Crypto Community Expresses Discontent over Optimism’s Latest Project Funding Round

Many voices within the crypto community are criticizing Optimism for alleged missteps in selecting projects for distributing OP tokens.

Crypto Community Expresses Discontent over Optimism’s Latest Project Funding Round. Photo: Optimism

In addition to announcing the upgrade of Canyon to the mainnet on the morning of January 12, the layer-2 platform on Ethereum, Optimism (OP), also revealed the results of Round 3 of RetroPGF, a funding program for ecosystem projects in the form of OP tokens.

RetroPGF is a funding initiative created by Optimism to finance "public good" initiatives for the OP Stack protocol, Optimism Collective governance efforts, developer communities, and user experience enhancements. The results of RetroPGF are determined by 208 badgeholders, members of the Optimism Collective's Citizens’ House, rather than OP token holders within the Token House.

Optimism disclosed that Round 3 of RetroPGF allocated 30 million OP tokens (approximately $116 million USD) to 501 development teams and individuals contributing to the ecosystem. Thus, the third funding round has set new records in both the amount allocated and the number of projects funded, overshadowing the previous rounds in 2022 and 2023.

Among the 501 projects funded, 366 are first-time recipients, 112 received funding for the second time, and 23 have been present in all three rounds of RetroPGF.

However, the published list of grants has sparked significant controversy within the cryptocurrency community, suggesting another example of "group benefits" in decentralized governance.

Notably, BanklessDAO received funding across 12 geographical community branches, totaling over 116,200 OP tokens from RetroPGF Round 3, valued at more than $450,000 USD.

Some members of the crypto community commented that BanklessDAO did not have significant contributions deserving such a large grant, given the relatively low membership in each regional community branch. Several also pointed out that the project already has its own token and should use its own treasury funds for development purposes rather than seeking grants.

In November 2023, BanklessDAO had also proposed funding requests for its community branches on Arbitrum, amounting to 1.82 million ARB tokens.

Another less-known project named Zuzula received over 99,300 OP tokens (~$360,000 USD), but its website is currently inaccessible, and its Telegram community is set to private. Zuzula reportedly generated revenue by selling course tickets, accumulating $429,000 USD.

Moreover, critics argue that leading DEX platforms like Velodrome, Kwenta, Synthetix, Galxe, and Lyra, which have significantly contributed to Optimism in user acquisition and liquidity provision, received disproportionately low funding compared to their contributions.

Nevertheless, there are still project teams and individuals who are rightfully rewarded for their community contributions, including Protocol Guilde, on-chain detective ZachXBT, and blockchain security entities like Revoke Cash, Blockscout, and Otterscan.

Ethereum co-founder Vitalik Buterin, who has previously praised Optimism's governance model, also congratulated the success of RetroPGF Round 3 in furthering public good development activities for Optimism and Ethereum as a whole.