Contributor Compensations [OLD]

ivangbi · April 10, 2022, 11:02am

Contributoooooors, the time has come.

Quite a few have worked very hard and are already taking a lead in different DAO operational processes… We all are stoked to be working next to you! Of course, one shouldn’t be doing that for free. This discussion is a compensation outline for the first members, and somewhat of a light policy (TBD) for new hires. DAO members can further discuss and suggest ideas, to bring for voting in a few weeks.

Compensation brackets

HR is a super complex process, let alone doing it in the “open”. Circumstances and personal situations are harder to reflect on in a context of a diverse DAO. As such, it’s likely easiest to have approximate brackets - and then see ad-hoc by allowing for some small degree of subjectivity given a contributor’s background. This should later on be decided by an actual HR committee as Gearbox DAO grows, like in Yearn Finance.

pic being adjusted, DEL.

Matching web2 / other DAO salaries while keeping full flexibility

The above results in compensations that match similar roles outside of the crypto world, whereas here there is also extra GEAR as vested to create an extra incentive for a contributor to work more. Contributors are not required to be online 24/7 and can perceive their other hobbies or projects. As such, there is no need for hard control of KPIs and such - which is practically impossible in the context of a DAO anyway.

For example, lack of motivation from a contributor will make it seamless for them to rotate out and not feel stressed, while strong motivation will result in full USDC compensation as well as extra GEAR tokens vested for the same $ value as the work that given month.

Self-reporting and max hourly compensations

It should be noted that one can’t practically note a 100 hour week (despite ex-core doing that and beyond) simply because the discussions on “why X task took you so much time” would become very problematic as the DAO scales. As such, the maximum of a salary is really the maximum unless some extraordinary circumstances with all-nighters took place.

At the end of the month, every contributor can quote how much they have been busy with certain tasks. Because most of the roles have concrete output (not BD or sales) it would be fairly easy to understand how much time one or the other task could have taken.

How is the bonus priced and distributed

The amount of tokens is determined by a 1 week TWAP prior to the distribution of the monthly package. During the non-transferable period of the token (now) the benchmark is taken as 300M FDV which means token price of 0.03.
At the moment of the distribution, that monthly installment goes into a vesting contract / voucher and is then vested linearly over the next 9 months. The vesting for every portion begins at the date of transfer and then takes 9 months to fully unlock.
In case a contributor wants to have the entire compensation package to be in GEAR, they can opt in the comments to have that. However, because there is no discount to market - perhaps there is no reason to choose that since one could just buy from the USDC side of the compensation and not even be vested.
We thought of removing options part because it’s just unnecessarily confusing, there is no point in doing it. In case somebody would like to have it, we can think together.
These tokens will be coming out of DAO treasury

Where is the money coming from before the DAO piles up $$

As the protocol is not large just yet and doesn’t make millions at the moment, for the next few months, funds raised from the Contributor Round a year ago will be used to pre-fund these activities. It doesn’t however mean anyone is working for some company, moreso that such a move is a donation to the DAO to work further without any oversight or dependency.

Concrete numbers proposed per contributor and groups

pic being adjusted, DEL.

Why not KPI-based sub-DAO structure?

If you are familiar with subDAOs (otherwise check the link) - you might agree that it is a bit too early for Gearbox DAO. There are some core tasks which are operational: doing some queries for protocol partners and risk scores (analytics & math), web and contracts (developing), marketing of core products - those are all very core. I didn’t find a way to turn those into subDAOs. Those are all inherent to the underlying protocol. As such, the core contributors need to scale first to a number which can then manage subDAOs without much operational overhead.

As such, the current group together with ex-core become more on the operational side, whereas they can spin off into subDAOs later on (like, if they decide to lead a product suite themselves) or help manage subDAOs that grow out of the core protocol. That is for the next hiring wave.

Comments

Ex-core 4 member compensation is not needed for this compensation breakdown.

Role name: Aspiring Gearpersons are pre-contributor role as per Discord, whereas after this proposal they become True Gearpersons - maybe the names need changing, they are a bit boring?

Wanna be a legend too? Or don’t have 24/7 time - and rather be a delegate? Join!

