Written by: Loxia
In the wave of decentralization, Ethereum is undergoing a new transformation - from a single blockchain platform to a truly open and sustainable value network that can accommodate multi-chain interoperability. With the booming development of second-layer networks (L2) such as Optimism, how public goods are incentivized and funded has also become a focus. Focusing on the "Ethereum Phoenix Vision" and the Superchain architecture, this article deeply explores the evolution of Optimism's Retroactive Public Goods Funding (RetroPGF) in recent years, and how the multi-layer binding of Base and Superchain promotes the implementation of decentralized governance. Finally, through the perspective of the LXDAO governance group, we will have a more complete understanding of how the evaluation method that combines data-driven and human insights was born in the new round of Retro Funding, and the opportunities and challenges they face under the incentive model of "impact = profit".
Key points:
Ethereum Phoenix Vision: Create an economic system that fairly rewards influence across the value network (chain), solves common market failures, and makes the production of public goods as profitable as building closed source software, accurately rewards influence to achieve "influence = profit".
Optimism's Retroactive Public Goods Funding (RetroPGF) aims to achieve the principle of "influence = profit" by retroactively distributing rewards - that is, positive impacts on the collective should be converted into individual profits. This principle serves as a North Star to incentivize the creation of a more productive and sustainable economic system.
Retroactive Public Goods Funding in 2025: More effectively and accurately reward builders who have an impact on Superchain.
01 Superchain Overview
Building a standardized, multi-chain interoperable ecological network
Superchain is committed to achieving seamless cross-chain data and asset transfer through a standardized and modular technology stack (OP Stack), while sharing Ethereum's security and resources, thereby forming a large-scale network effect in the L2/L3 multi-chain world.
The impact of ERC-7802 on Superchain transactions
Improve cross-chain transaction efficiency
Through standardized cross-chain interfaces (such as crosschainMint and crosschainBurn), asset transfers no longer rely on cumbersome cross-chain bridges or multi-signature verification.
Block Delay: The latency of cross-chain transactions can be reduced to 1 block, greatly improving capital efficiency.
No Asset Wrapping: ERC-7802 avoids the common Wrapped Token problem and allows direct use of native tokens for cross-chain operations.
Enhanced Capital Efficiency
The "Burn-Mint" mechanism helps assets flow freely between multiple chains, no longer constrained by the lock pool of traditional cross-chain bridges.
Aggregate liquidity: For example, 1M USD of assets can be used on multiple chains under Superchain at the same time, without having to lock them separately on each chain.
Reduce cross-chain + operating costs: The modular design of ERC-7802 simplifies cross-chain logic, reduces intermediate links and reduces the risk of cross-chain bridges being attacked.
Base is more deeply bound to Superchain at the ecological, governance and collaboration levels
Income and token distribution Base pays Optimism 2.5% of the sorter income or 15% of the profit through the income sharing agreement, and obtains 118 million OP tokens (issued in six years) for ecological incentives and governance participation.
Law of Chains
https://github.com/ethereum-optimism/OPerating-manual/blob/c095f3002233d212379d1e39b0d785e2ff000e65/Law of Chains.md
Mutual Benefit and Symbiosis
OP is a representative of relative decentralization and ecological diversity in the current L2 ecosystem; Base can expand more real-world applications for OP with the experience of Coinbase.
Base also needs OP's decentralized governance model and mature operating experience, and the two parties will form a long-term strategic bond.
02 The Evolution of Retro Funding
In the early days of Retro Funding, only public goods were retroactively included, such as the goal of RetroPGF 3:
Optimism's Retroactive Public Goods Funding (RetroPGF) aims to achieve the principle of "impact = profit" by retroactively distributing rewards - that is, the positive impact on the collective should be converted into individual profits. This principle serves as a north star to incentivize the creation of a more productive and sustainable economic system.
Impact: represents the value created by contributors for the Optimism collective.
Profit: represents the value extracted by contributors from the Optimism collective.
Gap: represents the difference between the influence and profit of a contributor.
(e.g.: influence - profit = gap)
RetroPGF fills the gap between the influence and profit of contributors, thereby achieving the state of "influence = profit".
Retroactive Public Goods Funding 1 ~ 3 (Retroactive Public Goods Incentive) Funded many excellent public goods, such as ZachXBT in RPGF 2. ZashXBT is a "faceless detective" in the field of cryptocurrency. He has made great contributions to industry transparency and security by exposing scams and tracking stolen funds through on-chain analysis technology. These contributions did not directly incentivize network growth, but they had a very positive impact on the entire collective, making the entire network more robust. So the badge holders in OP's Citizen House will vote for ZachXBT, who received nearly 190,000 OP in RPGF 2.
In Retro Funding 4, the community took into account the lack of support for actual users of the OP network in the previous three rounds of RPGF (only 5% of the rewards were allocated to the top 20% of users in actual network usage in RPGF 3), especially the lack of support for developer growth on Superchain, and the badge holders in the OP community raised concerns about the sustainability of Retro Funding. In rounds 1 to 3 of Retro Funding, Retro Funding relied on 850M OP's Retroactive Public Goods Funding (RPGF) to issue rewards.
In the 4th round of Retro Funding and beyond, Retro Funding will gradually turn to relying on protocol surplus income as a source of rewards. The previous protocol surplus income is not enough to maintain retroactive public goods funding, so Retro Funding, in addition to encouraging public goods innovation, also shoulders the task of directly incentivizing network growth. So Retro Funding first proposed funding for on-chain contributors (Onchain Builder) in the 4th round, to incentivize developer growth and increase network activities.
After RetroPGF 4, the community has also paid more and more attention to the dataization of evaluation indicators, and has begun to slowly try to use AI to analyze and preliminarily screen the data, and then add Badgeholder to make subjective judgments on the initial screening results.
