Introducing a Compensation System for BanklessDAO - GSE Deliverables [Incomplete DRAFT - looking for feedback]

Title: Introducing a Compensation System for BanklessDAO - GSE Deliverables [Incomplete DRAFT - looking for feedback]
Authors; Editors: @senad.eth, @AboveAverageJoe, @iSpeakNerd, @saulthorin
Associated Project: Compensation System Revamp Plan
Squad: @AboveAverageJoe, @saulthorin, @senad.eth @iSpeakNerd
Date created: Jul 28th, 2022
Date submitted: Jan 4th, 2023
Working Document: Google Doc

Alert: This is a fairly long and perhaps complicated post. Our goal is to make the content “digestible” and easy-to-understand for as many members as possible. Grab yourself a cup of :coffee: and enjoy the read! :slight_smile:


The GSE program was mandated to engage in an analysis of potential methodologies to be used for compensation to improve how budget strategy and resource distribution operates within the DAO. We seek to propose a new model that accounts for contextualised contribution by BanklessDAO members while maintaining an easy-to-admin interface for Guilds, Departments, Projects, and the DAO.


We approached this big topic by estimating the current complications within the DAO, things that happen to influence the compensation system in a bad way or are symptoms of/by-products of the current compensation standards. Then we formulated guiding principles on which our approach and proposed solutions are based upon.

Current Complications

  • Lack of distinction between public goods vs revenue generating projects. We fund everything the same.
  • No clear classification or progression levels for work roles
  • Lack of clear definition of what a contributor actually is
  • Clarity on expectations and responsibilities of, and by contributors
  • Market volatility in compensation plans utilising a native asset but calculated with external asset valuations

Determining Questions

  • Reward Principles: What’s the north star?
  • Reward Eligibility: Who should we reward?
  • Reward Structure: What should we reward, under what terms?
  • Reward Amount: How much should we reward?
  • Reward Consensus: How do we agree on the reward?


Every approach to find a solution based on a problem requires Research. Here are the sources we found:

BanklessDAO Forums


BANK Bonds

GSE APPROACH – identification of current state

→ Economic Policy to apply mechanism to funding pools

Economic Policy 1.0 - Current State of compensation

  1. Maximum funding request of 1,000 BANK/hr

GC Guideline of 1k Bank/Hour with occasional local deviation on a case by case basis.
Monthly Coordinape rounds with multipliers for each contributor level.

  1. GC authorises funding for Guilds/Projects/Department

The seasonal specification sets a maximum budget for guilds, departments & projects. Prior to each season ending, the spec is being ratified on snapshot and enforced by the community.

  1. Guilds/Departments/Project authorise funding for working groups
  2. Coordinape is 1.5M/month = 4.5M/season

This approach has manifested several classic problems, including values of labor that vary with market conditions, non-competitive earning rates, and lack of compensation elasticity at scale. Discrepancies between pool sizes results in drastic imbalances of allocation compared to contributions, leading to misaligned incentives around participation. The community debates about reducing the amount allocated to Coordinape next season already. I expressed my concerns with Coordinape too and tried to draw a path forward.

In compensating with our native asset, we are forced to use methods that overlap with traditional equity standards due to natural limits on the system, which this article maps rather succinctly.

In calibrating the development of a compensation framework, the approach we will be taking is in relation to the percentage of tokens, following the rationale of the author:

“Although this approach takes the most preparation, it’s also the only one that, in the authors’ opinion, accounts for market volatility and mitigates employee pay inequity, while minimizing unnecessary token dilution and preserving an employee’s asymmetric upside.”

Our revenue model is also impactful on our compensation system in that most revenues generated by projects dispersal happens locally, and only a small margin of surplus is passed on to the DAO. This means that self-sufficiency is expected of most areas of the DAO, and a large total surplus is necessary to fund internal operations that are cost centers by nature.

v1: BanklessDAO Compensation Analysis and Solution Overview V1

GSE APPROACH – identification of frameworks

Individual Contributor Compensation Dependencies

  • Coordinape allocation to individual contributor
  • Contributor’s skill + Necessity of contributor’s role
  • Contributor’s time horizon for compensation
  • Performance bonus (by token price)

Organizational Compensation Dependencies

  • Treasury emissions
  • Token price

We created a formula to balance the compensation dependencies for individuals and the organization. It allows us to transform the BANK emissions system from an equality-focused system of 1000 BANK/hr to each contributor to an equity-focused system → accounting for individual differences in contributor dependencies.