Van0k · April 11, 2022, 4:06pm

I think there are couple of things I wanted to point out:

I think that hourly rates often create perverse incentives for workers. E.g., if I’m an SC dev and I have a task that would take 2 days if I pace myself (and to an outside observer this would appear reasonable), but I manage it in 1, how many hours do I actually report?

I can probably extract the most value by doing the task in 1 day, playing Elden Ring on the second day and submitting the result in the evening. This kind of system punishes efficiency, I feel, so I would rather a flat monthly fee, conditional on a monthly review to re-negotiate if the worker doesn’t pull their weight.

I thought the option package was a fixed amount of GEAR per-month, and only the strike price TWAP-dependent? Here it seems that the amount changes to match the dollar value based on the TWAP.

The former is much better in terms of upside (it’s basically like investing once early vs. DCA), so maybe we could also introduce an alternative option to the current GEAR reward system, like a smaller fixed reward in GEAR (let’s say 50% of USDC salary based on the price at the point the contributor started working) that doesn’t change month to month. This would reward earlier contributors more, which I think is a good quality to have.

I’m mainly looking out fo my own interests here, but I feel that a lot of current contributors that were there early will have similar thoughts. Of course, frugality is also important and it wouldn’t be good to overpay early contributors too much in the future. But I think a balance can be found.

nikitakle · April 11, 2022, 4:35pm

I like Van0k’s thoughts. I understand it.

As a moderator and community manager, I can mark months of different activity. There are big events like token announcement, v2 launch or unlock. This generates a large flow of people, many questions and I can spend much more time on support and help. And there are lighter months when I spend more time translating documents or working on community development (thinking up or doing activities). This may take a different amount of time. And if one month I am very busy, then the next month it will be easier for me, this should not mean anything. Therefore, such work should be paid fixedly.

I can only express my thoughts, because I plan work in my region and it’s easier for me to distribute my forces. If there were more people, it would be possible to think about the distribution of time. Because some work more and some less.

duckdegen · April 11, 2022, 4:44pm

I personally would prefer a pure GEAR based compensation package, ideally with a monthly/quarterly vesting.

In my specific case, if i’d take a comp in USD + Gear that would be a taxable event that is equivalent to salary every month.
On the other hand, a vesting options package becomes taxable to capital gains only, which is more beneficial in my jurisdiction.
The best part of it: since we are still non-transferable 0 value tokens, the initial taxable event would be negligible, which sounds very appealing.

Also, as we have not discovered the true price of GEAR yet, and as Van0k pointed out, the intention here is not to take advantage of the protocols lack of fair value yet. So renegotiating a gear amount per month in the future is definitely something i’d be willing to do.

The caveat to this is that this would also require a more “fixed” model.

ivangbi · April 11, 2022, 5:22pm

Thank you, very valid points! Happy to hear concrete structure on how you would approach things then?

On the “how to define hourly” I totally agree with it. It’s not about keeping a sheet of the hours of work (hello, muh lawyers) - it’s more so a % of busyness you had that month. Let’s say, you had a lot of family stuff - ok, let’s quote 50% busy then. You were on vacation 3 weeks really? 30%. You were pretty much busy all the time? 80%+ then. It’s just the average.
→ Does this make sense and alleviate your concerns, or not really? @Van0k @nikitakle

Happy to hear how you’d structure it. My only concerns with doing fixed all the time, is that it makes rotation of contributors much harder, and requires some centralized oversight and somebody to poke people to put in the REQUIRED effort. With approximate %, you set up that effort yourself.

On the point of taxes and framing this… happy to hear your suggestions on how we could possibly make it better together 9I am familiar with EU tax laws in general). Just one note that I am not sure how to implement the startup vesting package here. If there were to be given one at fixed rate - it would make a contributor less rotatable and full-time truly, as point 1 states too. That can be done for really hardcore full-time SC dev, but is not applicable to DAO operational work which is more ad-hoc? Not sure, again, wanna hear your thoughts on a possible 9concrete) structure.

ilgiz · April 11, 2022, 5:27pm

Micromanagement doesn’t work in startups so no need to use it here. Hourly rate simply reflects the compensation range. Сompensation will be monthly, the worker can devote 50% / 70% / 100% of her/his time to project.