In Retro Funding 4, Retro Funding began to fund projects related to direct on-chain contributions (influence) such as DeFi for the first time. Unlike previous rounds, RF in RF4 and subsequent rounds began to focus on incentivizing the growth of influence itself, even if the funded projects themselves do not lack funds.
Retro Funding 5 mainly incentivized ecological tool projects (Utility) for OP Stack, such as integration and load testing infrastructure, scripts for running Optimism nodes, RaaS providers, OP Stack tutorials and documentation. Retro Funding 6 focuses on incentives in the governance category, mainly rewarding projects that have made outstanding contributions to governance infrastructure, governance analysis, and governance leadership.
OP Retroactive Incentive Overview:
https://optimism.mirror.xyz/zWlA9LROAzRee5BFqbquYHawmruKzLmXbONp_hcCwE4
Retro Funding S7’s 3 main points:
1. Retro Funding: S7 Missions
Focusing on data-driven impact measurement and taking a people-centric approach. These missions are chosen to allow the collective to accurately measure a portion of important contributions.
Alignment of the entire collective around a common mission framework will ensure the coordinated operation of all token distribution plans.
The evaluation algorithm defines how task outputs and results are measured. It can include both human qualitative evaluations and data-driven quantitative measurements. Rewards are distributed by running the evaluation algorithm on one or more measurement dates. The evaluation algorithm used in Retro Funding tasks will evolve throughout the Retro Funding program based on feedback from selected citizens.
(Like Deep Funding's attempt)
2. Retro Funding: Onchain Builders (8M OP Max)
Onchain builders reward projects that drive asset transfer through cross-chain interoperability by extending super chains on eligible OP chains.
Metrics for evaluating the algorithm:
Growth of SuperChain adoption
High-quality on-chain value (e.g., TVL)
Support and adoption of cross-chain interoperability
Evaluation begins in February, with rewards distributed monthly.
3. Retro Funding: Dev Tooling (8M OP Max)
Rewards toolchain software such as compilers, libraries, and debuggers that support builders in developing on-chain applications on SuperChain.
Measurements for the Evaluation Algorithm:
Adoption rate by on-chain builders.
The importance of tools in on-chain application development.
Components that support builders’ adoption of SuperChain cross-chain interoperability.
Evaluation begins in February, with rewards distributed monthly.
S7’s two new tasks mark a shift in how impact is measured and rewarded: the “Evaluation Algorithm” will combine quantitative and qualitative signals — data-based metrics and human insights — to determine monthly allocations.
As these algorithms improve over time, Retro Funding will hopefully more accurately focus on meaningful contributions.
03 LXDAO Governance Group's Opinions on the Reform of Retro Funding
1. Support Retro Funding - S7 Missions:
Support the continuous alignment of algorithm experiments and people to explore a better combination of models and people in governance allocation
Support the exploration of algorithm experiments. In the governance and allocation of DAO, theoretical breakthroughs can often lead to breakthroughs in the experiments themselves. Just as Deepfunding is trying, exploring algorithm experiments is likely to create a better governance model.
2. Oppose Retro Funding - Onchain Builders:
Hidden Risks of Single Growth Incentive: We oppose focusing the Onchain Builders’ reward mechanism mainly on the growth of SuperChain adoption and high-value on-chain activities (such as TVL). This single growth incentive perspective may ignore the speed of development of the diversity of the ecosystem. After all, the diversity and complexity of the network are the soul of OP. Diversity and complexity make OP healthy and robust.
The current proposal is too vague: The introduction of AI models easily directs people's attention to data and growth, but Base or OP's advantages over competitor Solana are not here. We believe that the continued incentives for Onchain Builders are necessary, but more support should be given to theoretical innovation and new experiments (for example, each version of Uniswap is groundbreaking). Theoretical innovation is abstract and requires voting by Badge Holders of Citizen House. At this time, the problem that AI models need to solve becomes "When the frequency of voting workload increases, how can AI models help Badge Holders complete their work more easily and more attentively?" Looking forward to seeing more details.
3. Support Retro Funding - Dev Tooling:
Dev Tool is a lever to leverage network value: Open source public goods development tools will greatly promote the diversification of the network. Developers exploring at the forefront of SuperChain are more likely to discover key Dev Tool opportunities, which are better for integration with SuperChain. The truly native SuperChain Dev Tool will lubricate the operations in SuperChain and provide indirect value growth for the network. This is the part that Retro Funding needs to focus on incentivizing.
Care should be taken to avoid duplication with the Op Stack category of S5: If a project that promotes interoperability on Superchain has been funded in S5, it is necessary to consider the value that the project has extracted from the DAO and give priority to funding Dev Tooling projects that have not been funded in S5.
4. Experimental opinions on the allocation algorithm and subsequent focus:
The experimental idea of Deepfunding gave Retro Funding’s algorithm continuous allocation experiment an important inspiration: that is, the node connections in the dependency/growth relationship network are continuous, so the new theme of each season of Retro Funding should only serve as the focus of Retro Funding, not all. For the projects that have been screened out in the Retro Funding rounds and still have influential contributions, they should be incentivized continuously over the long term.
In S1~S3 of Retro Funding, Citizen House spent a lot of time and effort to manually select good projects that "have indirect influence on the network". Some of these projects are even difficult to be discovered by indicators and are very obscure (ZachXBT). However, the huge time cost and low conversion rate make Badge Holders feel powerless. In S7, Retro Funding can invite some Badge Holders to do a small-scale vote, list their 10 favorite public goods in the application scope, and conduct multiple rounds of trial experiments to hone the collaboration between algorithms and people.
Davin
Alex
Hui Xin
YouQuan
Joy
Aaron