Draft Proposal: Compensation for Core Team & Contributors

This is a draft proposal to get community feedback, concerns, questions, ideas… before it is submitted to the YAM Snapshot page. This is also related to the Retroactive Compensation Proposal.

Summary

We propose to compensate the core team members of YAM protocol.

Abstract

Core team members of YAM protocol would be compensated in YAM token to align their long-term incentives with the success of the protocol. This compensation would be vested over a three-year time period.

Motivation

YAM protocol is most likely to succeed if there is a dedicated group of core contributors who benefit from YAM’s success. In order to align incentives with YAM token holders, it’s essential that these core team members be compensated in YAM and that it be vested over multiple years.

Additionally, it’s important that core team members have some flexibility to reward and incentivize smaller community contributors without needing to go through the slow, bureaucratic, decentralized governance process.

Specifications

Over a three-year period, YAM will be minted and streamed to a multi-sig wallet that is controlled by YAM core team members. This is a budget set aside for the core team to use at their discretion to reward, incentivize, and compensate talent within the YAM ecosystem.

This budget can be used to compensate themselves and it can be used to reward smaller, community contributors. It’s in the best interest of core team members that they surround themselves with strong talent to make YAM a success. This arrangement gives the core team the flexibility and latitude they need to behave more like a nimble startup instead of a slow-moving corporation.

In this vote, the YAM community decides how much YAM will be allocated for these purposes. Of course at any moment in the future the YAM community can adjust, replace, or stop this arrangement. It will be understood and expected that the core team will be transparent with the community as for the specifics of how these funds are used and allocated. In order to allocate these funds, the treasury will mint additional supply.

Note: The launch team has agreed to recuse themselves from this vote.

Poll

How much YAM BoU (balanceOfUnderlying) should be allocated for compensation of YAM contributors (core team members and community contributors), streamed over three years? We’ll use a weighted average so that everyone’s voice is heard.

Options
These would be the options that would appear on the Snapshot page.

  • 50k YAM BoU
  • 100k YAM BoU
  • 150k YAM BoU
  • 200k YAM BoU
  • 250k YAM BoU
  • 300k YAM BoU
8 Likes

Hi,
Rewarding Core Members and future contributors is necesarry for the growth and sustainability of the protocol.

However, I am unsure about the effect that minting new supply could have in the price or how it could be perceived by YAM holders, I believe respecting the initial supply agreement is a key factor to retain and build investors confidence.

I propose either buying YAM with the treasury YUSD, or simply distribute YUSD to the Core Team and contributors.

3 Likes

Figuring out where we get that YAM is certainly a discussion worth having. We could mint it. We could buy it (from treasury). Or we could adjust the LP rewards. There are trade-offs in each and all options are worth discussing. I don’t believe we should change the LP schedule (farmers gotta farm!). And I don’t think we should deplete our treasury in this way (this is perhaps our most valuable asset, let’s grow it not spend it!). IMO minting makes the most sense. It’ll be a relatively small % of the overall supply and vested over 3 years. Should have very little impact on price.

As for the asset they get paid in, I think it definitely needs to be in YAM. The whole point of this proposal is to align incentives. We are YAM token holders. We want the core team to care about YAM price, and care about it for multiple years. They need to have YAM. We want the core team to be missionaries (paid in YAM, believers long term), not mercenaries (paid in yUSD).

1 Like

Ok, you convinced me on this point, still not sure about the extra supply… I will let others comment so we can digest it together.

I propose this.

There’s the flat fee that should be paid to the devs/contributors. However, I also believe there should a bonus depending on the success of the protocol. This would a negligible percentage of every positive rebase that would be allocated to this specific end.

Not only would they be compensated for their work, but their reward could be exponential. This bonus would only be awarded occasionally. My suggestion semi-annually or annually.

I do believe that eventually we could/should have milestone and performance-based bonuses for the core team. But I think it’s too premature right now. We need to get a little further along, establish a clear roadmap, get more organized, have a solid team in place, etc.

So this proposal is the base YAM compensation to make sure we get incentive alignment. Right now, the core team has very little incentive to keep building other than their own sense of pride. That’s not enough. Let’s establish clear alignment fast.

1 Like

I have converted the amounts listed above into what they would roughly be as a percentage of the total supply of YAM (new issuance/total issuance+new issuance):
image
This is rough as the supply increases for the portion of positive rebases that go to the treasury. But it should be good enough to make comparisons to other projects.

To understand what these numbers mean in $ value, you have to multiply by the current scaling factor. This is roughly equivalent to determining token prices for non-rebasing tokens.