I think we’re still in the early stages of DAO, so only people who believe in the project and want to put a lot of their time into it should work here. High motivated people can do a lot - this is the only way we can achieve success!

Van0k · April 11, 2022, 5:55pm

Thanks, this sounds much better. So instead of reporting hours this is basically just choosing whether you’re full-time or part-time each particular month? E.g. I’m full-time most of the time, but maybe I want to take it easy in a particular month and take a smaller paycheck. If so I’m completely up for it, but maybe we should describe this more explicitly in the GIP and remove hourly rates, to avoid this sort of confusion in the actual proposal. Hourly rates make people think of software that tracks how much you look at the screen(

Regarding alternative GEAR compensation I’m proposing something like this:

In addition to just paying a fixed USD amount in GEAR each month worth 100% of USDC salary, a contributor can opt to get less (let’s say 50% of salary), but with readjustment once a year rather than once a month. So in my particular case instead of getting 400k GEAR first month that is then readjusted each month based on the TWAP, I’ll get 200k a month for a year regardless of the price, and only readjust end of the year based on a yearly TWAP.

Basically this would mean that I take a smaller immediate paycheck, but if GEAR moons I’ll have a nice bag.

The %busyness mechanics work exactly the same, i.e. if I report 50% of full-time in a given month, I get 50% from that fixed monthly allocation (100k in the described scenario).

Not sure how viable that is from tax perspective, experts can chime in here.

ivangbi · April 11, 2022, 5:59pm

YEZ. Ok for the GIP, will fix that!

On the second note - very interesting and concrete! @ilgiz thots?

nikitakle · April 11, 2022, 6:41pm

In my case, it’s not as hard work as Van0k and other devs. If the devs need a lot of time to write code. 4 hours a day is enough for me to complete tasks. But if you need me, I will always be available. If you need me to work some more time. For example, I can devote my weekends to work, this is normal for me. Therefore, for me, both an easy and a difficult month should be paid as usual.
For me, full time = doing all the tasks for the project in a month.Job not measured by time, it is measured by utility. It sounds like a job of trust. In such a scheme, there are two options - it works or it does not work. In such a scheme, you must either complete the work on time, or be a little late, but catch up. You can also take a break or go to work for a grant.

But as I said earlier on the call, from the very beginning I tried to devote a lot of time to the development of the Gearbox community and my motivation does not depend much on payment.

mugglesect · April 11, 2022, 7:14pm

Agree with this, specially point 2.

$GEAR should be a vested fixed monthly payout, it’s the biggest incentive to work. A dollar denominated fluctuating payout severely punishes contributors.

As the price of gear goes up, the $GEAR earnings come down. So effectively, if what contributors thought or worked on makes the token moon, they get no upside to their variable and effectively the entire incentive of having GEAR reduces

Beyond this, for me at least, the only way I can give up my existing job and move full time is if I feel my GEAR holding is substantial enough to make the risk:reward of the move worth it which won’t be possible if post-trading my annual gear allocation is about 60k$ worth

C3_Group · April 11, 2022, 10:17pm

Regarding the Compensation Brackets, the cash compensation does not raise any red flags, although we cannot say for sure without spending time benchmarking practices vs other DAOs and web2 companies. C3 can do this on behalf of the community, if engaged. Benchmarking will ensure the protocol is paying competitively, thus aiding in attracting new talent and retaining current contributors.

I would recommend this approach. In the interim, I think it would be helpful to clarify how long this compensation framework will last for and how often it will be revisited.

Is this a transparent process? We’ve seen various approaches to hold contributors accountable. Can’t speak for whether or not they are effective at scale, but we can share, if interested.

Regarding the GEAR Bonus…
We would advise using a fixed-value denomination once launched, as you have presented in the original table. Awarding fixed-token denomination does not align intended target pay with actual pay, can lead to excessive dilution in bull markets, and can lead to under-compensation in bear markets, which can cause retention issues.

If an individual delivers $12,000 worth of value in a given month, than they should be rewarded $12,000 worth of compensation. Fixed-token compensation results in ever-increasing pay for performing largely the same job. Upside should be realized through token appreciation, not via ever-increasing target pay opportunity.

