Proposal: PIP-72 - Liquidity Funding for Futarchy Experimentation in Velora Governance
Vote: For
Rationale:
Thanks for presenting this proposal. We had the chance to observe and partially participate in Optimism’s v1 futarchy experiment earlier this year, and wanted to share a few reflections that might be useful here:
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Participation is critical. In OP’s case, there were over 400 forecasters, but that was after filtering out thousands of sybils in a play-money setup. Even then, volumes and engagement varied widely. For Velora, ensuring strong and genuine participation will likely be the make-or-break factor for whether signals are credible.
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Signal quality and variance. At OP, futarchy did identify some top performers (e.g. Balancer & Beets) that the Grants Council had missed, but also picked one of the worst performers. This higher variance is both a strength (catching outliers) and a risk (greater noise). We should be mindful of how to interpret outcomes here, especially if sample sizes are small.
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Prediction accuracy. Forecasters consistently overestimated impact in OP’s experiment, in part due to the play-money environment and anchoring effects. Having real skin-in-the-game (even if small) and clear metrics could help Velora avoid similar pitfalls.
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Framing and communication. At OP, a lot of value came not just from the markets, but from how the results were framed in relation to existing governance structures. Making clear that futarchy here is non-binding and complementary will help set expectations and avoid perceptions of “gambling on governance.”
Overall, we support the spirit of experimentation. From what we saw at Optimism, futarchy can provide genuinely useful signals but it works best when paired with thoughtful design choices and clear communication around its role in governance.