This system allows for modular flexibility, experimentation, and autonomy at the guild/subDAO level for later incorporation at the DAO level, if desired.

v2: PROPOSED SOLUTION - how to build it

Economic Policy 1.5 - Innovative State of compensation

The order the GSE recommends:

  1. Coordinape funds will be allocated to coordinape system as described in @linksAn Idea to Improve Coordinape [DRAFT 2] - implemented :white_check_mark:
  2. tlBANK (= time locked BANK) - in development :hourglass_flowing_sand:
    • 1.25x for 2 years
    • 1.5x for 4 years
  3. Emission Bonus (performance incentive) - to do
    • Equal rate distribution to each individual tracked within system
    • Maximum Bonus incentive (→ 1% of BANK (in treasury) or 10% of total planned season new emissions)
    • Linear scale 0% up to max of 3x price difference between beginning and end of epoch
      • UP ONLY POLICY (0% bonus if price declines or no change)
      • This is our initial recommendation :point_up:
      • Variable monetary policy to be determined by DAO governance based on treasury recommendations
    • Determined by price movement of UNIv3 LP BANK/WETH oracle on mainnet
  4. Quality & Necessity Scores numerical recommendations → to be determined by the final results of the Role Analysis Study; NFT, a gamification approach to tlBANK by Bananachain - in development :hourglass_flowing_sand:
    • Personal qualification + necessity
      • Exceptions for fields of expertise?
      • Proof of qualification → Bankless Academy?
    • Long term alignment (tlBANK)

We go into the details on tipping $GIVE, streaming income, $tlBANK, and reputation based non-transferable tokens.

Formula Operations

We have included screenshots and descriptions here but you really should go look at the mindmap to understand the entire structure.

Coordinape participants per round (CpR)

  • used as a metric for active DAO member participation
  • Ratio of BANK per month/CpR = Member/Round average earnings (EQUALITY BANK/person)
  • This gives the baseline rate to be modified by equity mods

Equity modifiers (roles at individual level):

  • Average:
    • Qualification ratio (0%-100%)
    • Necessity of position (100%-200%)
  • This is our representation of the negotiation between hiring manager and employees in a corporation
    • Lots of context needed to be given in both directions for this

Equity modifiers (individual long-term alignment):

  • Additive bonus
    • Coordinape modifier by GIVE tips (system under development with coordinape + @nonsense + superfluid) – real-time signal of GIVE distributions in discord
  • Multiplicative BONUS
    • Voluntary $tlBANK (Governance managed) (*1, *1.25, *1.5)

Emissions Bonus (organization level):

  • emissionsBonus modifier based on Bank/Eth ratio (org level) – “performance bonus/profit sharing”
    • Monetary policy for alignment
    • :star: % Distribution if BANK/ETH go up
    • % contraction if BANK/ETH go down?
  • TotalPlanned emissions is determined by rate of treasury emissions and sum of seasonal budgets at start of season

Planning for the org:

  • norm is a multiplier to make left side (determined at end of season by seasonal planning + emissions) equal the right side (sum of individual factors)

Putting it Together

  • Left and right sides must equal

GSE Approach to Implementation - Responsibilities and workstream housing:

  • Scoping of tlBANK contract development and maintenance
    • Dev guild
    • Treasury dept
  • Tracking CpR numbers and the subsequent Member baseline rate
    • Treasury dept
  • TIPS system maintenance
    • Dev guild
  • Qualification + Necessity frameworks
    • Position qualification requirement framework, with assistant/shadow human supply planning
      • Ops dept
    • Position necessity framework and update structure
      • Treasury dept
      • Student recommendations

Reputation data sources

  • Governance Participation
    • Snapshot, forum, discord polls
  • Community engagement
    • DAODash, Thrivecoin,
  • Work contributions
    • Dework tasks
  • Cultural goods contributions

