[DRAFT 2] Rewarding Contributions in $CODE

[DRAFT 2] Rewarding Contributions in $CODE

Author: @kempsterrrr, @Erik_Knobl, @willblackburn

You can find the first draft of this proposal and associated discussion on the forum here.

Please comment on discourse not the document.

Summary

This proposal seeks to provide clarity on how contributions in Developer DAO are rewarded in our non-financial Governance token, $CODE.

This proposal has the following objectives:

  • Get $CODE flowing into the hands of contributors
  • Simple system for calculating budgets which will ensure proposals to secure funding do not get blocked by significant debate around allocations
  • Flexibility for experimentation on the DAO Org Structure and Rewards mechanisms at the Guild and Project level.

The aim here is a “good enough” framework we can iterate on and improve as the DAO matures. It is NOT intended to be perfect or permanent.

Motivation

Since the start of Developer DAO in September, many contributors have been pouring their time into helping move the DAO forward without any clarity on how they will be rewarded for this.

Addressing this is key to ensuring a healthy community for the long-term.

By rewarding contributions in our Governance token, $CODE, we can ensure the people contributing most to the success of the DAO are also the people with the biggest say in Governance decisions via their $CODE vote.

Whilst this will not help to pay people’s rent, it will help reward actions and incentivize activities that can result in meaningful meatspace funds i.e. projects receiving grants funding or generating revenue that is distributed between contributors and the treasury.

Specification

Flow of $CODE to Contributors

In the pursuit of simplicity for Season 1, this proposal suggests that all contributions across the DAO share the same largely trust based process for rewarding contributions:

  • An agreed flat hourly rate denominated in $CODE to serve as the basis for calculating budgets across the DAO.
  • Guilds and Projects define their own budgets. Contributors estimate their own hours. For bounties, time to complete is estimated and then multiplied by hourly rate in $CODE.
  • Projects that are expected to drive revenue will suggest a % split of revenue between contributors and the DAO Treasury to be included in their Budget Application and therefore discussed/voted on by DAO Members.

Budget Calculations & $CODE Hourly Rate

$CODE Budget and Reward Calcultions

In our Governance Token Proposal, 50% of $CODE allocation goes to the Community Treasury.

That’s 5,000,000 CODE.

For the purpose of calculating $CODE budgets, this proposal assumes the following:

  • 4 Year linear vesting of available $CODE
  • Seasonal length of 4 months

This means that each Season there will be 416,666.67 CODE available to be allocated to Guilds, Projects and other initiatives. For the purpose of calculating a suitable initial hourly rate in $CODE, this proposal assumes the following:

  • 100 active contributors
  • Average 10 hour weekly contribution

Based on calculations for in the attached spreadsheet, this extrapolates out to a suitable hourly rate of 15 $CODE which totals 240,000 $CODE per Season, or 2,400 $CODE for the “average” conributor. This is well inside the 416,666.67 $CODE budget thus leaving room for other initiatives (Gifting memberships, potential token swaps etc.).

The 2,400 $CODE seasonal rewards could be much larger for people who were contributing more. This is a good thing as it further decentralizes Governance power into the hands of people contributing the most.

Guilds can include Projects/initiatives run by the Guild in their budget or they can apply for a budget separately as a Project. Each can have a mixture of “salaried” roles and bounty pools, or only one or the other. It is up to the team how to approach this but budgets must be calculated using the hourly rate.

A worked example:

Design Guild

The Design Guild may choose to have some “salaried” roles for ensuring Guild functions correctly. The formula to calculate the budget for each role would be:

Estimated hours per week X Weeks in Season X Hourly CODE rate

They may also want to offer bounties for creating POAPs. The formula for calculating this budget would be:

Estimated number of POAPs X Estimated hour(s) to produce one X Hourly rate

However Guilds or Project decide to calculate and allocate their budgets is up to them.

Experimenting with DAO Tooling such as Coordinape, DeWork and Wonderverse is encouraged to find what works best for each group.

It is recommended that rewards are sent to contributors on a monthly basis (at most) so as to reduce gas fees. The Operations team will provide a spreadsheet for tracking transactions before the start of Season 1.

Budget Application Process

Existing Guilds and Projects can skip to Phase 2, new ones must start at Phase 1

Phase 1 - Conversations and Brainstorming

  • Post to discord: share your idea in a relevant discord channel to get feedback and have it out in more detail. If you’re unsure of the correct channel use #brainstorming
  • Generate Consensus, form a team: gain support for the idea from at least 5 other DAO members who are committed to scoping out and delivering the idea. Remember, your proposal will need to be voted on by the community so their support is important for the budget to be approved.

Phase 2 - Form a Team and Draft Budget Application

  • Form a team: get commit for at least 5 other people who want to be actively involved in the Guild / Project
  • Create a draft proposal: use this template to create a draft Budget Proposal and share on the forum for Feedback for at least X days
  • Gain support of a Budget Steward: for S1, a Budget Stewards Committee is being created. The committee’s first members are the guild leaders and the top 5 verified members from our early contributor rewards round, chosen by DAO members. A Budget Steward role will be created on discord and discourse to identify these people. Budget Stewards cannot support their own project.