With that being said, contributors’ compensation should be linked to token value on day 1. Instead of deriving the number of tokens at the end of the quarter (granting in arrears), you could derive the number of tokens at the start of the quarter (granting in advance) and extend the vesting period to 12 months. This way, assuming the price appreciates, contributors realize upside in two ways (1) they receive more tokens because the comp value was derived at a lower price (again, assuming the price appreciates) and (2) the tokens appreciated during the quarter (of course, subject to vest).

If there are any full-time contributors that the protocol/community would like to retain long-term, a front-loaded or annual token grant could be considered, but the tradeoff should be a longer vesting period. This will provide upside, assuming the price appreciates. For example, suppose SC dev would like to be retained for a one-year period. AT LAUNCH, he/she could receive their annual pay (e.g., $12,000 x 12 months) in tokens that vest over two years (one-year cliff, then quarterly). Because the market is so volatile, we would caution over-reliance on a front-loaded granting method because it can lead to unintended consequences, particularly during a bear market. A balanced granting approach could be considered instead.

Please refer to our latest article on token granting practices to learn more about a balanced granting approach, granting in arrears/in advance, and fixed-value vs fixed-token compensation. We are also here to assist!

C3: Crypto Compensation Consulting

ov3rkoalafied · April 12, 2022, 12:50pm

Yeah this is nice. Personally with how unpredictable both available work + personal availability are, I’d prefer to chip in however much I am able to each month, then can be retroactively rewarded.

RE: Transparency/Fairness, I do still think something like coordinape is the fairest approach I’ve come across. Let everyone else who’s been working decide on approximate allocations for everyone relative to everyone else EXCEPT themselves. Doesn’t have to actually go thru coordinape, just a simple google form each month could suffice. The point is, the “higher ups” such as ivan, ilgiz, etc aren’t gonna know what everyone is doing all the time, but they’ll have a rough idea. Individuals such as me aren’t gonna know what everyone is doing all the time, but we’ll have more complete idea of what certain people are doing that we work with closely.

If you give some bigger weighting to the opinions of Ivan, Ilgiz, and the “subDAO managers” or whatever you want to call them, and then separately give some weighting to everyone else who’s getting paid, I think you would get a relatively fair payout distribution.

Overall though everyone on this list starting working on gearbox because they liked the project, community, mission, etc. I think it’s fair to assume that people would be altruistic and not try to game the system unless proven otherwise.

The one hiccup is that system relies on giving everyone a relative allocation based on a total amount available, whereas with gearbox you would basically assign a user a value from 0 to 100%. In theory everyone could be TOO nice and assign 100% to everyone. Perhaps we could use the standard system (just assign everyone a value relative to each other that adds up to 100), and then we can create a cutoff for the top couple users and call them “full time”, then put everyone else down to part-time.

It’s also likely some of the full-time users will be relying on this payout for their true full time job. In that case I think they should be removed from the system and just be promised the salary each month unless they indicate a month where they can’t be full time, in which case they can drop into the part-time system with the rest of the chumps.

So in summary, my idea would be:

If you are full time, you get your salary that month.
Anyone who is part time (including anyone full time who asks for a part time month) would fill out a form at the end of the month that includes all part time users*, indicating how much work they all did relative to each other (adding up to 100). Ivan, Ilgiz, Mikael, and perhaps the full time devs, will get a bigger weighting.
We use the results to create scaled payouts for everyone.

*We may have to include full time users in this as well, to get a relative value to scale the part time payments from.

Alternatively, we could just rely on ex-core deciding payouts if that is their preference. I’ve had good luck with coordinape/coordinape like systems in the past but I can see how it could breed politics with the wrong group (though I feel we have a fantastic group here as well )

BYLI · April 12, 2022, 2:08pm

I think for 1, I totally agree with Van0k.
For 2, I think a fixed price is good. But there are several points needed to discuss clearly, the first is the fixed price, the second is what percentage of the USDC salary basing on the fixed price (will be rewarded as GEAR token) and the third is how long the GEAR reward will be locked, how long the vesting period.

amplice · April 13, 2022, 10:43am

Directionally agreed with @Van0k here.

