Compensation at BanklessDAO

General
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5vy7ku

BanklessDAO is a growing and evolving organization. As we scale, we will face new problems, but we will also resurface old problems.

One of those “old problems” is compensation [1] [2]. In the past, we’ve slapped on bandaid solutions, like using Coordinape and 1000 BANK/hr as a back-stop against more challenging questions around complicated compensation guidelines.

Well, that backstop is starting to fray.

About a month ago, a handful of us met to establish the Compensation Working Group. While progress has been slow, we’ve made some definitive strides.

This post serves to surface some of our findings, expectations, and next steps.

THE PROBLEM STATEMENT

One of the first things we did was canvas the problems, courtesy of @wolfehr. We spoke to a few groups (albeit not all of them) to surface some patterns and trends. The entire challenge statement can be found here, but some of the repeated concerns were:

  • Lack of guidance for creating consistent comp structures that are equitable across all projects
  • Lack of consistency for the same role held across different guilds
  • Sustainable remuneration, both to retain talent and not burn through funds
  • Comp should be tied to tangible work completed

No doubt these are just a sampling of the problems we truly face.

GENERAL PHILOSOPHY

As with all things in DAOs, compensation is hard. We’ve seen a few models kicked around in the DAO ecosystem. The following tweet summarizes some of them:

The first topic of conversation was around the model we wanted to go with. There was pretty unanimous consensus that we wanted to have a flexible compensation model that was decided by “the market.” What does this mean? Each guild/project/initiative will determine their own compensation structure, which can be modified to fit their needs.

However, this does not mean there won’t be guidance.

Determining Compensation

Comp falls into two categories:

  1. Compensation capture: How the dollar value is decided upon
    • Market rates, milestone/KPIs, revenue share
  2. Compensation distribution: How value accrued gets distributed to the team
    • Coordinape, team set salaries, hourly, roles, UBI, bounties

The idea here is that we (comp working group) will provide guidance on how/when to use specific capture/distribution methods. For example:

  • First Quest will capture compensation through market rates and milestones for completing objectives, then, given the small size of the team, distributed through Team Set Salaries (this is what we did for Season 1)
  • BanklessDAO Consultancy will capture compensation through revenue and distribute a portion to the core operating team and distribute the rest to project teams
  • Newsletter team captures compensation through KPIs (delivering on newsletters) and distributed through bounties (and donates all revenue back to the BanklessDAO treasury)
  • Bounty Board team captured compensation through market rates and distributed funds using coordinape (for Season 1)

:key: The point is, there are numerous ways to design a compensation package that best fits your team. With a decentralized compensation model (where each team decides on their own), it will never be universally fair. But the team-driven nature of a fluid compensation model means that you get to have a say in how you get paid.

Compensation Guidelines

There are two broad categories of guidelines:

  1. Global Compensation: Universal guidelines applied across the DAO
    • Market rates, DAO-wide coordinape, standard guild bounties (Twitter campaign, blog post)
  2. Local Compensation: Soft guidelines for teams to determine their own comp models
    • See Determining Compensation above

The idea here is to provide global compensation guidelines to allow for teams to set their local compensation. For example, there are questions around:

  • Do we set different market rates based on skillset? (Eg. Writing, development, design, legal)
  • Do we stratify between expertise (Eg. Jr vs Sr Developers)
  • Do we adjust market rates based on location?

NEXT STEPS

There is still a LOT left to do. We’ve only barely scratched the surface. We have interview to conduct, research to do, forum posts to write, feedback to gather - rinse and repeat.

I’ll leave the specifics vague here as we still have to sync on a strategy going forward, but we’re hoping that in the first half of next season, we’ll have a concrete compensation framework that we can begin to implement in the latter half of Season 3.

Moonshot Idea

A quick note here: When talking to some frens at Yearn, I had an interesting discussion as to the nature of a “Compensation Council.” The idea here was instead of having a top-down group that determines compensation, this Council would basically be a dispute resolution mechanism. The compensation council would create a framework document that teams would adapt to their local projects/guilds. If at any point, someone were to take issue with Project A’s comp plan, they could raise an issue with the compensation council and the council would evaluate if Project A did properly apply the framework. If not, they would work with Project A until a fairer comp plan was determined.

This way, the comp council isn’t actively involved in every decision, but rather serves to make sure that other teams properly apply the framework. This would also let the council note evolving needs and adapt.

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thanks for your post.

In order to give some additional reasoning, I invite all those who have not yet done so to read the post on the compensation structure implemented by PoolTogether. Personally I found it very interesting and instructive, perhaps it does not add new ideas but organizes them in an interesting way.

