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Optimism’s RetroPGF Round 3 Faces Community Criticism Amidst Token Allocation Controversy

In January 12, Optimism, the layer-2 platform on Ethereum, announced the deployment of the Canyon upgrade to its mainnet. Alongside this news came the results of RetroPGF Round 3, a funding program supporting “public good” initiatives within the Optimism ecosystem through the distribution of OP tokens. However, the allocation of tokens and the list of beneficiaries have stirred up controversy within the crypto community.

RetroPGF, initiated by Optimism to fund projects contributing to the OP Stack protocol, Optimism Collective governance, developer communities, and user experience enhancements, awarded a record-breaking 30 million OP tokens (approximately 116 million USD) to 501 development teams and individuals. This marks a new high in both the amount allocated and the number of projects funded, surpassing the previous two rounds in 2022 and 2023.

Of the 501 projects, 366 received funding for the first time, 112 were allocated funds for the second time, and 23 had been present in all three RetroPGF rounds. However, the published list of beneficiaries triggered mixed reactions within the cryptocurrency community, raising concerns about “group benefits” in decentralized governance.

One notable case was BanklessDAO, which received funding for all its 12 regional sub-communities, totaling over 116,200 OP tokens valued at more than 450,000 USD. Critics argue that BanklessDAO’s contributions might not warrant such a substantial grant, especially given the relatively low number of members in each sub-community. Some even suggested that projects with their own tokens should utilize their funds for development rather than seeking sponsorship.

In November 2023, BanklessDAO had previously proposed funding for its sub-communities on Arbitrum, calling for 1.82 million ARB. Another less-known project, Zuzula, received over 99,300 OP tokens (~360,000 USD), but its website was inaccessible, and the Telegram community was set to private. Despite generating revenue from course ticket sales, skeptics questioned the need for such funding.

Additionally, some prominent decentralized exchange (DEX) projects, including Velodrome, Kwenta, Synthetix, Galxe, and Lyra, were criticized for receiving relatively small amounts compared to their perceived contributions to Optimism’s user attraction and liquidity.

However, amidst the controversy, deserving projects and individuals were acknowledged for their community contributions. Protocol Guild, on-chain detective ZachXBT, and blockchain security entities like Revoke Cash, Blockscout, and Otterscan were among those praised for their meaningful contributions.

Even Ethereum’s co-founder, Vitalik Buterin, who had previously commended Optimism’s governance model, congratulated the success of RetroPGF Round 3 for furthering the development of public goods within the Optimism and Ethereum ecosystems. The ongoing discussion highlights the challenges and nuances involved in decentralized governance and resource allocation in the crypto space.

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