[DRAFT] Rewarding Contributions in $CODE

👩🏽‍⚖️ Proposals
1

Author: @kempsterrrr

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 ensure 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 of rewards across all roles denominated in $CODE
  • Guilds and Projects define their own roles. Contributors performing these roles provide their own estimation of hours contributed per week. This is then used to extrapolate funding required for the Season.
  • An additional 20% on top of budgets is allocated for ad-hoc contributions/bounties to be distributed to contributors as Guilds or Projects see fit
  • 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.
  • Guilds and Projects can apply for further funding mind-season where needed via the Budget Application Process.

Budget Calculations & $CODE Hourly Rate

This assumes the majority of funding is allocated to Projects as opposed to Guilds.

Initiatives that require funding inside guilds that are outside of their normal DAO Level operations should apply for budget funding as a Project.

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 overall $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 312,500 416,667 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 5 hour weekly contribution
  • Every Budget add 20% 50% to calculations for ad-hoc rewards

This extrapolates out to a suitable hourly rate of 20 40 20 $CODE which totals 192,000 288,000 240,000 $CODE for the Season and 1,600 2,400 1,600 $CODE for the “average” conributor. Well inside the 312,500 416,667 $CODE budget thus leaving room of other initiatives (Gifting memberships, potential token swaps etc.)

The 1,600 2,400 1,600 $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.

Budget Application Process

The Operations Team will act as processor of Budget applications and allocations during Season 1. This will be a purely administrative role whereby the Operations Team will execute the will of DAO Members and process decisions made via DDIPs.

Required parameters for Budget Application Proposal:

  • Clear definition of Guild / Project purpose with measurable outcomes clearly defined
  • Evidence of community support for Guild / Project in the form of discord conversations, meeting notes and discourse threads that show quorum achieved via our DDIP process.
  • A dedicated Notion Page which clearly outlines roles, responsibilities and….
  • Clear budget for roles and ad-hoc contributions using the framework above.

Once these criteria are met, evidence must be submitted to the Operations Team via this form to be processed and $CODE to be allocated.

Must include:

  • Project /Guild Name
  • Champion(s) discord handle
  • Evidence of completing Governance Process and all supporting documentation
  • Link to Completed Notion Project Page
  • Link to Forum post showing evidence of DDIP/Budget Application Process
  • Wallet address where funds should be sent

Benefits

See “motivations” section above

Drawbacks

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

  • 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. The 20% 50% added on top of budget calculations for ad-hoc rewards should provide plenty of scope of experimentation here.
  • 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

Previous Discussions

Primarily based on feedback and conversations in the Season 0 feedback channel threads as well as various ad-hoc conversations in project and guild meetings across the DAO.

Next Steps

This proposal will remain in draft form until Monday 28th Feb to allow time for DAO members to debate it’s contents. Whilst is everything is up for debate, some specific areas would be valuable receiving feedback on include:

  • $CODE Vesting schedule being 4 years
  • % split between contributors and DAO Treasury for Projects that bring in Grant funding or Revenue so we can provide a guideline for budget calculations
  • Feedback on balance of Drawbacks

@kempsterrrr updated proposal with new figures as per mistake highlighted in this reply from @myz1237.eth. Also removed deadling set for Monday gone to give more time for discussion.

14 Likes
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I’m in support of this plan!

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I think this is a great step forward for us, let’s do it!
Thanks Kemp!

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Thanks! Loved our conversations last week :heart:

Any thoughts on :point_down:

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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.

Is this to say that projects which are expected to bring in revenue require contributors to go at-risk until after the project? Or is it that the profit share is a bonus incentive?

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Very good question @Colin4ward

The proposal suggests that moving forward the budget application process is proactive, whereby groups of members who come together to put forward an idea with the above criteria met can apply for $CODE which is allocated to them ahead of time to create the project.

Unanswered question here on exactly how that works but i’d suggest it’s transferred monthly/seasonly to a pre-defined multi-sig for the project/guild to ensure we’re not just allocating out LOADS of $CODE without any idea if there is follow through

This then proactively incentivises contribution by rewarding members with elevated Governance rights via our non-financial Governance token $CODE. So in the context of being rewarded in elevated Governance rights via $CODE, no members will not be going “at-risk” until after the project like they have been up until now.

That said, given $CODE is a non-financial Governance token and we will not be assigning it any value this does not help members pay any meatspace bills such as their rent.