Future additions

Economic Policy 2.0 - Implementation State of compensation

  1. Develop workstream under Ops Guild with Liaison between Treasury & Ops
    • Workstream Docs spreadsheets based on safe data + seasonal budgets eventually, automated with 0xsplits or drips?
  2. Integration with coordinape bot developed by nonsensetwice
  3. tlBANK monitoring
  4. Earmarking of Revenue Funds (= voluntary tax % of DAO-wide revenue generated in exchange for: less BANK sell pressure) used for Comp System is a variable rate set by the DAO → sBANK (stable BANK)
  5. Performance bonuses based on peer feedback


What is sBANK?

  • sBANK is forfeited BANK earnings that are a claim of a percentage of DAO (stablecoin?) revenue per epoch
  • option transfer BANK to sBANK after each compensation epoch (optional: proportional transfer to sBANK (50:50 ratio e.g.)
  • sBANK will/can be kept until burned for redemption (stablecoins)
  • sBANK not burned rolls over (is being kept)

Implementation & Maintenance

Cost for development?

Workgroups; centralisation problem; a lot has to be done manually (probably)

tlBANK: If you are willing to get paid in a portion or all in $BANK it can be purchased at a 5% discount. If you are willing to lock up that $BANK into vesting schedules it can be purchased at up to a 20% discount (schedules include seasonal and up to 12 months)

Unanswered questions:

  • Review of comp frameworks
  • Revenue dispensation framework
    • Money goes into the treasury. → Idea: aside from earmarked (token swap with token locking for 1 year, etc.) funding; when funding comes in it gets sorted in allocation system; percentage is put into treasury as “non-earmarked”; usable by DAO
    • Stablecoin & eth-compensation: how distribute non-native assets such as 25% of our revenue? → framework to be fleshed out!

Prototype: Stablecoin- & ETH Comp Framework
Mindmap: Excalidraw+


seems overly complicated and doesn’t show how this resolves the issues mentioned in the back ground.

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This approach looks awesome @senad.eth The mix of Coordinape and locked tokens is a good approach. For reference, Shapeshift and DAOHaus have both implemented locked token compensation in their compensation systems and it’s worked well.

On the locked token + NFT for locked token conversation, at Hedgey we have this live already if you’d like to use it. Shapeshift and DAOHaus both have an opt in program that lets people receive locked token NFTs w/ a bonus based on how long the tokens are locked for. The locked tokens are held in a vesting contract and the recipients receive an NFT that can be used to claim the locked tokens after a preset date. Using the NFTs, holders can still vote with locked tokens (if you choose) and add on cool NFT stuff like accessing gated rooms. Shapeshift and DAOHaus send out around $50k a month in locked tokens on it.

I’m Hedgehood in the treasury chats btw - happy to jam on ideas


Thank you for this thoughtful post as well as the study you all conducted with master students to get external input.

What happens to the equation if coordinape is paused for reason ‘x’, like now?

Should this only be for tlBANK holders?

Generally the approach involves lot of analysis and is trying to algorithmically balance markets, and i generally like these types of approaches. Another approach is a purely market driven bid for any output. The bid can increase or decrease similar the ohm tokenomics till a buyer is found for any output. This allows all outputs to be priced at the live market value based on

If the suggestion is to levy a tax, why not levy it directly to the BANK token contract? similar to cultdao?

A more formatted version of this with a few simulations based on IRL scenarios would be nice to have

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I don’t know why it wasn’t linked in the top-level post but there is a spreadsheet


What Year GIFs | Tenor

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What happened to this?

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Thanks @Jengajojo!

That’s a good question and something I’ve thought about the other day.

I think we could consider doubling down on using the Thrive Protocol as our Compensation Lego for the DAO. You can check out @0xJustice tweet to understand my thoughts connected to it:

When it comes to this study - it was pretty much tailored to Coordinape’s protocol, that’s true. We’re not using it anymore on a DAO-wide level and I’d also not vouch for it’s usage again. Coordinape still exists though so we could help them innovate by leveraging this framework as a starting point and do consulting on how to improve. Perhaps something Bankless Consulting can look into CC: @Icedcool et al?