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I think that we too should distinguish in a similar way the modalities of contribution, also continuing on the path of the distinction between full time and part time, which obviously is based on the general interest of the DAO.

I also insist on a point that I think is important: we all know that the purpose is decentralization, but - as Yearn (and not only) teaches - it is difficult to wake up in the morning in a decentralized universe without first creating infrastructure and educational means that support and allow its flowering.

Perhaps there could be a point of contact between full-time positions and the establishment of an infrastructure team that helps the DAO to navigate the best path to be able to flourish and decentralize in a fair, transparent and fruitful way for the whole ecosystem.

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Guidance is the keyword.
Decentralization needs it in order to be in its essence.

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Thanks for taking the time to summarize the thought process being done on this. I like the thought of global guidelines combined with local model proposals that the teams can choose. This way we can balance guidelines and a need for flexibility over time.

As you point out there is a lot that needs to be defined. I feel this is a topic that seems particularly complex because it is not purely analytical but has quite a high emotional aspect to it. In my view, we run the risk to overthink the solution to try and cater to as many emotional pitfalls as possible. This is where your moonshot idea comes perfectly into play. We could use the council to calibrate our compensation model over time. A team or individual thinks the global or local rules could be improved? Reach out to the council to evaluate. This requires quite a high level of flexibility from all DAO members because it may mean that the compensation model will be adapted every Season. However, I believe this is precisely the culture we want to foster. Experiment.evaluate.adjust.

As a consequence, I want to encourage us to be brave and only develop the part of the compensation model that we absolutely need right now. Use it for one Season. Plan time to review and adjust at the end of the Season. Repeat. As long as the DAO will keep the culture of listening to the concerns and visibly act on those I am absolutely convinced this approach will deliver the best results and high DAO member satisfaction along the way.

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Thats a great model and outlook @grendel I really like this piece!

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To add to the conversation we are really paying contributors with our reserves. We are giving people voting power.
However, this in the future should change too to payments in stablecoins when we have enough revenue available, or at least start a mix model paying part in BANK and part in stablecoins.
To put it in perspective, in quarter 3 we only made 15K in profit. This was taking into account a 90% discount for BANK. If you take the current BANK price then we made a loss in quarter 3.
I’m totally fine with distributing BANK to the people that believe in this project and we should do so. But the BANK supply is finite (at least for now) and we should be finding more revenue streams.

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I agree with this sentiment

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Appreciate the direction and the thoughtful research this working group is doing.

Seems like there’s some guidelines brewing of different models of comp (and hopefully their strengths and weaknesses learned so far from our existing experiments with them). Really like that it’s a guide only and sounds like it still allows for localized experimentation. Really appreciate particularly the closing paragraph that considers that if there’s tons of latitude and self-organization relative to comp across the DAO then there’s likely the occasional dispute due to lack of rigid standards.

I will vote in favour of guides/experiments and latitude; so I’m also in favour of an expectation of dispute and a formal method of resolving defined. I don’t think this is isolated to comp though. I think there’s need for an evolution of the ombuds into a proper DAO-wide dispute resolution framework. In the spirit of Ostrom’s Principals #5,6,7 for a Commons (https://www.onthecommons.org/magazine/elinor-ostroms-8-principles-managing-commmons) we need a clear and accessible path to dispute resolution and graduated escalation of sanctions for violation of agreed to norms – outside of that freedom and experimentation should reign imo.

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I am not a big fan of part-time vs full-time dichotomy here. A much better estimate would be the value of the work you can offer in my honest opinion. If working “full-time” means showing up for the whole day then yeah very few of us can go full-time BUT we may add that value at, say, night-time. Or in the 3-4 hour window after our day-jobs.

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I also think that freelance contributors would be more willing to join us if we paid in stable assets that are listed on major coin exchanges so that they can cash-out. It does not necessarily bind them into the Bankless framework against their will.

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A full-time job in the DAO does not translate into being at the desk for 8-10 hours a day, but in bringing value, work, support to the DAO, to many of its components and to other members with diligence, continuity and honesty. What matters is always the quality of what is done, whether chasing a bounty or playing a part-time or full-time role.
The difference - in my opinion - is identifiable in the depth and extent of one’s involvement with the DAO, which often transcends the concept of “role” defined today in the guilds, the responsibilities one is willing to take towards the community and - obviously - also in the availability of time that can be granted.

