Changing the Game With Variable Compensation | BanklessDAO Weekly Rollup
Catch Up With What Happened This Week in BanklessDAO
Dear Bankless Nation 🏴,
What a week! But the BanklessDAO family is still heads-down buidling. With projects and governance proposals coming in hot, we are not only buidling things, we are actually working on the very foundation of our DAO.
The GSE team has drafted its first proposal: the DAO Constitution & Improvement Proposal Standard [bDIP-0], which aims to properly structure our organizational and governance processes. With the BanklessDAO Constitution & Community Handbook, they are moving to have all foundational documents in one place to ensure easy accessibility.
Another proposal in the Forum discusses the migration of our financial operations to Polygon, with an eye on mitigating the high gas costs on Ethereum Mainnet and expanding BANK’s utility into a multichain world.
With the launch of Sats & Gwei, a weekly podcast on crypto and blockchain happenings all over Africa, BanklessAfrica is putting the ‘B’ in Buidling. They show no signs of slowing down, bringing the latest updates to the crypto curious and those who have already found their footing in this space.
Finally, having launched two collections — Work/Life, and Forever Dream — Lanz and Migrants NFT are in the midst of raising funds during Gitcoin Grants Round 14. The project creates NFTs based on powerful stories from the migrant worker community.
It’s been a heck of week my friends — settle in with the Rollup, listen to a podcast, read an article or two, and remember that together, we go further.
🙏 Sponsored by CitaDAO
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🚀 Gitcoin Grants FTW
Support your favorite projects and founders as they move to receive greater funding from Gitcoin and its community of public-goods supporters. Quadratic Funding means broad community support sends matching funds through the roof! With as little as 1 DAI, you can support these BanklessDAO projects and builders and exponentially increase their total funding.
🎙 BanklessDAO Podcasts
Join us for this New Joiners Session to learn more about BanklessDAO, understand how to get involved, meet mentors who could guide you on your journey into DAOlife, and bond with other new joiners who may become fellow travelers on your journey.
Our friend teeLEROO and the Newsletter crew have kicked off a Crypto Portfolio Challenge, a fun contest where bDAO members have a chance to create a practice investment portfolio. Based on the performance of your portfolio, you could win 5K BANK! This contest is sponsored by BanklessDAO’s newest newsletter: The DeFi Download. While this is a fun way to practice investing, the market is looking pretty harsh out there. DO take care of yourself. We get through these markets TOGETHER.
We are happy to announce that BanklessDAO will be featured as a media partner at Spain’s first Web3 event, taking place July 6-8 in sunny Barcelona! ETH Barcelona is a community-led passion project about the Ethereum blockchain, cryptocurrency, and decentralization that celebrates the community and its values. It focuses on education, innovation, art, and creating positive social impact.
If you would like to attend the event, get your ticket at https://ethbarcelona.com.
We have been provided with two extra tickets that are strictly for the bDAO community! To be eligible for a ticket, you must be L1 or above, and be sure that you can make it to the event (so the ticket doesn't go to waste). Sign up now! Submissions will be accepted until June 23 at 15:00 UTC. The winners will be announced at the Community Call the next day. If you are interested in helping the bDAO team represent at ETH Barcelona, check out the associated thread in the BDAO@GLOBALEVENTS category at the bottom of the server. See you there!
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Changing the Game With Variable Compensation
Author: Jake and Stake
In many professions, particularly sales, variable compensation (or performance-related pay) is used as a way to align employee incentives with business incentives, leading to positive outcomes for both parties. When the business makes more money, the contributor makes more money.
This model rewards outcomes instead of time worked, giving contributors a direct stake in the outcome of their efforts as well as autonomy over their work. Someone who creates great results for little effort will earn the same as someone who toils for hours for equivalent results.
Variable compensation can be implemented in a variety of forms:
These compensation models ultimately link performance to strategic goals and the recognition of different levels of achievement. In practice, we already exchange “equity” (in the form of governance tokens) to fund projects, so we’ll explore two models that the DAO might find particularly useful: commission and bonuses.
Commission and Bonuses
With commission, contributors receive additional compensation in direct proportion to the revenue (or profit) that they generate. This compensation structure works particularly well with revenue generating projects and is the typical compensation model for customer acquisition (sales).
Commission is flexible because the percentage can be adjusted to reward the sale of particular products. Given a product that’s not doing well in the short-term but is important for the long-term roadmap, a good commission structure can incentivize sales people to change priorities.
Bonuses are similar to commission, but the additional compensation that contributors receive is usually fixed and based on meeting a particular milestone or achievement during a set time period.
Both of these compensation models — commission and bonuses — can encourage DAO contributors to create projects that generate income, because DAO members have control over how much they make or don’t make.
