank you, everyone on this panel for doing what you guys do, because it is a north star for me and I think a lot of us in the Ethereum community.

• 1:19:29Ryan Sean Adams?

  Thanks, guys. Love you, guys. Appreciate you, guys. Action items, of course, for Bankless listeners. One is you can get involved in the City of Optimism, become an optimism citizen. There are some clues dropped in the episode today. How to do that? You can also check your eligibility for AirDrop One. We'll include a link in the show notes. And finally, of course, the same team is doing a Twitter Spaces right after this show. So go along on Twitter. 30 minutes. It's going to happen in about 30 minutes or so. We'll have some other Bankless content on EVM equivalents this week. Of course, got to end with risks and disclaimers. So Dave and I have been so excited about this project. We are also advisors on the optimism project.

• 1:20:10Ryan Sean Adams?

  So full disclosure, when they invited us in, we were happy to accept. Very excited about what optimism is doing in the space, very aligned with values we share. But of course, as always, got to end with ETH is risky, crypto is risky, DeFi is. You could definitely lose what you put in, but we're headed west. Now, the west is on the L2. It's the frontier. It's not for everyone, but we're glad you're with us on the Bankless journey. Thanks a lot.

• 1:21:38Ryan Sean Adams?

  The.

• 1:23:48Ryan Sean Adams?

  The.