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Allow me to give my contribution to this point of yours even if you answered Kouros:
The will is to be able to pay both in BANK and in stable / eth. Obviously this depends on the revenues that can be generated by the DAO.
An alternative, now that the BANK token has been bridged on Polygon, could be to use QiDAO to be able to collateralize the BANKS to obtain ETH or stables in exchange, so as not to sell the BANK on the market.

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Great post. I am not happy with the location being part of the compensation model since we’d be asking people to reveal personal information in order to get compensated. Additionally, VPNs make it difficult to geolocate a user

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In my understanding “local” means related to guilds, projects or any non DAO-wide compensation model

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Thanks for this post. It is essential that we find the right way to compensate people.

Compensation can take many different forms and we should always remind ourselves that this is still a very early stage of the DAO. Basically we have just started it if we think it in terms of years.

The maturity stage of the DAO structure, which has been growing and maturing a lot in the last months should not lead us away from recognizing that from an income-generation point of view we are still in the pretty infancy.

In order to attract talent, retain it, expand its usage the focus should all be onto revenue generation. I am not saying profit (even if that is what will be making the difference in the long run) but, at this current stage, the focus should be on growing the revenue streams. Double down on what is currently giving us oxygen at first and looking from frameworks that incentivize revenue generation projects.

If we have a strong revenue flow than we can have a stronger retribution system.

BANK has been “printed” out of nowhere, its value is only in part being represented by the community behind it. If we want to grow it, and survive a bear market stage (perhaps next year somewhen?) then we need a revenue stream that we can rely upon.

Deep down it is my conviction that “work” in the DAO can be divided and personally I also find the PoolTogether article referenced above by @Grendel inspiring.

People going full-time should have a “role”. A precise one requiring a person to be there full time. The role itself will be enough to keep the person fully occupied hence only people having the ability to go full time will be able to apply. If you do not have that time and you apply the disconnection will be self-evident.

People going part-time can be easily subdivided into doing “recurring tasks” (on-going) and “single sprints” (tasks). The on-going find a perfect system with coordinape, you know who you are continously working with on a weekly/daily base and you can reward them. The sprinters, working toward a single project should apply for a grant. This will give them the oxygen/motivation to complete the project with that budget.

I also invite people to read that, but also to think much more about the revenues. We need the latter to keep the right people doing the right work.

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Love the idea of the “Compensation Council”

We could even have the ability to appeal the council by bring a case to coin vote (coin vote might be like the supreme court).

Maybe we have elections for the council positions.

This is kind of how democratic nations states work.

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Great post thank you for breaking that down for us. Assigning full time and part time roles in my opinion will better help with accountability as it relates to the scope of work. I’m excited to see which way we go and continue to experiment.

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The way I see it the value proposition of BANK at the moment is new members acquiring BANK, and the growth of the treasury.

I believe that Bankless DAO, unlike yearn or Pooltogether that have well defined functions, is more of a social DAO or a DAO of DAO’s. While yes, our mission states that we want to onboard 1B people in to the ecosystem the infrastructure to be able to do so is nascent and it is necessary to be building new primitives all around the new interactive DAO ecosystem that is coming in to existence.

Thus, I believe the maintenance of the core structure of bDAO that is onboarding, welcoming, supporting and nourishing new talent entering in to the space (aka the guild structure) should be looking to define and fill in its roles with full time “employees”of the DAO that get payed in a rate that is defined in a non pegged stablecoin some of which they must receive in BANK and the rest of which they can recieve in the currency of their choice (among those that are available in the treasury).

The Projects that spin out of the Guilds should be asking for Grants with detailed proposals and concrete goals that can be evaluated by the individual guilds, and funded by the guilds treasury pools (or batch requestested by the guild coordinators from the main pool). Proposed projects should keep in mind that in the long term they will be needing to onboard users or generate income as it will be possible to ask for multiple grants but not steady funding from the Gild or bDAO treasury.

Another important factor I would start thinking about is the “taxation” model that we are going to be setting up. And how to incentivize adherence to that model. The way I see it the value proposition of BANK at the moment is new members acquiring BANK, and the growth of the treasury. The growth of the treasury through the income generated by Projects under a guild should be giving an part of the income generated to the Guild treasury and DAO treasury. Furthermore when Projects become their own DAO’s there should be a system in place to incentivize and maintain this “taxation”.

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I really want to see this become a reality.
Please highlight if this is being worked upon or if a soft-consensus is required for this. Thanks!

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We had a first conversation with QiDAO. Once we will be able to go on with it, a proposal will be presented in the forum to get the DAO feedback.

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