As I see it, even the highest number is a pretty reasonable percentage of YAM compared to many other projects in the space. I pretty consistently see teams getting 25-30% of the total supply in other projects.

My personal preference would be to be more generous in future YAM rewards and more conservative in the retroactive rewards for the incentive alignment reasons mick @Wigglez has stated.

let me know if I borked any of the math.

2 Likes

I don’t agree with the increase in supply, we have rejected the increase in supply in the past proposal, the unanimous proposal is to use the Treasury to pay for the developers and the community needs, if you are a newcomer, please check the previous proposal, thank you

1 Like

I suggest we have a discussion until the yam market value at least returns to V2 level.Given that most LPS are in dire straits, this may not be the best time for this advice.

2 Likes

I do like the idea of incentivized bonuses. I don’t think those bonuses should be contingent on positive rebases because I don’t want to incentivize intentional price manipulation. At this point from so many hours of engaging with the dev team, I know they are earnest about this project, and I trust them. So I’m not concerned about them intentionally trying to artificially inflate the TWAP for YAM in order to cause a positive rebase to earn bonuses. However, thinking long term, I don’t want to build in a mechanism where someone less ethical could do so as the core team expands over time.

But I’m very much open to exploring other milestones that could trigger bonuses. For example, the community could vote to establish bounties for high priority endeavors in the vein of a hackathon in order to incentivize the team to pursue certain directions and initiatives faster than others, etc.

3 Likes

This is not only unrealistic but also counterproductive to ever actually returning to that level. The only way YAM increases in value is if development on future products and utility happens regularly and effectively. The only way to insure that is to guarantee compensation to the people doing it.

1 Like

Thanks Ross. This is great. I agree that most recently-launched protocols will keep anywhere between 15-30% for the core team. Pretty standard stuff. I recognize that YAM is slightly different as it’s a “fair launch” project, has no VCs/advisors, and is the most fairly distributed token around. Those are characteristics that make it truly unique and special.

But regardless, the core team needs strong upside incentive and alignment. Or the market cap will continue to bleed. If anything, I’m starting to think we need to add a few options past 300k YAM. Seems totally fair.

Hey @wang I have really bad news for you: if we don’t quickly figure out a way to compensate the core team, then they will leave YAM. They are rational beings and they will go where they are rewarded, compensated, and incentivized for their hard work. They won’t work for free for very long. They just wont.

And if that happens, if they move on, then the value of YAM Market Cap will continue to bleed down to $3M market cap (treasury as price floor). I don’t think any of us want that. But that will definitely happen if we don’t retain our strong talent and properly motivate them.

Also, I’m a big LP. I feel your pain. This is why I believe securing compensation for the core team is so important. Otherwise we will lose more money.

1 Like

Well said @KW710

YAM market cap will only increase (to the levels we all hope) if we have a core team that is building, innovating, and shipping. This project dies without a core team.

I am fully supporting this. Do we need to setup the one time compensation with the long term performance compensation now? or we do it later.

I think performance-based bonuses we can add later. I think we need base comp setup asap. And once we have a more clear roadmap, goals, team, etc… then we can add performance bonuses. I mention more here: Draft Proposal: Compensation for Core Team & Contributors

1 Like

Are you trying to scare people into passing the bill by saying the team is leaving?Team members are optimistic about this long-term project, and their ideals are far beyond money. Please do not use money to insult them.They deserve to be rewarded, but this is not the best time.It’s time to give the team money for development projects, not to talk about dividends.Once the project is on track, a fund can be set up to compensate them.

2 Likes

@wang, One thing to note is that these funds are also to hire other developers/designers, do collaborations, post bounties, etc. To help pay All contributors to the YAM ecosystem. It isn’t just for the Core team to put in their hardware wallets. We want people who work on the project in the future also to be incentive aligned with YAM tokens. So some of this fund will go to those people as well, in addition to what we may pay from the treasury.

If we don’t have these funds available then there is less incentive for everyone working on the project to build new things. The benefit that these tokens can provide should be greater than any dilution.

4 Likes

actually, i think use yUSD is better than YAM. Cause if we keep giving core team yam, they will have a very heavy power on voting. They can have YAM, but they need to get it by fair farming or second market as other people. We can switch the yam to yUSD…

1 Like

I agree with your proposal, but I think there should be a Yam development fund, controlled by the team and financed by the Treasury.For example, at each rebase, 10% of the revenue is sent to the development fund for project development and programmer incentives.

1 Like