DXdao Compensation Structure Overhaul - June 2021 [Draft Proposal]

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The goal of this proposal is to outline the new compensation structure at DXdao. To ensure long term alignment with DXdao and remain competitive with market salary rates, we have reexamined and restructured the current compensation structure. If this proposal passes, we will be transitioning away from the current Worker Compensation Guidelines.

The new proposed contributor level guide and compensation can be found here as well as in the chart below.

To further clarify and explain the proposed level guide and compensation we have prepared a Q&A to answer any pertinent questions. Any questions and feedback around this new structure are appreciated.

New Compensation Structure Q&A

How will new levels be determined for current contributors?

Once passed through governance, contributors should closely assess the language presented in the new compensation structure and have a discussion with their squad lead or other relevant contributors to their vertical. Contributors should make an educated decision surrounding their level based on the updated level descriptions and any feedback received. If a contributor doesn’t feel a level completely describes them, they should start at a lower level. Although there is no direct conversion, generally speaking contributors are likely to fall within the following levels:

image

When will the new compensation structure go into effect?

After discussion on this forum post, a proposal will be made on mainnet and xDai. If this proposal passes, the structure will be considered in effect. This is expected in 1-2 weeks depending on feedback.

What if I have an active worker proposal with the old compensation when this goes into effect? Will it be retroactive?

The signal proposal will have a date in the future when the new guidelines will go into effect. Only proposals after this date will be able to use the new guidelines as a reference point.

How do you plan on calculating DXD with this new compensation structure? And what about vesting?

The current plan is to use the current DXD price instead of ATH based on the DXD price at the time of proposal submission, and for all DXD to be vested linearly over 3 years with a one year cliff. Governance can implement more specific processes ensuring that proposal submission times are not gamed.

How does DXdao compensation compare to the rest of the market?

This is a snapshot of compensating in DeFi from January of 2021. These guidelines are meant to be competitive. The Sushi compensation guidelines and the YAM compensation guidelines are relevant. Other anecdotal data for compensation in non-DAO projects was also considered, as well as feedback on the Marketing Lead search. This is also meant to account for the unique relationship of being a contributor or “contractor” to DXdao.

How do “Promotions” work with the new level system?

Like all worker engagements, promotions are led by the individual contributor, who can apply in a new worker proposal to be at a higher level. The community will provide feedback on the worker scope in the forum and squad leads are encouraged to vocalize when a contributor in their squad has misrepresented their level, be it to the low or high end. REP holders will use various signals from the community and collective to determine whether or not to approve the “promotion” to a higher level.

What is the goal of the new compensation figures?

This new structure represents a small increase to base salary and a larger alignment of incentives through vested DXD which was previously a nominal amount. Deeper commitment and experience results in deeper alignment.

Are there other changes to the compensation structure and proposal process?

Yes! Changing the compensation structure is a good opportunity to update other things in the proposal process. All of the above is just a starting point and eager for more feedback on this plan and what else to improve. Other items to consider:

  • Switching proposals to three month cadence
  • Separating the trial period entirely
  • Bonuses and other incentives
  • Unification of contributor proposals
  • Legal and other worker costs
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Thanks, Melanie, and the rest of the contributor experience squad.

For anyone who might have missed it, the precursor to the overhaul is the recently conducted contributor compensation structure poll.

I support the initiative, in particular with regards to extending the vesting period for DXD to 3 years. That should help attract people dedicated long-term, and deter those who may not truly believe in the cause of the collective.

Furthermore, although the initial compensation for the first few months is reduced, I am happy to see, and it does seem appropriate, that the trial period will be separated, in order to avoid any anonymous contributors taking advantage of any upfront payment.

Overall, I believe the changes are a step in the right direction.

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Would the compensation level descriptions be an appropriate place to add a few comments introducing performance expectations at each level, e.g. effective communication within a team structure emphasized at lower levels, monitoring and delegation of necessary maintenance tasks such as updating informational documentation in various forums at mid-levels, mentoring and onboarding new members at higher levels?

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Hi, Colt! That’s a very good suggestion. Similar info does actually already exist though /see link bellow/. It just hasn’t been made easily available, yet. The descriptions in this particular table are intentionally written in a broad concise manner. In a startup environment, it is important for individuals to be comfortable with ambiguity, roles are fluid and each contributor might wear few hats. Hence, the descriptions used in this table tend to serve as an overview of the individual’s experience with regards to their past career, together with their familiarity with the disruptive Web3 space. Aside from that, any position-specific description of duties and expectations, as you rightfully expect to see, can be found within the “Open Positions & Bounties” tab of the soon to be officially published Documentation Book. As the dao is a sovereign autonomous collective, it is not incorporated and it does not employ any workers. The distributed community independently interacts with the smart contracts, and freelance contributors can hop on and off to assists with anything they see themselves fit to do. That’s why anyone engaging with the community is asked to do so along with a proposal outlining the scope of activities they wish to be a part of, without anyone above them telling them what to do. It is the complete opposite of what Uber does. Uber does tell drivers what to do, but pretends it is not their employer.