The proposed solution to this is two fold:

  • Supporting teams to apply for grant funding which is then split between contributors and the DAO with the suggested & included in the budget application. This should be the focus of most of the projects we support given out goal is to create public goods and I do not see us having trouble securing grant funding with some energy put into activating the many opportunities available, @drop_knowledge has some passion about helping drive a grants team to help achieve this/support projects and myself and @RyanCoordinator are passionate about helping make this happen ASAP
  • Any projects that do generate revenue and apply for funding (i.e. job board, future conferences/events etc.) should include in their proposal how they indented to split any revenue generated with the DAO, this gives members the chance to discuss/debate and decide if they agree/not, or alternatively we set a standard rate. very interested to hear debate on this.

Hope that helps clear up the thinking and gives some answer to the question?

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Would this apply for people on the Biz/dev guild? They can be seen as active contributors but splitting sponsorships between contributors and the DAO in this particular case seems weird.

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This is a brilliant question. It had been on my mind that for “DAO Level” projects and initiatives such as Seasonal Sponsorship or the Job Board that are likely to generate significant recurring revenue from the actions of a few, it’s not totally clear to me how the split would work and so debate on this topic important.

These things need to happen and we need to be ensure people are incentivised to do them but be careful about those incentive structures so the focus doesn’t become maximising ROI - I know @wolovim has some interest thoughts here.

As the proposal currently stands it kicks this questions to the Budget Application Process but and I am unsure if we need to/should account for specific use cases like this here, or, if we should maybe just provide some guidelines and refine during the budget process.

Maybe it would be interesting to get thoughts on people who have been playing these roles thus far so in the Seasonal Sponsorship space that’s @nas @tonyolendo @Colin4ward @daeshawn.eth @Orlundo (please any one I’ve missed) and on the job board that’s me, @drop_knowledge @pbillingsby.eth @jazza.eth aykay.eth @carlomigueldy.eth @angel

My personal thoughts (acknowledging that I come from a place whereby i’ll likely be rewarded for FT work at the DAO soon), that these recurring revenue generating initiatives should probably primarily (or maybe entirely) going to the DAO Treasury given they are at the “DAO Level” and be spread across the DAO to support other initiatives as much as possible.

This feels a bit unfair though writing it so I think it would be really valuable to get others input here as too wether or not we set a standard or kick this debate to the budget application process where we could look at the specifics of each case.

Kicking the debate to the budget application process is where my thoughts are currently

ADDED

To clarify… on a project level (for example with the conf) if there is someone involved in the project from MBD/BizDev that is securing partnerships at the project level imho they should definitely be rewarded for that as other projects would be. It’s the DAO Level recurring piece I’m struggling with in my mind.

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The amount of CODE distribution may be wrong, or the length of one season should be 3 months. 312,500 CODE is for seasonal length of 3 months

sorry for my weired focus :smiley:

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Well I’ll be darned! The number of times I looked at those numbers and didn’t realise that is incredible. Thanks so much for pointing this out :bowing_man:

I’ll update the numbers in the proposal above. This is actually a good thing as we now have a larger pool of $CODE per Season to allocate to contributors which means more reward and quicker decentralisation via $CODE holdings.

With the total new monthly $CODE budget of 416,666.67 we can have an hourly rate (following the same assumptions) of 40 and still have 128,666.67 $CODE left after rewarding contributors for other initiatives. Or, 200,666.67 if we have an hourly rate of $30.

This is much much better! Might be a good idea for another check on the numbers if you don’t mind :pray:

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I’m struggling to stay on top of all this DAO structure and contributor reward stuff.

From the mbd side I think what we need most is the ability to agree weekly/monthly time commitments and a rate that this will be compensated for contributors that are taking on different roles in the guild.

I don’t think we can generalise how the guild may get a share of initiatives/projects it works on. Think we could negotiate that on a project basis, but think for now the guild should just focus on having some core ongoing contributors that are compensated for their time commitment.

Perhaps this can be budgeted on a seasonal basis with a way to propose new contributors with their time commitment and rate.

We already have a list of contributors in our notion with time commitment. That can be used as an initial guide for people, roles, commitments and then we just add a rate in CODE or DAI to that…?

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so in the pursuit of simplicity for S1 this proposal suggests a flat hourly rate in $CODE that is rewarded for contributions made. guilds/projects would estimate the amount of time they’re committing and then extrapolate this using the hourly rate figure to come to a budget.

Generally the idea is Guilds would have a few budgeted operational roles to make the guild function and then all outcome driven initiatives will be scoped and budgeted for independently as Projects to allow for flexibility and make it easier for budget proposals to pass through Governance.

