In a previous post I discussed options to streamline the flow for paying contributor streams and rationalizing the process so all participants understand how the process works and what is required of them. You can read that here: Rationalizing Contributor Streams
That post mainly dealt with the YAM portion of contributor compensation. This post will build on that and focus on similar principals, but try to address both stablecoin and YAM compensation, as well as how to keep the process transparent, accountable, and scalable.
Because the DAO works primarily through on-chain actions, paying contributors has been a larger effort endeavor than many expected when first designing the compensation system. What started out as a process to pay contributors in a transparent and incentive aligned way has not always lived up to those promises and as time has gone on, this process has taken up more and more valuable time from contributors. And after some recent departures, it now needs an overhaul.
Before we get into my proposed plan, lets lay out how we want the process to work and what the goals of it are.
- The Process should be transparent for contributors and token holders.
- Contributors should be held accountable for the work they do and not be able to “game” the system
- Contributors should be fairly rewarded for their work.
- Payment should be incentive aligned.
- Payments should be for work that has already been done.
- The process should require as little overhead as possible from contributors and token holders to achieve the above goals
- [Happy to add more if people have suggestions]
The existing compensation works as follows:
- Contributors make a proposal to governance to work for the DAO and lay out what their roles will be and what they expect their compensation to be. It is unclear what is required to submit these proposals, or whether they are vetted or not. A HR committee was created to try and streamline this process (I am a part of that committee).
- Once approved, contributors will work on a trial period for a few months, where they are paid entirely in YAM.
- After the trial period they will earn their full compensation in the breakdown of their choosing, up to 70/30 stable/YAM split.
- Every month, contributors are expected to fill out a contributor compensation report to be posted publicly on this forum. The HR committee reviews the performance of contributors monthly.
- Contributors are paid monthly in stablecoins for work done over the last month. They have streams opened every 3 months for their YAM portion of pay.
- If a contributor stops contributing or leaves, the HR committee has to actively stop their stream and make sure that they don’t get paid their stablecoins. This puts a lot of power in the hands of the HR committee, and also a lot of work to assure that everyone is on task and contributing sufficiently.
- The YAM vesting doesn’t work as intended: The idea of the YAM streams was for vesting to occur over a 3 month period. But this implies that the YAM earned for the last month would vested over the next 3 months. Instead, the YAM to be earned over the next 3 months is streamed in real time.
- Accountability requires additional overhead from the HR group.
- Transparency reports are not seen as important (based on how quickly they are filled out) and require that the HR group coordinates and pesters contributors to fill them out.
- There is limited ability for contributors to work a flexible schedule that varies from month to month because the rates are set beforehand.
- There are limited opportunities to do work via different models (bounties, milestone based compensation, etc).
- YAM voters rely on a small group of contributors to make sure that work is being done efficiently and that all contributors are working effectively.
- The DAO risks becoming an “employer,” which could lead to regulatory issues.
- Doing all compensation via on-chain transactions via full governance adds overhead and complexity for paying contributors.
These proposed changes come in 2 parts. One part is the changes to the process that contributors would follow and the other part is the changes to the process that that DAO would follow to pay them.
- Those who wish to contribute to the DAO will post to the forum with their initial proposal. It should describe what they plan to work on, expertise, and an hourly rate (guidelines should be provided). This information can be ratified via snapshot voting, and is very similar to the current procedure where a contributor will “apply” to governance.
- If desired, a trial period can be created for a new contributor in which some of their compensation is held back until the end of the trial, at which they are paid in full. If they are not a good fit and do not reach the end of the trial then they will no receive the held pay.
- At the end of the month, all contributors who have done work that month and wish to get paid will need to submit a compensation request to the forum, outlining the work that they have done in the prior month and confirming the rate and total amount. These requests are like public timesheets.
- The requests will be reviewed before being added to the contributor payment transactions
- The requests also serve as transparency reports and give insight into what each contributor has been doing.
- Contributors who do not submit a compensation request by the deadline will not be paid in that month’s transaction and will have to wait until a later transaction.
- Contributors will be paid stablecoins for the work they did at their pre-determined rate. The YAM portion of their Pay will be determined based on the 30-TWAP determined at the end of that month and deposited into a custom (or sablier) stream with a continuous vesting period (3 months)
- YAM governance will need to review initial contribution proposals with the help of the HR committee, when new contributors are on-boarded.
- The HR committee should review contributor compensation reports and the public can also review all contributor compensation requests as they are made monthly.
- Governance pays contributors who correctly and accurately submit compensation requests in monthly batches.
Right now, all payments happen via on chain vote. This requires a lot of overhead from contributors and governance. We can move to a multi-sig model that limits risk of lost funds for the DAO, but greatly increases speed and flexibility of the process.
A new contributor compensation multi-sig would be created that holds funds to be distributed monthly. It can be filled monthly or quarterly from the treasury with stablecoins and YAM earmarked to pay contributors. This multi-sig can be signed by the HR group as a 3 of 5 model. Payment is sent to contributors directly from this multi-sig, and new streams are opened from here as well.
As a further addition in the future, a new contributor compensation guardian contract can be added to allow the community to use governance to stop any transaction from the multi-sig and revoke funds if it is deemed that the HR group is acting against the wishes of governance. A new implementation of this model of optimistic approval has been created by withTally using gnosis safes and compound governance (like what YAM uses): GitHub - withtally/safeguard: Safeguard is a tool for on-chain Ethereum DAOs to delegate funds to multisigs while keeping some level of control
Moving to a model like this will clear up the interactions between contributors and the DAO, allow more transparency, and pave the way for a more decentralized future for YAM. We need to start thinking about contributors to the DAO as contractors, and the payment mechanisms as contracts between contributors and the DAO, and not as an organization with employees and traditional corporate structures. Those structures can get built on top of the DAO as it grows and requires more specialized work. This will also allow different groups of contributors to craft different types of organizations to contribute to YAM as they see fit.
All of these changes will require work and additional consideration, but this is a key part of building a better foundation for YAM as we move into the future.