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Hey everyone!

Wanted to step in here. Throughout our process of creating this overhaul I’ve had notes surrounding burnrate, but wanted to cement a ‘mostly’ accurate snapshot after the implementation of the overhaul, and make it visually digestible to those still confused with the implications of this overhaul.

This sheet accounts for a rough translation of all current contributor levels and time commitments to the overhaul, and displays an arbitrary “risk” profile. This sheet accounts for both DXD and the salary changes. There is more context directly in the sheet.

I will be sharing at the upcoming Governance discussion.

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Completely forgot to comment on this but I will leave some thoughts.

The compensation structure is far too weighted towards DXD for the lower tiers and this does not make sense as the spread between the top and bottom tiers is only 20%. Lower tier contributors do not have as much weight to affect the DAOs success as much as the higher tier contributors.

I believe that the range should go from 10% all the way up to 70%.

Will REP stay the same or will that also be changed?

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Great post and nice initiative to simplify compensation within our DAO.

Despite being the first real DAO, DXdao has some catching up to do with regard to DAO contribution and compensation structures.

Feedback:

  • I know DXdao is all about flat hierarchies, but that doesn’t scale, unfortunately. Some people are required to manage others and that doesn’t necessarily reflect their compensation structure - some people can be amazing developers, but their managerial/leadership skills are not great and vice versa. I personally found this compensation guideline to be intriguing for this reason: Otis Compensation (Public) - Google Sheets
  • Crypto-native contributors want flexibility and our current compensation guidelines don’t really allow for that. I would therefore also recommend having a look at the IndexCoop compensation guidelines, they have been setting the standard in the space in my opinion: https://twitter.com/dberenzon/status/1415014149814378505

Unfortunately I can’t join the call today to discuss these changes, but we’re already on the right track.

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I think it would good to have a worker proposal “status”.

The status can be:

  • Draft: Daotalk topic.
  • Accepted: Accepted with a proposal in a on chain proposal.
  • Rejected: Rejected with a proposal in a on chain proposal.
  • Finished: The proposal time or work proposed was finished.
  • Payed: The proposal was finished and payed.

Between the Accepted and Finished status the proposal can be reviewed by other workers, a proposal can finished with different payment terms to the ones that were proposed.

The important thing is to reach the Accepted and Finished status on chain, for this no payment or transfer needs to be done in the proposals submitted. The worker can just submit signal proposals (proposals with no blockchain actions) to get on chain validation of his proposal status.

A worker can also submit a proposal to has his worker period Finished and Payed in the same proposal.

Something like this would also help to unify the contributor proposals into the compensation structure.

Another requirement that we should add is that worker/compensation proposals should be submitted in schemes with at least 4? days of voting time and in specific networks, now for example it would be good to only use contribution reward in xdai for worker proposals, and when a worker period reach finish status the rep and dxd vesting can be claimed in mainnet if the worker wants to.

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@levotiate REP will remain the same in this structure

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Thanks for the feedback and sharing these links @heychristopher ! It’s great to receive input from long term DXdao investors and members. I hope feedback from you and others continues.

First, the Otis Compensation model is very interesting, well thought out and organized. If DXdao moves away from our current flat hierarchy I think we should definitely think of using this as a model to follow.

Will take a closer look at IndexCoops compensation guidelines to see how we can improve ours in comparison to theirs.

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@AugustoL I like these suggestions. I’d like to play around with these ideas and incorporate them into the overall proposal process and get back to you on what this looks like

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In addition, as iterated by @sky, let’s not lose sight of answering these important governance and REP questions as well:

  • How do we treat contributors who fail or delay the governance process if they aren’t earning REP?
  • Do we slash REP? If so, how much?
  • Do we slash pay instead of REP?
  • Remember when there was a strong belief that REP had a USD value?
  • How do we treat pay in relation to REP?
  • Should we look backwards? Or implement these new rules going forward?
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IMO we should slay both a and a slay that the contributor would feel starting a 10% slay in a 2 month delay and increasing 5% per month. The Slay of REP can be equal or higher than the financial slay %, a higher REP slay % would mean that in addition of a delay the derivables were not enough or what it was commited.

In short, same amount of REP and USD regarding delays, starting ata 10% cut in 2 months. And regarding performance a slay in USD and REP, with the slay in % REP being decided by the dao.

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I agree, that a 10% slay of REP and USD after proposal submission has been delayed for 2 months seems fair. I also agree with the additional 5% slay in both REP and USD with each month further delayed.

As far as an additional slay of REP and USD around performance and deliverables, I’m not sure, seems a little too subjective for me.

