How can we improve our Compensation Model?

Compensation Model 1.0

Snapshot referendum

A few contentious issues:

  • Is using PRINTS as compensation adequate or too much of a potential legal hazard and should be avoided at all costs?

  • We’d like to grant access for hard working members to PRINTS, either as direct compensation or (perhaps preferrably) via a buy-at-a-discount scheme from the DAO’s treasury, so as to provide longer term incentives. What is a good way to do this?

  • The current iteration might not be enough to stir up engagement in our community, what are some other initiatives we could take?

  • We might wish to grant access to outsiders who are eager to work in the DAO but don’t have the capital to buy their membership. How could we do this?

  • As per the current model, we have to discuss KPIs for each area of the DAO in order to tie compensation to performance. What are effective and easy to track KPIs for each area?

I’m a little bit confused about everyone voting on everyone as per the current Coordinape model. I don’t keep much track of what’s happening in other committees unless it directly pertains to Curation, so I really don’t feel qualified to ‘give’ in those areas and am worried I will end up allocating ignorantly. Also, as @jukay says, a lot of stuff is happening behind the scenes of which there is quite literally zero mention on Discord, so it’s pretty hard to assess contribution. I know this to be true for sure in Curation but I’ve gleaned that it’s very much happening elsewhere too.

Overall I completely agree with Jukay’s message regarding compensation in #governance:

"Having a compensation model and roles that are more traditional and tied to leaders and managers should be something that we explore, and incentives are tied to performance over that time period.

The idea of bounties and tasks could still exist for members to contribute. I think that’s valuable. These things are not mutually exclusive."

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I like the community aspect and quick cycles of the coordinape model, although agree this this could be augmented by running other reward mechanisms (including more traditional long-term paid roles and one-off bounties).

On coordinape itself I suggest the following improvements:

  1. Shortly after the end of each epoch members who wish to be considered for reward write a brief sumary of their contributions during the epoch. These are circulated prior to the start of voting.
  2. Voting is open to all DAO members, not just those identified as discord active.
  3. Timelines are publicised in advance. Suggestion: deadline of 1 week after epoch end for submission of contribution summary, then voting opens and runs for 1 week.

After reading the discussions it becomes clearer that a single compensation model does not satisfy all needs across the DAO, the two major tracks that seem to emerge are:

  • a) a discrete agreed upon compensation for inner circles and other activities not visible to the rest of the DAO.

  • b) a general way for DAO members to periodically recognize each other’s contributions, generating a social graph which can be used for a fair, wide, and transparent compensation.

I think having both models in parallel makes sense, given they balance each other out.

IMO for (a) we can/should do a round of voting for the base and cap compensation budget, and the practicals of how said funds are distributed left to the group to self-organize, does not require coordinape, feels to me overkill and does not require “design by committee” with the whole dao, members accepting the budget should be enough.

And for (b), I wouldn’t consider this something we should over emphasize, it is less about paying peoples rent, coordinape is useful for deriving the breakdown of payments, but also as

  1. a way for individuals to surface what they have done enabling others to show appreciation and
  2. a way for members not directly contributing to day-to-day tasks to feel like they are participating somehow still
  3. is a feel-good positive-sum community experience in general :slight_smile:

some other assorted notes:

  • don’t think using PRINTS as a form of compensation is a good idea, it can be a general bonus package but not something worth exploring this early

  • don’t think we should mix up this compensation discussion with other “fellowship” or “new members” related initiatives and ideas, that is likely better explored on its own after this is figured out.

In general, I feel there is maybe a tug of war forming between two schools of thought, either we embrace a DAO native set of principles, or pull our way back to a more traditional corporate structure, which I suspect feels more natural to many members today. IMO it could become detrimental for the evolution of the DAO to try to navigate the middle path without a north star, we’re better off defining our principles and general culture sooner rather than later, and this can be something members signal alignment via voting, too.


Nice thoughts @adrianleb . Only comment is about “activities not visible to the DAO”. I think transparancy is key, so even if the compensation model for (a) is more traditional and doesn’t involve frequent member votes, I would still like to see regular reporting on activities. I can think of very little undertaken on behalf of the DAO that can’t be shared with the DAO.

Alright! So happy that this discussion is in full effect.
Here’s the main issues we have to address with the current model in my opinion:

  1. Visibility: some valuable work isn’t visible to most members of the DAO, and thus gets less compensation than it should.
  2. Unpredictability/variance: this model outputs highly variable income for contributors, given that one’s final compensation is dependent on:
    (1) budget;
    (2) cryptocurrency fluctuations;
    (3) individual effort;
    (4) other member’s effort as they “compete” with you;
    (5) the perception of others about the value of your work.
    All of which are factors which can move wildly from one month to the next. This is problematic for members who attempt to rely on working for the DAO as their main source of income. This ends up disincentivizing full-time contribution, which is desirable, as continuity increases efficiency in almost all of the DAO’s activities.
  3. Detatchment from performance: if almost no work is done inside an area in a month, or if mostly unvaluable work is accomplished, the entire compensation budget still paid. Although this is game-theoretically unstable — as anyone who realizes this state of affairs can choose to do the heavy lifting and scoop most of the compensation to himself — it is imperative that the performance of each area is gauged and set against some sort of long-term strategy, which is yet to be formalized.
  4. Lack of responsibility: in the current model, no one is actually responsible for the performance of any area. In the absense of fixed roles (and thus, attributions), there is no one to scold when things aren’t happening as they should. We only rely on the vacuum to be naturally filled by those looking to increase their compensation, like an invisible hand. This eventully works, but is too slow, and relies on us having a constant pool of similarly skilled, replaceable members, which really isn’t the case for much of the work.
  5. Lots of work to vote every month: yes, but also we don’t have any HR. It’s as if the HR work is decentralized, and everyone does a bit of it.
  6. No long-term alignment: compensation is only appraised monthly. There is no incentive for people to commit themselves to longer projects.