Just to clarify on the work % system.

Basically, the percentage thing is an honor system, you gauge for yourself how much you are doing compared to how much you would be doing if you were full time, then report the % each month.

It’s not about hours, but overall how you feel about a mix of hours, effort, and work completed, and its reliant on each individual to judge themselves.

Is the above correct? If yes, then I think it’s fine, at least for this initial group. Hopefully nobody will take advantage of the system.
Re: token comp, I broadly agree that some mechanism to get just a bit more token rewards for being early would be cool, and that I’d be happy to give up USDC + do longer vesting or options or whatever to do so.

I think @Van0k’s proposal to allow us to opt to get less USDC in favor of tokens that readjust to TWAP less frequently is a reasonable solution. I’d be fine with longer lockups/vesting on this, whatever is needed.

Or alternatively maybe something like, every month we get to buy GEAR at some discounted (dunno, 25-50%) price relatively to monthly TWAP, but its locked up/vested for a longer period of time or something like that? Just throwing ideas out.
What constitutes as work exactly? Is me replying to this thread work? I am also a delegate after all, so this is kinda my responsibility either way.

Is discussing things like tokenomics/DAO in discord work? I guess this is ‘work’ even though for me it doesn’t feel like it, just feels like chat. Obviously @ov3rkoalafied putting together a detailed tokenomics doc is work, but if I am just giving my dumb opinions on his big detailed document, is that also work? Not a very important point here, just wondering how others feel because I often feel discord chat is not “productive time” but maybe that is a problem with my mindset, we are DAOOOOing after all.

TLDR: Overall the proposal is good. Seems like most people agree about wanting a bit more token upside and less fixed salary, so lets let @ivangbi keep his favorite coin (USDC) and we can keep more of our favorite coin (GEAR).

ov3rkoalafied · April 13, 2022, 3:07pm

I disagree with point 1 because of the concerns you bring up in point 3. Work is so subjective. Let us all grade each other and you at least get a large number of data points with not much additional effort that should capture an average of what “fair” is. Let everyone grade themselves - how are you going to do that? How do you know that what you are doing is right compared to how others grade themselves? You don’t, so you probably have to… well, compare yourself to others! Which brings me right back to let’s just all grade each other.

Also I personally want to keep the 50/50 distribution. Need the USDC to pay taxes on the GEAR being recieved. I guess ultimately it doesn’t matter except the higher % GEAR we give out the more likely it is some of it may need to be dumped. I’d rather do 50/50 and let ppl buy more GEAR with the USDC if they desire.

amplice · April 13, 2022, 10:26pm

To be clear i’m not opposed to using coordinape or something like that, it’s just a matter of whether we want to do that immediately or roll with the honor system for a 3-6 months before investigating the options and switching to some specific platform, whether coordinape or otherwise. Pretty agnostic here, fine with what’s proposed, also fine with alternatives.

mugglesect · April 17, 2022, 11:26am

Finally thought this through entirely

While the proposal’s great and tbh for the people who are looking for flexibility it is bang on. It limits long term incentives

For contributors who are looking to contribute for a longer term(years) and will be giving up a current stable job. The incentives don’t entirely justify the higher risk

While $63,360 annually is not bad, it’s low compared to current market conditions for people in good existing job roles.

The reason to take such a pay cut though is usually an equity allocation which has more future upside. Majority of the projects allocate 0.25-1% to initial core workers but with lock + vest in place.

The current allocation of 0.02% annualised is something that doesn’t entirely offset the additional risks that one might have to take as they give up an existing stable position with good future growth possibilities to move to gearbox. There’s an additional loss of perks + benefits that have to be given up from insurances, term plans, healthcare, meals, travel budgets, tax savings and more

For the above reasons, I would want the DAO to explore the possibility of moving contributors who want to move full time(primary job) for a longer term to a plan with token allocations that are as per market standards with the same terms as the initial ex-core ie 1 year lock, 18 month linear vest, alongside the USD compensation. This will ensure there’s enough incentive for people to truly dedicate time to Gearbox as primary work and have long term success of the project in their mind always.