Phase 3 - Forum Vote

  • Add a vote to the Budget Application post on discourse
  • If at least 100 people vote and there is at least 66% in support of the proposal then submit your successful budget application via this form.

There are specific requirements for submitting Budget Applications:

  • Projects must have at least one Champion to serve as the primary point of contact for the rest of the DAO including the budget application. Guilds must also identify who plays this role in their structure.
  • Projects must have a discord channel where DAO members can join the conversation. New proposed Guilds should provide an overview of the Category to be created.
  • Projects must have a Project Page in the Developer DAO Notion Projects table, Guilds a Page in the Guild section on the Notion Home Page.
  • A multisig setup with at least 3 signers, budgets will be sent to this address.

The Operations Team will act as processor of Budget Applications and allocate funds to Guild/Project multi-sigs during Season 1. This may sound like centralisation and a single point of failure however the purpose is solely to enact the will of the DAO based on the Budget Application Process.

Budget Distribution, Accountability and Visibility

Budgets will be distributed on a monthly basis by the Operations Team.

To help DAO members maintain some visibility of project progress and also to ensure some level of accountability during Season 1, Guilds and Projects must submit a bi-weekly update to the forum to receive the next month’s allocation.

No updates, No $CODE.

If an update is submitted and the Operations Team have any reason to question whether or not the next month’s budget should be issued, they will refer this to the Budget Stewards to Vote on allocating/not-allocating the next month’s budget. This vote will be carried out in public via a sesh bot poll restricted to people who hold the Budget Stewards discord role.

This process will be improved during Season 1 as we figure out better ways of coordinating work and sharing updates across the DAO. Ideally the Budget Stewards is either and elected committee or it is tied to a threshold of $CODE holdings, then delegated power by the DAO to make these decisions on behalf of members.

Benefits

See “motivations” section above

Drawbacks/Acknowledgements

In the pursuit of simplicity and forward momentum, a few compromises have been made and should be acknowledged:

  • Valuing all work across the DAO equal in terms of reward in elevated Governance via $CODE allocation. This is imperfect as value generated on hourly contributions is not flat and something we should explore in more detail during S1.
  • Trust based system for rewards rather than explicitly outcome based system. We’re relying on social constructs to ensure lots of $CODE isn’t wasted and it is unclear how well this will work in practice but massively simplifies getting $CODE into the hands of contributors.
  • All rewards being in $CODE does not directly help people pay their bills. It is hoped the incentivisation of action by rewarding in $CODE will drive initiatives that generate grant funding or revenue which is then distributed to contributors who brought in that funding/revenue on their project.
  • These calculations cannot be perfect and there is a reasonable chance we could go over the budget for Season 1

Next Steps

  • Guilds and Projects to start creating budgets using this model (kempsterrrr available for support whenever needed)
  • Create new discourse category for Budgets/Grants
  • Leave discussion open on this proposal until Friday 6th May to discuss some details of the proposal which we can review @ the Town Hall. Everything is of course open but key points of discussion:
    • $CODE Vesting period and hourly rate
    • Required numbers of votes on Budget Proposals (currently 100, seems likely to be a blocker)
    • Budget Steward Concept
  • Then Elevate to Forum vote for at least 72 hours.

Credit: Lots of inspiration from forgmonkee’s posts at BanklessDAO

11 Likes

an important point for discussion here…

  • where projects are supported by the grants team to secure granting funding, should they give some kind of kick back to the DAO treasury? cc @Wikist @Erik_Knobl

interested to get thoughts. My thoughts are…

If the DAO is rewarding the grants team to help people secure grants with $CODE then probably some nominal % of grants funding should filter back to the DAO treasury, single digit percentage, maybe between 5-10%.

That is an important and hard topic as if the project succeeds, then such kick back would require a legal form as such a project would become a company on it’s own for example. I mean with the grants that require legal forms.

Getting some money from the grants seems fair, as if D_D has helped them get them, but we will know more once we establish the structure for grant-team and whre it sits inside the DAO.

I also thought about possible implementations, once the projects starts to stand oh it’s feet. We might offer them an offer either they go on their own or come under D_D support.

If the projects earn in crypto, maybe we can develop some sort of kick back protocol mechanism for the future projects? Because connecting it with project profits might be very complicated. I say that assuming the projects go outside of the D_D eventually, but we might also speak about them staying inside somehow. Creating like an “D_D Umbrella Ecosystem” that would basically support projects that came out of us, but at the same time stay in touch for alter stages of the project.

But that is just an idea. In terms of the grants I would just like to see how much input we will have with Gitcoin grants and see how much people would value our contribution, but the idea seem fair.

Gain support of a Budget Steward: for S1, a Budget Stewards Committee is being created. The committee’s first members are the guild leaders and the top 5 verified members from our early contributor rewards round, chosen by DAO members.
I would suggest Stewards can object to a Budget, in case a specific point is controversial. And in that case, a vote of all stewards can be triggered.

1 Like

Yes, I think this is a good idea. Noticed you shared this document drafting a proposal to formalise the budget steward role so will weigh in there.

@willblackburn @isiah what are your thoughts on elevating this proposal with everything else going on re defining budget stewards and [DRAFT 2] DAO Operators?

I think today’s meeting of Initiative Leads is a good place for last chance feedback, so that we can move it today to a forum vote.