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+- Start Date: 2019-04-08
+- Target Major Version: 3.x
+- Reference Issues: N/A
+- Implementation PR: N/A
+
+# Summary
+
+- Functional components must be written as plain functions
+  - `{ functional: true }` option removed
+  - `<template functional>` no longer supported
+- Async component must be created via the `createAsyncComponent` API method
+
+# Basic example
+
+``` js
+import { h } from 'vue'
+
+const FunctionalComp = props => {
+  return h('div', `Hello! ${props.name}`)
+}
+```
+
+``` js
+import { createAsyncComponent } from 'vue'
+
+const AsyncComp = createAsyncComponent(() => import('./Foo.vue'))
+```
+
+# Motivation
+
+## Simplify Functional Components
+
+In 2.x, functional components must be created using the following format:
+
+``` js
+const FunctionalComp = {
+  functional: true,
+  render(h) {
+    return h('div', `Hello! ${props.name}`)
+  }
+}
+```
+
+This has the following issues:
+
+- Even when the component needs nothing but the render function, it still needs to use the object with `functional: true`.
+
+- Some options are supported (e.g. `props` and `inject`) but others are not (e.g. `components`). However, users often expect all options to be supported because it looks so similar to a normal stateful component (especially when they use SFC with `<template functional>`).
+
+Another aspect of the problem is that we've noticed some users are using functional components solely for performance reasons, e.g. in SFCs with `<template functional>`, and are requesting us to support more stateful component options in functional components. However, I don't think this is something we should invest more time in.
+
+In v3, the performance difference between stateful and functional components has been drastically reduced and will be insignificant in most use cases. As a result there is no longer a strong incentive to use functional components just for performance, which also no longer justifies the maintenance cost of supporting `<template functional>`. Functional components in v3 should be used primarily for simplicity, not performance.
+
+# Detailed Design
+
+In 3.x, we intend to support functional components **only** as plain functions:
+
+``` js
+import { h } from 'vue'
+
+const FunctionalComp = (props, slots) => {
+  return h('div', `Hello! ${props.name}`)
+}
+```
+
+- The `functional` option is removed, and object format with `{ functional: true }` is no longer supported.
+
+- SFCs will no longer support `<template functional>` - if you need anything more than a function, just use a normal component.
+
+- The function signature has also changed - `h` is now imported globally. Instead of a render context, props and slots and other values are passed in. For more details on how the new arguments can replace 2.x functional render context, see the [Render Function API Change RFC](https://github.com/vuejs/rfcs/pull/28).
+
+## Runtime Props Validation
+
+Props declaration is now optional (only necessary when runtime validation is needed). To add runtime validation or default values, attach `props` to the function itself:
+
+``` js
+const FunctionalComp = props => {
+  return h('div', `Hello! ${props.name}`)
+}
+
+FunctionalComp.props = {
+  name: String
+}
+```
+
+## Async Component Creation
+
+With the functional component change, Vue's runtime won't be able to tell whether a function is being provided as a functional component or an async component factory. So in v3 async components must now be created via a new API method:
+
+``` js
+import { createAsyncComponent } from 'vue'
+
+const AsyncComp = createAsyncComponent(() => import('./Foo.vue'))
+```
+
+The method also supports advanced options:
+
+``` js
+const AsyncComp = createAsyncComponent({
+  factory: () => import('./Foo.vue'),
+  delay: 200,
+  timeout: 3000,
+  error: ErrorComponent,
+  loading: LoadingComponent
+})
+```
+
+This will make async component creation a little more verbose, but async component creation is typically a low-frequency use case, and are often grouped in the same file (the routing configuration).
+
+# Drawbacks
+
+- Migration cost
+
+# Alternatives
+
+N/A
+
+# Adoption strategy
+
+- For functional components, a compatibility mode can be provided for one-at-a-time migration.
+
+- For async components, the migration is straightforward and we can emit warnings when function components return Promise instead of VNodes.
+
+- SFCs using `<template functional>` should be converted to normal SFCs.