Token Engineering the Superchain
An Experiment in Promoting Adoption of Token Engineering
This article outlines a set of experiments that the Token Engineering Commons (TEC) will conduct in the second half of 2024 that focus on learning how to build demand for token engineering in a major web3 Layer 2 blockchain ecosystem.
Token Engineering Ecosystems
The TEC has thus far focused its grant making with a strict public goods filter. The research, education, tooling, and social infrastructure projects we’ve funded — through four Gitcoin Quadratic Funding rounds and our earlier direct grant making — are foundations for all to build on, and we will continue to support this work.
With that said, to realize its full potential, token engineering needs to be where the action is: building and operating web3 ecosystems. The TEC is now exploring how best to catalyze and accelerate that ecosystem adoption, and it starts with an experiment in Optimism and the Superchain.
Testing Changes to TEC’s Grant Programs
This experiment in spurring ecosystem adoption requires changes in the way the TEC’s grant program works. Our near-term goal is to test two primary changes:
Goal 1: Ecosystem Advocacy
Ongoing, direct funding of Superchain impact would quickly drain TEC resources. Instead, our efforts are better invested in advocating for small-scale shifts in Optimism’s funding to test ways that token engineering can contribute to the ecosystem’s development. The objectives of this advocacy work include: 1) building awareness of token engineering with delegates, badgeholders, and builders; and 2) catalyzing projects that demonstrate real impact.
Goal 2: Impact Evaluation
Optimism makes investments in ecosystem development guided by expected and actual impact. As with any grant program, the TEC’s impact happens indirectly through our grantees. To use a billiards analogy, the TEC directly impacts the cue ball (our funding decisions), which then hit “object balls” (grantees’ work), hopefully sinking them into the pockets (grantee impact).
The indirect nature of this impact makes it difficult to specify, in advance, exactly what form it will take. The best we can do is: 1) select good projects with a high likelihood of impact, and 2) support and provide incentives to grantees to plan, articulate, measure, and report on their impact. This is the basic feedback loop we plan to use to catalyze token engineering impact in the Superchain.
The Experiment
The following experiment starts in August and runs through 2024 as two grant rounds integrated into one unified $100K campaign. The TEC is investing $10K in the first round and $40K in the second, while Gitcoin is contributing $50K to the first round (by selecting the TEC as a Community Round for Gitcoin Grants #21).
Round 1: GG21 Quadratic Funding Round
We will run a Tunable Quadratic Funding (TQF) round on Gitcoin Grants 21 in August, with a few important modifications from previous TEC rounds:
- Superchain Impact: Admission to the round will require a high-level plan with a vision and short-term goals and milestones for catalyzing adoption of token engineering in the Superchain. Grantees must agree to participate in an impact evaluation process for the upcoming Retro Round (below).
- Superchain Voting Boosts: In addition to our current practice of using TQF to boost votes with token engineering expertise, this round will boost votes for Superchain stakeholders (badge holders, top delegates, and “trusted users”).
Round 2: TEC Retro
The retroactive funding round is currently slated for November and will use Gitcoin’s EasyRetro on Allo Protocol. It features:
- TQF Recipients: Only recipients of the August TQF round will be eligible.
- Superchain Impact: Retro awards will recognize progress against plans from Round 1 applications, broken into two milestones: 1) completion of an impact plan using Karma in early September; and 2) grantee-specified impact goals in late October.
- Two Badgeholder Groups: Awards will be decided by a panel of badgeholders with a mix of experience in token engineering and Superchain governance and stewardship.
Awareness Building in the Superchain
Over the course of this campaign, the TEC will be experimenting with building awareness of how token engineering can contribute to the trustworthiness of the Superchain. This work will start simply with events, community organizing, and communications aimed at explaining the field and highlighting the work of grantees to Superchain governors, stewards, builders, and other key stakeholders.
Grantee Incentives
To generate meaningful token engineering impact for the Superchain, we need to attract participation from high-performing teams, most of whom are quite busy. Funding from this campaign won’t fully offset the opportunity costs of shifting their work priorities. That is a good thing because we only want projects genuinely interested in working in the Superchain. Having said that, there are a few incentives that the TEC can use to catalyze their participation:
- Grants as Catalyst: Grants from this campaign can spark interest and help offset the opportunity costs of prioritizing this work.
- Visibility: Working together with the TEC, projects will have a better shot of growing visibility for their work in the Superchain.
- OP Retro: This campaign will catalyze impact that some grantees can use for Optimism Retro Funding (Round 7 in October focuses on dev tooling).
- Mission Requests: We plan to connect participating grantees with Optimism Mission Request opportunities that map to their expertise.
Risks, Challenges, and Learning
This campaign is not without its challenges and risks. The most obvious uncertainty revolves around the quality of participating projects, which the TEC can influence with the above plans but cannot control. Another risk is that we fail to attract additional funding from sponsors, which would reduce incentives for participation but not eliminate them for the reasons listed above. There are also some risks around the ability of grantees to generate meaningful impact in the relatively short period between the two grant rounds. We plan to work with grantees to keep their objectives achievable for the scope of this experiment. Finally, there are risks in being able to recruit enough badgeholders with expertise in token engineering and Optimism governance.
Any significant shift like this is sure to entail unanticipated challenges as well, which is why the TEC is treating this work as an experiment. By the end of the year, we should know a lot more about what is required to catalyze adoption of token engineering and measure its impact in a specific ecosystem. Throughout this process, we intend to be transparent with what we learn–both the good and the bad–by sharing our results through follow-on articles and through the TEC forum.
We are excited about the long-term potential for a symbiotic relationship between the token engineering and Superchain communities. Both can benefit greatly from each other, and we hope this plan can help build those relationships.
This plan was developed by Jade, Bear, Monika, and Gideon. It has gone through a TEC Advice Process with feedback from: Nate and Efra (from the TEC), Griff (former TEC steward and now advisor, founder, Giveth, Commons Stack, General Magic and more), Tamara (former TEC steward and now advisor, founder Commons Stack), Sejal (Grants Innovation at Gitcoin), and Sov (Cartographer’s Syndicate and head of grants at Gitcoin). Thank you to everyone who contributed.
This post was written by Gideon.