This increases the autonomy of contributors and turns revenue generation into a game that can be optimized. We can make work more like a game and less like ‘work’ if we have systems in place that allow people to 1) plug in easily and 2) see how others are doing.
Humans want to be valued, and compensation structures like these make value explicit through receipt of direct and specific rewards. If implemented well, this could lead to a culture of high performance within the DAO. Smart contracts have created the opportunity to design our own incentive structures, and variable compensation is another tool that we can experiment with.
Compensation Design Challenges
However, there are some downsides.
This turns project leaders into founders and if the project doesn’t work out, you may get little for your efforts. This is why most variable pay plans include a base salary. BANK can be used as a base compensation, but we should make it clear that project contributors will be rewarded for the value they bring, whether it’s revenue or some kind of internal value.
Execution risk is somewhat unavoidable — with or without variable compensation. At the very least BanklessDAO will have funded the education of its contributors.
There are places where variable compensation simply doesn't make sense. One instance is cost cutting. If contributors are rewarded based on how much they cut costs, this can lead to a downward spiral where growth is reduced through cost reduction. These are often competing goals.
If two separate work streams of a project (or the DAO) implement incentive structures that run counter to each other, it could neutralize the benefit of both. And if the goals, KPIs, or quotas are unattainable, people will end up burning out and rage-quitting altogether. Poorly designed compensation can lead to worse overall outcomes.
Compensation structures shouldn’t be overly complex. If the structure is too complex, it will reduce overall effectiveness, because it’s hard to see how your results drive your compensation. It should be made abundantly clear how this kind of compensation affects the project overall, why compensation design choices were made, and how contributors are rewarded for their efforts.
If people feel like they’re not measuring up to their peers or they feel like they aren’t bringing value to the projects they’re participating in, their vibes will be low. We all want to create a fun place where we get paid to do the things we love to do, but people are different and they will have different outcomes. This could lead to increased competition in ways that are stressful.
Given the above concerns, I don’t think variable compensation is appropriate for all functions. I do think it could be implemented if we choose effective parameters and design in the open.
Set Your Own Goals
This could work for bDAO if we let people set their own goals across all positions (even functions that do not drive revenue).
By allowing members ownership of their objectives we give them autonomy over their work. This is really useful for roles that don’t directly tie to the bottom line and roles that are more difficult to quantify. For instance, while activities such as answering support questions or onboarding contributors don’t, by themselves, create revenue, they’re still very valuable.
Allowing contributors to set their own goals frames the question of success within the scope of the project and gives each person a stake in delivering something that matters.
Avoid Bad Goals
But wouldn’t people just game the system and set bad goals? Yes, there’s always the possibility, but when people must state their goals publicly, there is social pressure not to under-shoot.
The Grants Committee and project leads can work together to figure out what the goals are and to keep team leaders accountable. All variable compensation and goals are reported to the GC. When contributors know that their team, project lead, and GC can see what their goals are, they’re more likely to set better ones. Goals should be quantifiable and assessed/evaluated on a regular basis (probably monthly).
“What gets measured gets managed.” - Peter Drucker
We can also implement a base pay (we already do) and a threshold that unlocks a portion of the commission/bonus. This can be considered “partial credit” for the work done to achieve the intended outcome. I propose a 50-50 split for base to variable compensation with half the variable compensation allocated after hitting a pre-defined mark. This is simply an example, and the numbers can be adjusted by each team.
The bonus or commission can be taken in BANK or the token that is paid as revenue. If we get members to think like owners and give equity to key players in proportion to the contribution that they provide, we will retain contributors. The best people want a stake. Winners win, and they know they can participate in the upside.
The End Goal
This mechanism allows contributors to see and monitor their growth within the DAO. Churn should go down because people see that they are making progress and challenging themselves. This is a key factor in creating feelings of fulfilment in life. And while we can’t make people feel fulfilled (or feel anything for that matter), we should endeavor to create an environment where people can make good money and strive towards shared success.
The goal here is to incentivize everyone to think and act like owners. While holding tokens gives people ownership, we can enhance this by implementing systems that get everyone aligned around a common goal.
The ideal scenario is a place where we create a game-like environment where people can play and experience flow-states. A place where the more money you make for your community, the more money you make for yourself. A place where helping to make the pie bigger earns you a bigger slice, plus a dollop of cream.
🎣 Phishing School
Authors: d0wnlore and the InfoSec Team
Help bDAO Ban Scammers; Scammers Are NGMI 💀
Crypto markets may be down, but this does not deter predators in the dark forest that is Discord. We have noticed an uptick in Discord scam DMs sent to bDAO members in the past few weeks.
These scammers are preying on new vulnerabilities people have developed as they watch the price of their crypto assets drop significantly. Or perhaps they and their organizations are trying to make up for their existing bets on stealing money from a crashing market by being more aggressive.
