Why should Base and OP create a community of interests?

Author: Haotian-CryptoInsight

Last night, OP Stack’s rising star @BuildOnBase Chain released a cooperation statement with @optimismFND, which contained a lot of information and answered many rumors and doubts. How can the upgrade contract of layer2 avoid the suspicion of centralization control? Is the profit sharing as high as the rumored 30%? Why doesn’t Base establish its own portal and instead form a community of interests with OP? Let me explain them one by one:

At the beginning, Base explained the reason for cooperating with OP Stack, which is consistent with the viewpoint I interpreted in the previous long article: OP is open enough and attractive to developers. The original words were “the more hands on the code, the more chances to spot and secure the foundation.” This actually sets an example for many organizations trying to build an open-source ecosystem. If you want to open-source, you should boldly open up and work together to contribute to the open source. Don’t boast about your own technology today and get sued for plagiarism tomorrow. Such noise is detrimental to the entire track. It has to be said that OP is fully committed to open-source collaboration.

The statement mentioned the Law of Chains, which is a set of system governance rules that participants in OP Stack must follow, equivalent to the “Alliance of Six Nations.” This alliance honestly points out the stage (Stage 0-2) in which OP-Rollup currently stands in the decentralization process: layer2 has not achieved absolute decentralization. Therefore, after joining Base, some technical support was provided, including:

1) Joining the operation of op-geth and op-node clients. The more clients of this type are distributed, the stronger the decentralization of the organizational structure;

2) Adopting the op-reth fault-proof client, which is developed and implemented by the LianGuairadigm team. It is used to detect and prove faults and malicious behavior occurring on layer2 to ensure the security of user funds. In addition, the Pessmism pessimistic monitoring tool stack has been launched to monitor various components of OP Stack (Sequencer, Bacher, challenger, etc.);

Everyone knows that Optimism’s optimistic mechanism assumes that malicious behavior does not exist. Who can prove that malicious behavior does not exist? It is the Pessmism pessimistic monitoring system and a set of fault-proof clients operated by LianGuairadigm, which provide comprehensive security guarantees for the optimistic declaration of Optimism.

3) Building a Security Council for SuperChain, which is like the “United Nations” organization in the super chain.

On the one hand, it stipulates that the multi-signature for contract upgrades is jointly composed of the Optimism Foundation and the Base Foundation, which adds another trusted entity on the basis of the original single-organization multi-signature. Because everyone criticized the governance contract upgrade feature of layer2 being completed by its committee in a multi-signature manner. Once the committee members collectively engage in malicious behavior, such a multi-signature will be meaningless. The new chain rules expand the multi-signature entity, which can increase external constraints and credibility.

On the other hand, it proposes a challenger key management scheme. The Base team has the right to delete the OP team’s output proposals if they engage in improper behavior, which essentially means that if a member of the alliance behaves maliciously, other members can step in to stop them. (This is actually a double insurance for the Layer 2 governance approach).

Now, let’s focus on the profit sharing issue that everyone is most concerned about. There have been rumors of profit sharing at 10% or even 30%, but these are incorrect:

According to the announcement, profit sharing can be based on 2.5% of the Base Sequencer’s total revenue, or 15% of the pure profit portion after deducting the consumption of the L1 mainnet. Simply put, it depends on which calculation results in higher profit sharing: either 2.5% of total revenue or 15% of total profit.

Let’s do a calculation using data from Dune Analytics. On August 24th, the total fee revenue for Base was $4,092,331, which would be $102k based on 2.5%; or the total revenue was $2,626,794, which would be $394k based on 15%. Currently, it seems that the latter option provides greater benefits. However, after the Cancun upgrade, the cost of L1 interaction will be significantly reduced due to the decreased referencing of Blob storage. Therefore, sharing based on revenue may better align with long-term planning, as relying solely on profit would introduce an additional layer of trust costs, considering the complexity of factors such as operations, network, and resource consumption.

Lastly, let me explain my confusion: since the OP Stack is highly open-source and Base is so popular, why do they insist on tying themselves to Optimism’s interests? Wouldn’t it be better to stand on their own?

From a technical standpoint, Base needs the OP team’s rich experience in maintaining and operating components such as the Sequencer, in addition to open-source code. From a profit perspective, this high level of integration and cooperation means that Base will have the opportunity to earn up to 2.75% of OP tokens over the next 6 years.

In fact, the key issue lies in the existing narrative surrounding Layer 2, which is hindered by centralization concerns. The governance contract upgrade is controlled by a single organization’s multisig system, making it difficult to gain trust consensus. Expanding the range of trusted entities can effectively solve this problem.

Clearly, both the Base and OP teams understand that they are exchanging a broader vision for a promising future.

Reference: An analysis of why OP Stack is favored by developers:

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