KIP-10: KlimaDAO Compensation Framework

json

Summary:
The DAO would like to ask permission from the community to formalize the contributor compensation process and framework. This framework will be the guidelines in which the DAO can operate to pay its contributors, if any amendments are needed they must undergo another community vote.

To ensure the longevity of the protocol, increase liquidity initiatives and to help fund future projects the DAO would like to increase the treasury revenue gained from bonding from 10% up to 30%. Note, increasing the fee will not negatively impact staking or bonding.

Abstract:
The DAO has seen incredible growth in the amount of contributors since its inception. The protocol grew to an average market cap of over $100mm with over 80 contributors within 3 months of operation. Since then, the protocol has seen a contraction in market capitalization and with that a contraction in treasury KLIMA valuation. As stated in a recent Klima Medium Post, the DAO is focused on the continued development of the protocol. A formal framework is necessary to ensure fair and equitable compensation for sustained long-term growth and development.

Currently the contributors are compensated at the beginning of the month based on several metrics which include but are not limited to:
Consistency & Reliability - Do the contributors show up to the meetings regularly and are constantly driving DAO initiatives?
Vision & Mission Relevancy - Are the current workstreams in line with the DAO’s mission and vision?
Deliverables - Is the contributor driving deliverables
Impact - How much impact did the work have on the DAO or protocol at large?

The DAO treasury currently holds <30,000 KLIMA and the current payout per week to contributors is ~ 1.7k KLIMA.

From the beginning the DAO wanted to ensure fair and competitive wages for the contributors. However, due to recent market conditions an adjustment to payments is needed to maintain the current level of development. It is important to note that all contributors are paid in KLIMA revenue that is acquired through bonding and so far only three compensation payments have been distributed.

Given the current market conditions, expected bond revenue, and amount of contributors within the DAO, the treasury only has a runway of approximately 3 months. This is based on the inflow of bonding revenue relative to the outflows from contributor allocations each month (assuming a price / Klima of $50). The DAO believes that continued contributor compensation is the best way to ensure protocol longevity and development. The proposed framework has two key components to it:

Department leads will be given an option to move toward vested KLIMA to help mitigate selling pressure and to allow for more immediate compensation to regular contributors
Increase the amount of KLIMA that is distributed to the treasury to maintain current contribution levels

It is important to note that for every KLIMA that is minted for bonds, 0.1 KLIMA is minted for the DAO. For context, Olympus does 1 OHM for 1 KLIMA minted for the DAO. The DAO would like to increase this up to 0.3 KLIMA minted for 1 KLIMA minted for bonding. This extra KLIMA will be utilized for liquidity endeavors, contributor payout and any potential outsourcing of protocol work.

Proposal: The DAO to adopt the formalized process and to increase the revenue gained from bonding to the treasury to up to 30%

chillinboy

Gotta pay people their fair share. If this helps then we have to support

0xFelix

Yes fully agree with this proposal. Continuing to build and expand the protocol is the only thing that matters at the current stage, and adequate compensation is a natural part of that.

thereckoner

As long there is also a threshold value of KLIMA above which 0.3 would go back down

babylon

Shouldn't 20% be enough, that is increase of 100%? Not saying that we shouldn't pay contributors how they deserve, but couldn't we increase it step by step? Once market becomes healthier (2-4 months) it will be huge amount compared to now. Lets increase it to 20%, and monitor how it performs, we can reopen this topic again in 2 months if we realize 20% is not enough.

json

babylon the increase will also include other endeavors

babylon the amount that goes to the treasury won't affect the market conditions in any major way. In fact the amount will actually unlock more capabilities for the protocol. For example, we will be able to pair Klima with gOHM to start that LP. It is important to note even with the increase in revenue we will not be paying out more.. in fact we are trying to reduce the amount of payout.

sambogoat

Broadly supportive of this KIP.

As stated above, a mechanism to reduce the revenue fraction given certain market thresholds should also be part of this KIP.

As a general DAO thing, it would great to see contributor spend and deliveries made visible to the DAO as a standard practice. Is the backlog open for all to view for example? Apologies if this is already the case.

Fonjix2m

What is the market conditions change and klima is back to $100 or $1000? Or this proposal assumes that klima value won't go back up? If the is a possibility that the market conditions may change then I will like the proposal to include a value at which if klima reaches, the % of kilma directed towards the treasury will change.
In short I will prefer an adjustable inbuilt function where we determine the upper and lower limits based on different scenarios of market conditions

tigerlily

The DAO is filled with the most productive and thoughtful people I have ever seen in an organization! I support anything that will ensure proper compensation to these selfless individuals, many who actually volunteered before, during, and after Klima launched for several months to build every aspect of KlimaDAO without ever asking for compensation and who didn't receive any compensation until December 2021. One of the biggest indicators of success for an organization is long-term high retention rate of active contributors, so let's ensure we really take care of our DAO contributors so all these rockstars stay put here. Additionally, this may help make space for more amazing talented individuals to join the Klima team, allowing quicker impact, scaling and growth of the our community, treasury, and the DAO.

F00

For context, Olympus does 1 OHM for 1 KLIMA minted for the DAO

This should read

For context, Olympus does 1 OHM for 1 OHM minted for the DAO

FluctusLux

Trim the fat. Adopt and increase to 20% increase. Reduce Bonding capacity by half. I don't believe every single one in the DAO is doing major contributions. 83 people is too many. Pretty sure only 20% of the people here are doing the heavy work. The rest are simply there to fleece the DAO or work to leverage and get liquidated.

