Currently, there’s no monetary policy proposal type. So, this is not a proposal, but rather a conversation starter about some serious issues.

This has been completely centralized, as decided by Optimism Foundation. The projections offered at genesis have not been honoured, and current projections 6 are also vague. Confidence in tokens or anything of economic value is derived from predictability and stability - which has been completely undermined in the name of experimentation. There’s billions of dollars at play here, we need to take things more seriously. The entire handling of $OP distribution has been haphazard. I believe $OP can do better with decentralized community checks and balances, and thus there should be monetary policy proposal types.

While there are many errors and problems with the policy, the most obvious issue is - the RetroPGF allocation. I’ve discussed burning it in the past 3, so let’s revisit that topic. As per initial projections announced at genesis, 100% of the RetroPGF (along with Ecosystem Fund) was intended to be allocated by the end of Year 4:

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However, after nearly 2 years in, only 40 million, or ~4.7% would have been distributed. Current projections 6 are radically different [please see Erratum below, the next figures are wrong], calling for only 140 million OP to be distributed by the end of year 5. This is only 16% of the initial projections, despite the 1 extra year. To be clear, this is a more reasonable projection than the ones initially offered, but that leaves a massive overhang of 700 million $OP tokens. At the end of 5 years, over ~75% of pending unlock (effectively inflation) will be RPGF alone.

It’s obvious that RPGF was severely overallocated at genesis, and >6x gap between initial projections and current projections reflects the magnitude of the error. My recommendation is to burn the ~700 million OP that was overallocated to RPGF, while honouring the current projections till year 5.

[Erratum: As @danftz points out below, it’s actually 340 million OP per the projections, with the overhang being ~500M OP, not ~700M OP. I’d prefer to see 140M OP be distributed, as that’s plenty for RPGF.]

To be clear, this does not mean the end of RPGF at the end of year 5. 5 years in for the OP Collective, and nearly a decade in for the Optimism Foundation and its predecessor Plasma Group at large, it’s about time to consolidate and become economically sustainable. Beyond that point, a ~75% overhang is unjustified. So, RPGF will continue, but in a different form, that’s sustainable:

This will lead to:

These are just my thoughts, please voice your opinion below.

PS: I’ve changed the title to “Burn surplus RetroPGF” from “Burn RetroPGF”