Potential solutions I see:

  1. Visibility: I think this issue could be nicely mitigated if people took the time to communicate what they’ve worked on inside coordinape, as there is a designated field for that which most didn’t use. Also, remind people that they’re voting for actual work, and not just discord participation.
  2. Variance: Variance in the output is the sum of variance in the inputs. We could work to control/decrease variance in the things that aren’t supposed to be sources of variance in compensation, such as not changing the budget too much and adding a stablecoin portion to compensation.
  3. Detatchment from performance: This was supposed to be addressed by the performance-tranche mentioned in the original compensation model document. We still need to set KPIs for each area to make this possible. I’m afraid this might be another source of variance to compensation, though.
  4. Lack of responsibility: We could have each area elect a leader which will be constantly responsible for that area’s performance, with some fixed compensation attached to it. This could work to solve the 3rd issue as well, as this person would be incentivized to direct work torwards performance. This “position” could be revisited regularly by the community, like every 3 or 6 months. I think FWB does this.
  5. Lots of work to vote every month: This is a feature not a bug.
  6. No long-term alignment: I believe some members are already working on a long-term strategy document, which is a necessary first step.

Please let me know your thoughts. These are just the things I could conjure up by myself.
Thanks everyone!

Agree! You bring a good point here, reporting from inner circles is super important. I think having a predefined budget for the circle helps giving extra predictability for those groups, while the budget, member composition, etc is ideally re-visited once in a while, and based on reports and direction, re-evaluated if needed.

@lucaspon I think ultimately the points I brought challenges the current model in a few ways, personally the approach being taken will lead us to work as a company more than a DAO which feels un-natural in this space.

I think there is the potential of one or multiple companies incubated by the dao, in which we implement more formalize org structures, and the closest we have to that today are the working groups, what became a bit clearer after this first round is that we’re mostly focused on those efforts, while trying to use dao-native tooling like coordinape.

Personally, to be talking about KPI at a DAO level feels kinda weird, I get it in within the context of working groups / core units / sub companies, but I’m not convinced yet it has a place when structuring DAOs.

I would like to revive this topic and give a little more context of what happened since then and about lessons learned.

We ended up going into a more centralized direction, and forming a core team and extinguishing decentralized compensation. While this ended up giving much more certainty to the people involved in the core team/staff, this had the side effect of disincentivizing members to contribute and diminishing the accountability.

Can we get to a consensus for a 2.0 model to substitute the current state of affairs, incentivize member participation, promote people who are willing to come to the DAO to work and improve accountability from the staff members to the rest of the DAO?

We have since addressed some of these issues in the RAW DAO model in the following way:

  • Detatchment from performance: each area’s compensation has a significant portion (called performance tranche, which is set at the beginning of each quarter) that is paid as certain goals or bounties are achieved. If a certain area achieves half of its goals, only half the performance tranche is paid.
  • People voting “incorrectly”: this is addressed by granting more votes to more active members as months go by, and by keeping out those without a baseline level of activity from participating in the Coordinape system. Also, moderators begin with 3x the amount of votes of regular members.
  • Lack of responsibility: this is addressed by aggregating the results of coordinape throughout the months, rewarding top performers for their continued contribution, and punishing the bottom performers by resetting their roles and votes if they don’t perform or are absent in certain months.
    These rewards include governance tokens, thus granting more ownership and political power to those most critical in building the organization.
  • Variance: this was addressed by having the budgets for each area be set at the start of the quarter, and not being tinkerable until the start of the next quarter. However, we are considering allowing budget increases during the quarter. Also, a stablecoin portion might be beneficial to further address variance.

The full system is described in this two-page document, which I suggest people read.

We have since observed nice results, improved engagement, and all criticism to the system has thus far been limited to Coordinape’s poor UI.

This can be solved by developing a custom solution for this model, which can then be contracted to third parties as well.

I think we should first agree on the main goals of our compensation model:

  1. Opportunities to newcomers: all members of the DAO, old or new, should be able to join the system, begin work and qualify for compensation.
  2. Meritocracy: all participants’ positions and compensation should be earned from substantial contributions to the organization and not other factors.
  3. Decentralization: arbitrary concentrations of power should be avoided, such as specific members or committees unilaterally deciding others’ compensation. Decision power should be distributed and earned through continued valuable contribution to the DAO.
  4. Talent retention: talented and dedicated members should want to remain working with Fingerprints, having their long-term incentives aligned with the DAO’s, and earning more influence and recognition as they continue being valuable for Fingerprints.
  5. Stability: participants should have a reasonable degree of stability and visibility in what they can expect to earn when working for Fingerprints.
  6. Attachment to performance: members should be compensated for achievement and not effort, and more achievement should imply better compensation. We don’t want to compensate members for grueling displays of effort, we want them to achieve what needs to be done properly with the least suffering possible.
  7. Scalability: the system should be able to ajust and properly accomodate new contributors as the DAO grows.