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Below is the final proposal text for the compensation overhaul at DXdao.

This proposal explains the new compensation structure at DXdao. The new structure is meant to ensure long-term contributor alignment with DXdao and remain competitive with market salary rates. Once this proposal passes, contributors to DXdao can reference it for compensation in proposals starting from the date of proposal passage (UTC time).

The new proposed contributor level guide and compensation can be found on ipfs here, as well as in the chart below.

DXD compensation

Contributors should use the current DXD price at the time of proposal submission. All DXD compensation should be vested linearly over 3 years with a one year cliff. Governance can implement more specific processes to calculate the current price and ensure that proposal submission times are not gamed. To account for the price volatility for crypto assets and protect the treasury in unforeseen events, DXD compensation has a floor price of which the DXD price shall be calculated. The initial floor price should be set at $225. This ensures a maximum annual 3.37% release of current treasury DXD figures, compoundable over three years.

DXdao on-chain governance may adjust this number at any time as it sees necessary.

Determining compensation levels

Current and future contributors should closely assess the language presented in the compensation structure descriptions and have a discussion with their squad leader or other relevant contributors to their vertical.

Contributors are encouraged to meet with at least two (2) other contributors to discuss the new compensation level. Previous Level 5 contributors and squad leader should meet with at least two (2) other squad leaders to discuss what level you would fall under in the new Compensation Structure. @melaniedavis and the Contributor UX squad can also provide support.

Contributors should make an educated decision surrounding their compensation level based on the updated level descriptions and any feedback received. If a contributor doesn’t feel a level completely describes them, they should start at a lower level. Although there is no direct conversion, generally speaking contributors are likely to fall within the following levels:

Current Level New level to consider
Level 1 Level 1-3
Level 2 Level 2-4
Level 3 Level 3-5
Level 4 Level 5-7
Level 5 Level 6-8

Future contributors are encouraged to read the level descriptions and consult with their squad leader and the Contributor UX squad to determine an appropriate level.

Ultimately, DXdao’s on-chain governance has the final say.

Promotions

Like all worker engagements, promotions are led by the individual contributor, who can apply in a new worker proposal to be at a higher level. The community will provide feedback on the worker scope in the forum and squad leads are encouraged to vocalize when a contributor in their squad has misrepresented their level, be it to the low or high end. REP holders will use various signals from the community and collective to determine whether or not to approve the “promotion” to a higher level.

Product tokens

Product tokens will be left up to product squads, but if a DXdao contributor is focused on a specific product, then a portion of that contributor’s DXD compensation may be substituted with the specific product token.

Additional FAQ can be found here

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Thanks Melanie! This new compensation structure would be a huge step forward for DXdao and its contributors. There is still more work to be done to build out the proposal process and work culture of DXdao, but this is a material improvement for DXdao, DXD holders and contributors, compared to the current guidelines.

Curious to hear others thoughts/opinions on the proposal text as this will be referenced in the future. I think the two areas to take a closer look at are:

  • DXD compensation - vested over 3 years with a 1 year cliff, using current DXD price with a minimum DXD price of $225
  • Determining compensation levels - a process for transitioning to new system

We are a bit light this week bc of ETHcc, but we will be discussing this on tomorrow’s governance discussion and then I think we can move forward with an on-chain proposal.

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I think this is a good idea.
Vested tokens makes more sense than assigning a value to rep and then giving extra DXD when max rep is reached (I think holding rep should be pro bono work but not lead to significant financial incentives which are best reserved for DXD) or to having compensation based on the time someone has stayed at the dxDAO.
For the cliff, I think it should be a real cliff such that no DXD is given at all if the worker stays less than a year. This ensure we get long term workers and that working badly (leading to firing before a year) is not incentivized.
Compensation may still look a bit high but it would probably depend of how it implemented in practice (we saw that workers used to gravitate toward the higher levels of compensation, while to be fair workers should be more evenly distributed among the levels).

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Proposal is live: Alchemy | DAOstack

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I voted against this proposal, mainly because as I reviewed it today, and looked at @KeenanL’s spreadsheet, I saw that at a DXD price of $225 and with the current headcount, the DXD leaving the treasury in a year would be 10,374, which represents over 20% of the circulating supply. I think the 3.37% number is referencing total supply and only looking at the amount released from vesting over the next year. I think we should be painting a clear picture of the budget impact of this proposal, and the release of DXD from the treasury. I also think it’s important to solicit clear feedback from DXD holders and the wider community, and to do so specifically on the impact to circulating supply of DXD.

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I voted against this proposal because I think we need to request feedback from DXD holders (via Snapshot) first as they will have the most impact from the currently proposed new compensation guidelines. I also think a clear representation of how many DXD tokens are actually leaving the DXdao avatar address per year is important.

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