That said, given $CODE is a non-financial Governance token and we will not be assigning it any value this does not help members pay any meatspace bills such as their rent.

The proposed solution to this is two fold:

  • Supporting teams to apply for grant funding which is then split between contributors and the DAO with the suggested & included in the budget application. This should be the focus of most of the projects we support given out goal is to create public goods and I do not see us having trouble securing grant funding with some energy put into activating the many opportunities available, @drop_knowledge has some passion about helping drive a grants team to help achieve this/support projects and myself and @RyanCoordinator are passionate about helping make this happen ASAP
  • Any projects that do generate revenue and apply for funding (i.e. job board, future conferences/events etc.) should include in their proposal how they indented to split any revenue generated with the DAO, this gives members the chance to discuss/debate and decide if they agree/not, or alternatively we set a standard rate. very interested to hear debate on this.
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One oversight for this proposal is how we ensure the $CODE being allocated is not being wasted i.e. the Guilds and Projects who are being allocated code for their contributions are contributing and creating value. In it’s current form the proposal suggests an entirely trust based model once budget applications have been accepted by the DAO.

This came up in the Gov call yesterday with @willblackburn @doswell.eth @RyanCoordinator @manny and others

A proposed solution for this is only Sending $CODE to Guilds and Projects on a monthly basis rather than the entire Seasonal amount up front and then putting in a monthly check to get an update on progress to make sure progress has been made.

Two options currently top of mind (these are not fully scoped):

  • Each month, guilds and projects must provide an update to this forum on their progress
  • A vote is added to the bottom of this to confirm if the next months budget should/shouldn’t be allocated

OR

  • Each month, guilds and projects must provide an update to this forum on their progress
    -A team (Ops, Gov, new team/committee) review this post and decide via vote whether or not the next months budget should be allocated

Would love to hear some thoughts on these suggested approaches :pray:

Hopefully we can discuss this on Friday’s call about open proposals.

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I think recurrent activities with opportunities to collect funds for the DAO should be done by the DAO itself, through a Teams structure like Ops is doing, and get people paid for doing them. That would include Grants, Sponsorships, Token Swaps, etc. We need full-time people working on those, and bringing value to the D_D.
Ideas that can generate profit should be 50/50 split between the team and the DAO.

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Yeah. I think mbd may be better served by having budgets for contributor roles independent from the outcome specific initiatives. I don’t see these as “operational roles”, but just contributors as we have them now. Based on the current setup I would like to just have partnership champions and initiative champions just state their weekly/monthly time commitment and be compensated based on that.

Would only want to scope an initiative and request budget for it when it gets to a place of formality and scale. Is this possible?

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I’m glad to help on it, kemp.

Btw, I am alex, haha. Sorry for my name confusing you.:smiley:

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The amount of Average Hours worked Per Season is not correct, it should be 80 hours per season. and the remaing calculations should be changed accordinglg.

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Glad to see this as one of the main topics of debate in the thread. Incentives make the world go round and I think we should be careful about which we establish. I’m pro-sharing the fruits of labor, but one thing I do not want the DAO to turn into is a PFP NFT factory because its most profitable.

If we establish a revenue-sharing model, I think that also needs to be paired with a nontrivial project formation/application process that screens projects for being well-aligned with our mission, values, and goals.

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Agreed. Even with a strict proposal process, I think that profit sharing would warp reality as anyone contributing would be better compensated for contributing to revenue driving projects over public goods (assuming a public good has no revenue).

Maybe (again, with a strict selection criteria) put all project revenues into a single pot and use that as a means to share revenue out to contributors. Here I see a risk of apathy (lack of direct compensation for effort) in exchange for not punishing people that want to work on non-revenue tasks.

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cc @gjsyme

i hear these concerns and have tried to factor them into the proposal. my general thoughts are all budget applications need to follow our DDIP process where by members will need to vote on budgets before they are accepted. It would be hear that the community can choose to support projects or not, and also feedback on the suggested % split in any grant or revenue funding.

who’s responsibility is it too ensure we stick to focusing on public goods ? is it not the community via Governance whereby they’ll vote on what they do or don’t support?..

regarding incentives not skewing the output of the DAO towards revenue generating projects, i personally feel our focus should be on creating a team/process that is focussed on supporting teams to secure grant funding for building public goods. I know @drop_knowledge has some ideas here. rather than trying to restrict the scope or project budget applications the community can make.

lastly i think it’s important we update our Governance Proposal templates to have an explicit section on “Mission & Values alignment” or similar to force budget applications to explicitly state how their project supports our mission, values and goals. cc @willblackburn

2 Likes