asot · April 17, 2022, 9:46pm

I think it is great to continue working out appropriate remuneration schemes for contributors and I am generally in favour of the proposal and would just like to add two thoughts / considerations:

Compensation should in my opinion certainly comprise both USD stablecoins (taxes, living expenses) as well as (locked/vesting) GEAR tokens (long-term incentive alignment / upside)
As mentioned by @mugglesect, I consider it important not to underpay contributors. This is a fast-moving space and we should not be too stingy with our treasury resources and stifle our growth in the process, especially as it relates to the quality of contributor talent the project can attract. In the global competition for talents with sought-after skills (especially devs), a salary of USD 63,000 will likely not make people work on Gearbox full-time if they already have a secure junior-/mid-level position in a more established startup or global tech firm

amantay · April 18, 2022, 9:45am

Generally support the proposal.
Because my normie tradfi job pays my bills, I can contribute to Gearbox mostly for fun and don’t care much about increasing fiat compensation.
I totally agree with @Van0k regarding GEAR compensation though. I’d rather go for a fixed GEAR amount with no dependancy on the actual price @ivangbi. After all, we’re aiming GEAR to the moon, would be fair to have certain GEAR part according to initial expectations and then work hard to make it’s actual value x100

ivangbi · April 18, 2022, 10:04am

Generally support the proposal.
Because my normie tradfi job pays my bills, I can contribute to Gearbox mostly for fun and don’t care much about increasing fiat compensation.
I totally agree with @Van0k regarding GEAR compensation though. I’d rather go for a fixed GEAR amount with no dependancy on the actual price @ivangbi. After all, we’re aiming GEAR to moon, would be fair have certain GEAR part according to initial expectations and then work hard to make it’s actual value x100

As per the notes by you ser, @Van0k @ov3rkoalafied @amplice & everyone - agree on some fixed idea overall, will try to put something more refined together for this. The concept makes sense, so as early working members see more upside than just 2x bonus to the USDC notional. Ok clear! Brb with that.

Is discussing things like tokenomics/DAO in discord work? I guess this is ‘work’ even though for me it doesn’t feel like it, just feels like chat. Obviously @ov3rkoalafied putting together a detailed tokenomics doc is work , but if I am just giving my dumb opinions on his big detailed document, is that also work? Not a very important point here, just wondering how others feel because I often feel discord chat is not “productive time” but maybe that is a problem with my mindset, we are DAOOOOing after all.

As for the @ov3rkoalafied note on how to access work and @amplice suggestions: generally, comments ona. doc (unless lowkey re-writing) or delegation work are not counted here. Delegations are a separate thing which might have its own incentives once we come to that part. Work is work, operational. Comfy chat talking while often being important, is not operational work that needs execution. The goal is to have approx deliverables, not to access every hour of work. If you did 1-2 docs in a month, it can’t ever be sold as full-time really. For example, a dev full-time literally remakes an entire app and flow, contracts, etc.

I believe we will not have issue here at first, and once we scale, it will be committee-based anyway.

Also thank you for great notes to @C3_Group! Noted on all.

For contributors who are looking to contribute for a longer term(years) and will be giving up a current stable job. The incentives don’t entirely justify the higher risk. While $63,360 annually is not bad, it’s low compared to current market conditions for people in good existing job roles. The current allocation of 0.02% annualised is something that doesn’t entirely offset the additional risks that one might have to take as they give up an existing stable position with good future growth possibilities to move to gearbox

Now to the point of @mugglesect and @asot: you are right, so for not fully dev roles (which do seem to have at par compensation and beyond) there is no current goal to turn it into absolutely full-time stuff in that regard and match a web2 comfy salary of a big specialist. For example, DAO work is not 24/7 and is very ad-hoc, so the proposal was made with that in mind. That is to not end up with too many people truly full-time and then not know what tasks to give to each other. That’s just the start though, please correct what’s wrong. For example:

for devs, they get truly full-time larger rate higher than market or same. I assume no issues there?
for non-devs, it’s supposed to be part-time mostly, unless they come up with roles and tasks to rally do daily, whereas then the compensation can be upped with longer vesting

Does this make sense?