Regardless, we all need to step up our vigilance to help keep bDAO and the wider ecosystem safe. This starts with reporting scams you receive through Discord DMs to our #report-scams channel, with a few caveats.
Here are some quick tips on how to successfully report a case of Discord phishing to our #report-scams channel. With the right information, the InfoSec Team and bDAO administrators will be able to take action on these cases quickly.
Three Things to Do When Reporting
Do send your Discord scam reports to the #report-scams channel. Having all reports sent to this specific channel helps provide consistent and timely information to everyone, not just those who can take administrative action.
Do include the User ID or full username (username#tag) in your report. In particular, the User ID is required for us to make it easier to ban users that may have left the server before we took action on them. Otherwise, including their full username helps us track down specific users easier.
Do report scammers if you are confident that the scammer is, or was in, the BanklessDAO Discord server. Our main focus is on pruning the server of undesirables. But it's not possible for us to proactively ban every single scammer that is using Discord. It's very likely scammers will be DMing you through other servers as well.
How to Get a Discord User's ID
Other than getting the full username (username#tag) of a user, the easiest way for reports to be actioned is through a scammer’s User ID. This way we can take action regardless of whether they are still active in the BanklessDAO server or have changed their Discord username. This information is gathered through a special context menu item that can only be seen when Developer Mode is turned on. This can be activated in desktop, mobile, and web Discord clients.
On the Web/Desktop client, turn on Developer Mode by going to User Settings > App Settings: Advanced. On the mobile client, turn on Developer Mode by going to User Settings (bottom-right icon with your PFP) > App Settings: Appearance.
Developer Mode will add a new ‘Copy ID’ option to the context menu whenever you long-tap/right-click on a server, channel, or user.
Are there risks to turning on Developer Mode? None, as of this writing; all this mode currently does is add a Copy ID option to your context menu. This will allow you to copy the ID of a Server, Channel or User.
Turn Off DMs Based on Your Contribution Level
For those joining us on Discord for the first time, it may be prudent to just turn off DMs. Most scam DMs will prey on people new to crypto, Discord, and the relationship between the two. The less experience you have in this space, the less likely you will actually need to have DMs turned on, as much of your high-value communication will be in the public as you learn and level up with your frens. If you or a fren wants to bring the conversation to a DM, you can arrange things by using the Friends system and/or temporarily allowing DMs for the server both of you are on.
Proposals in Discussion
Our current organizational structure and governance processes are spread across Notion, Forum posts, Snapshot, and community members’ tacit knowledge. Documentation is not easily accessible nor internally consistent, and knowledge is increasingly lost when experienced members leave the DAO. Without a readily agreed upon and accessible standard, macro changes to our community architecture are impossible.
The BanklessDAO Constitution & Community Handbook changes this. It represents a single ‘source of truth’, a consolidation of previously dispersed governance guidance. This document aims to crystalize the DAO’s structure and decision-making processes. It’s one of the most important proposals we’ve had in some time, so please review, comment, and vote.
Coordinape is the platform we use to distribute 4.5M BANK per season for contributor rewards. This represents around 15% of our total seasonal budget. As innovative as it is, there is still much room for improvement. Coordinape is complicated for many BanklessDAO newcomers, not as effective as it could be at rewarding contribution, and doesn’t offer an incentive for contributors to move up member levels. This proposal seeks to create a new Coordinape model that more closely aligns DAO rewards with member contributions and better incentivizes people to work toward greater impact and more sustainable involvement in the DAO.
The “DAO Contributor Sentiment Tracker” aims to be the first data-driven measurement and evaluation survey about the behaviors, attitudes, and sentiments of DAO contributors. We believe that while there are several data points and rankings of the fastest growing and most active DAOs, there is a lack of understanding around the motivation for contributing to DAOs and the sentiments following contribution. This is an opportunity for BanklessDAO to take ownership and showcase itself as a thought leader.
The BANK token has been operating on Ethereum Mainnet since its inception. Given the high liquidity, security, stability, and decentralization benefits of Ethereum Mainnet, this will continue to be the case. However, it’s necessary to explore additional options due to high gas prices, the cessation of the gas subsidy agreement with parcel.money in June 2022, and the desire to increase tradability of BANK and make it more accessible to members. This proposal offers a way forward for migrating BANK to Polygon and provides a template for how to facilitate its use and integration in bDAO and our guilds.
✅ Action Items
🗳 Forum: Comment on the DAO Constitution & Improvement Proposal Standard.
🤝 Action: Check out Bankless Card in bDAO’s Discord and apply for a role.
☎️ Telegram: Follow BanklessDAO on our favorite chat app.
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