Joaquin

FluctusLux Agree, the Software Development department of TechInsights Inc. in Canada has 66 members excluding department leads and the department maintains 4 platforms that produce millions of CAD dollars to the company per year. Nonetheless, there is no point in the comparison between an IRL company and a DAO so use my comment merely as an example of how much inflated may sound 83 less than part-time contributors in one single department for a common person (me).

In conclusion, I agree with the KIP, though I would enjoy having a more detailed description and efforts being made so far (or in progress) per department. Basic information.

What do you think @json and @tigerlily ?

tigerlily

FluctusLux Contributors are paid based on their effort, output, and impact, so those who aren't being paid much are not doing as much. Those who do the most heavy lifting are getting compensated fairly for that. I believe it is very shortsighted to say that any number of contributors is too many because as a DAO we should be staffing to fill every necessary skills gap within the organization so that we can scale the quickest on every possible channel/vertical if the DAO has the need and we have the ability to properly compensate them based on working capital. Keep in mind that we also have hundreds of volunteer contributors who work with our paid contributors collaboratively to facilitate amplification of all things Klima.

If we had a 10,000-person team as productive as our 100-person team that we have now, we could move exponentially faster to save the planet and push the world quicker towards immediate and measurable climate-positive actions. When we are able to support that amount of contributors with a sustainable working capital, we would be shooting ourselves in the foot if we chose not to.

Keep in mind that the paid contributors at the DAO work for you and all the rest of the Klima investors, not just "the DAO".

F00

Equity based compensation is based on a persons belief in and expectation of future value/price isn’t it? I’m not sure how I feel about adjusting equity compensation based on current price/value.

I do understand people may need a basic level of “fiat” comp. Can we structure compensation to have one part stable and one part KLIMA in that case?

Do we collect USDC from the protocols USDC/KLIMA LP?

lshmis

This KIP-10 should only be accepted if we reduce the bonding capacity. Otherwise it will further dilute stakers and i am not into that.

Regarding OHM minting 1:1 , they had 80% dilution in 7months while we have 50% in 3.5 months with 0.1 KLIMA minted for DAO and the only logical explanation to that is - questionable bond capacity.

Sirob

As a contributor I would support this (I am also obviously biased), but more importantly, as an investor, I would also like to see this being flexible on the downside and allowing the DAO take to go back to 10% if/when things improve. Hence I'd like to see a clearer methodology and strategy with milestones.

Andii

Sirob I very much agree with this.

sirthus

At this early stage of KlimaDAO's existence, recruiting and retaining top-tier talent should be one of the highest priorities. If we are not able to properly compensate our contributors, development will suffer and put KlimaDAO at a marked disadvantage when we can least afford it. Amending to 30% to fund DAO finances is the minimum that should be done. As the KIP notes, OlympusDAO does 100%.

I'd like to caution against casting aspersions against the Klimadao contributors. I contribute in several departments and am continually impressed with the surplus of talent and lack of ego I see there. I have seen nothing that makes me think any of them are trying to game allocations. Those who know me know that I would speak my mind if that was the case.

I will be voting For on this proposal to allow top-tier talent to build KlimaDAO into a world-class organization. We have the potential to be a game changer both in terms of carbon markets and in the nature of work, and this KIP is a necessary step to getting there.

vanisle_kahuna

In general, how are the detergent leads tracking metrics like consistency or impact?

ShredTheGnar

In tough times, organizations that survive and eventually thrive are the ones that are able to tighten belts and push through challenges. I don't believe it wise to expand payroll at a time when market outlook is tough, we have been unable to secure new investor interest and have so far not shown much in the way of visible progress - same old website, same old talking points, very little in the way of concrete results. Based on observations current investors can barely keep up with bonding as it is. The hard work of contributors is extremely appreciated but this should be put on the back-burner until there are signs of progress that are visible to those that aren't able to see 'behind the scenes' on the contributor server. Speaking as someone with experience running an organization that profited in every single year of the more than 10+ in operation, this does not appear to be the ideal time to increase costs.

sirthus

ShredTheGnar You say "so far not shown much in the way of visible progress" and I don't disagree, but have you considered this may be related to a lack of funding?

I am helping to process applications for the DAO and can tell you we have a giant pool of talent just itching to pitch in.

I think this next month, you'll really start seeing some of the hard work our existing contributors are putting in. And I think this is exactly the moment we need to bring on more talent and work harder. We have the first mover advantage for now, but ReFi is a rapidly evolving space with some heavily funded projects. Let's keep KlimaDAO in the lead.

FluctusLux

ShredTheGnar In tough times, organizations that survive and eventually thrive are the ones that are able to tighten belts and push through challenges. I don't believe it wise to expand payroll at a time when market outlook is tough, we have been unable to secure new investor interest and have so far not shown much in the way of visible progress - same old website, same old talking points, very little in the way of concrete results.

I agree here.

sirthus I think this next month, you'll really start seeing some of the hard work our existing contributors are putting in.

Then let us see those hard work first before expanding payroll capacity. Talk is cheap. Show results.

That being said, I still agree to expanding the amount of KLIMA minted, up to 20%.

EricKessler

All for fair compensation but I am strongly in favor of a vesting period would mitigate the potential selling pressure created by this.

Joaquin

Could you include in the table above the department name? E.g. marketing department has 83 contributors with an avg allocation of $3,425 per contributor. Is there any special reason why the department name was excluded?

Ultimately the DAO (us) want to understand the distribution of contributors across departments. Thank you.

reikuman

Joaquin It's 83 contributors across 7 departments, namely Engineering, Policy, Ops, Partnerships, Marketing, Creative and Community. From my understanding, it's meant to see it as a collective as a DAO rather than individual departments.