Optimism Futarchy Experiment: Comparative Analysis
Executive Summary
This report presents a comparative analysis between Futarchy and Optimism’s Grants Council as mechanisms for grant allocation. The experiment was designed to evaluate the effectiveness of Futarchy in allocating 500,000 OP tokens to increase Superchain Total Value Locked (TVL). The Futarchy consisted of a decision period, conducted from March 10 to March 20, 2025, and an evaluation period, which ends on June 12, 2025.
Methodology
Optimism used Butter to deploy a futarchy to forecast 22 protocols’ potential Superchain TVL increase over a three-month period following receipt of a 100,000 OP grant. The experiment utilized non-transferable tokens exclusively for use with Butter’s contracts, with members of the OP collective receiving allocations based on their on-chain attestations.
For each protocol, UP and DOWN tokens were deployed into an AMM. The price of these tokens was designed to represent estimated increases in Superchain TVL, with a range between $0 and $100M. The five protocols with the highest forecast Superchain TVL increase at the end of the decision period on March 20, 2025 were selected to each receive a 100K OP grant.
The final redemption value of these tokens will be determined by the actual Superchain TVL increase produced by the selected projects from the decision date to June 12, 2025. Each forecaster’s PnL is tracked on a leaderboard at opleaderboard.com.
Results
Grant Allocation Outcomes
Futarchy Selection
| Rank | Project | Forecast (Superchain TVL Increase) | Allocation |
|---|---|---|---|
| 1 | Rocket Pool | $59.4M | 100,000 OP |
| 2 | SuperForm | $48.5M | 100,000 OP |
| 3 | Balancer & Beets | $47.9M | 100,000 OP |
| 4 | Avantis | $44.3M | 100,000 OP |
| 5 | Polynomial | $41.2M | 100,000 OP |
Grants Council Selection
| Rank | Project | Allocation |
|---|---|---|
| 1 | Extra Finance | 100,000 OP |
| 2 | Rocket Pool* | - |
| 3 | SuperForm* | - |
| 4 | Gyroscope | 100,000 OP |
| 5 | Reservoir | 100,000 OP |
| 6 | Balancer & Beets* | - |
| 7 | QiDAO | 100,000 OP |
| 8 | Silo | 100,000 OP |
*In instances where the Grants Council selected a protocol already chosen by the futarchy mechanism, the next protocol in their ranked list was selected.
Participation Metrics
- Total Forecasters: 431 unique addresses
- Total Transactions: 5,898
- Average Transactions per Forecaster: 13.6
- Unique Page Visitors: 2,262
- Conversion Rate (Visitors to Forecasters): 19%
- OP Collective Participation: 57 out of 423 eligible addresses (13.48%)
- Late Participation: 41% of addresses made their first trade in the final three days
Swaps by Protocol
SuperForm received the most single-day trades on March 19, 406. Superform published their proposal on March 18, later than any other project.
Top 20 Traders by Price Impact (approximate)
| Rank | ENS Name | Farcaster ID |
|---|---|---|
| 1 | – | joanbp |
| 2 | skydao.eth | sky |
| 3 | alexsotodigital.eth | alexsotodigital |
| 4 | quattrobajeena.eth | – |
| 5 | vexalus.eth | vexalus.eth |
| 6 | nanobro.eth | nanobro.eth |
| 7 | uncuts.eth | ukhy89 |
| 8 | pachelevine.eth | pachelevine |
| 9 | beyabatu.eth | beyabatu |
| 10 | thesleeper.eth | thesleeper |
| 11 | beefybadger.eth | beefybadger |
| 12 | davydmusic.eth | davyd-music |
| 13 | – | – |
| 14 | russiaisaterrorist.eth | cmfpro |
| 15 | – | wengwagon |
| 16 | optimismcn.eth | – |
| 17 | – | ikkitrader |
| 18 | ලක්ෂිත.eth | laka |
| 19 | lacchiman.eth | lacchiman.eth |
| 20 | - | souless |
Participation
| Date | Unique Visitors | Forecasters |
|---|---|---|
| 10-Mar-2025 | 66 | 2 |
| 11-Mar-2025 | 564 | 36 |
| 12-Mar-2025 | 413 | 24 |
| 13-Mar-2025 | 305 | 43 |
| 14-Mar-2025 | 234 | 51 |
| 15-Mar-2025 | 167 | 40 |
| 16-Mar-2025 | 124 | 14 |
| 17-Mar-2025 | 238 | 30 |
| 18-Mar-2025 | 340 | 52 |
| 19-Mar-2025 | 382 | 60 |
| 20-Mar-2025 | 427 | 79 |
Project Engagement
Of the 22 projects included in the experiment, only 10 provided formal proposals to forecasters, of which 2 projects did not go on to share these plans with forecasters. This limited information sharing may have affected the accuracy of forecasts.
Comparative Analysis
Forecast vs. Project Estimates
| Project | Project Est. | Forecast | Difference | Futarchy Rank | Grants Council Rank |
|---|---|---|---|---|---|
| Rocket Pool | - | $59.4M | - | 1 | 2 |
| SuperForm | $57.5M | $48.5M | -$9M | 2 | 3 |
| Balancer & Beets | $21.5M | $47.9M | +$26.4M | 3 | 6 |
| Avantis | $15M | $44.3M | +$29.3M | 4 | - |
| Polynomial | $15M | $41.2M | +$26.2M | 5 | - |
| Extra Finance | $8M | $39.7M | +$31.7M | 7 | 1 |
| Gyroscope | - | $37.4M | - | 10 | 4 |
| Reservoir | - | $38.9M | - | 8 | 5 |
| QiDAO | $10M | $26.9M | +$16.9M | 18 | 7 |
| Silo | - | $41.2M | - | 6 | 8 |
Key Observations
- Selection Overlap: Three of the five projects were selected by both the futarchy mechanism and the Grants Council, indicating some alignment between the two approaches.
- Forecast Optimism: With the exception of SuperForm, forecasters consistently produced higher TVL increase estimates than projects’ own projections. This optimistic bias may be attributed to the absence of downside risk in the play money environment.
- Systematic Differences: While both mechanisms identified similar top performers, they diverged significantly in their rankings, suggesting fundamental differences in evaluation criteria.
- Project Engagement: Limited proposal submissions from projects may have affected forecast accuracy, as only 45% of projects actively shared their plans with forecasters.
- Participation Dynamics: Participation peaked toward the end of the experiment, suggesting that shorter trading periods (approximately one week) may be optimal for future implementations.
Conclusion
The comparison between Futarchy and the Grants Council, though incomplete, revealed both similarities and differences. While there was significant overlap in project selection, the ranking methodologies produced distinct results. The futarchy mechanism demonstrated strong user engagement but showed evidence of optimistic forecasting bias. The use of play money may affect the mechanism’s incentive compatibility property.
The final measurement of each project’s Superchain TVL increase from March 20 to June 12, 2025, available on June 12, 84 days post-decision, will provide a definitive comparison of the effectiveness of these two allocation mechanisms.
Note: This analysis is based on preliminary data that may contain errors.