• General
  • Request for Comment: DAO Compensation Alignment

The contributors at klimaDAO continue to make worthwhile contributions to the protocol. While the DAO went through significant leaning down recently, as can be seen in KIP-24 there's still significant costs associated with DAO compensations (>$200k per month). Additionally KIP-24 proposes paying up to 50% of this compensation using USDC from the treasury. While the reasons outlined in KIP-24 are valid, it does bring forth the question of whether the current and KIP-24 proposed compensation structure aligns DAO members with the protocol. This proposal suggests a basic improvement to the compensation structure to do so by suggesting a compensation model similar to Equity + Base Pay model.

Suggestion 1: (this is the core part of this proposal, the next two suggestions can be spun off as their own KIPs)

  • Lock 30% of every contributor's monthly compensation for 6 months in the form of wsKLIMA.
  • Lock a further 20% of every contributor's monthly compensation for 12 months in the form of wsKLIMA.
  • Release remaining 50% as USDC or KLIMA or any appropriate mix of both immediately (called Base Pay from here on).

this proposal believes that this allows for the contributor's to use up the Base Pay part of their compensation immediately for whatever purpose they might need it while still showing good faith alignment with the protocol.

Suggestion 2: (this can be spun off as a separate KIP if needed)
Release compensation information publicly every month using OlympusDAO's monthly allocation sheet as a template. The information can be anonymized to a higher degree if needed e.g. instead of specifying each member's discord name they can be mentioned as Marketing Team Member 1, Marketing Lead 1 etc. (although arguably this shouldn't be needed).

Suggestion 3: (this can be spun off as a separate KIP as well)
Consider the USDC being used for compensation as a 0 interest LOAN from treasury to the DAO. This should be repaid by reducing the klima cut the DAO gets from bond sales in the future until an equivalently less amount of klima has been received by the DAO than with current fees.

Please provide suggestions, improvements, and comments.

    Z33 I am definitely not apposed to locking klima/having vested klima as part of the salary however that might lead to higher costs for compensation though it would be deferred to a later date. I do also worry that the 50% figure is quite high particularly for those individuals that use their salary to fund living expenses. Perhaps somewhere in the ballpark of 20% is more reasonable though curious to see what others think.

    • Z33 likes this.

    The primary issue here is that the DAO treasury is low on KLIMA so we wouldn't have enough to support this. Its also important to note that with reward reductions and a slowing of bonds there is a minimal amount of inflow into the treasury for compensation. Your second suggestion we are going to do. For suggestion 3 there is still no formal proposal outlining what the "DAO" owns versus what the Treasury owns, I believe this will be one of the primary focuses of the DWG when it begins.

    • Z33 replied to this.

      json thanks for responding panda! appreciate all the work you do!
      "The primary issue here is that the DAO treasury is low on KLIMA so we wouldn't have enough to support this." I'm not sure how that's relevant here, as I'm assuming KIP-24 extends that runway already by paying up to 50% in USDC directly. I'm basically suggesting locking up the remaining 50% that has to be paid in klima for 6 months to a year. this can be extended to USDC as well. if for some reason let's say 80% of comp needs to go out in USDC you can still subject that USDC to a locking period.

      the tl;dr of Suggestion 1 is: subject half of monthly compensation to a 6 months to 1 year locking. I don't particularly care what part is paid/locked as USDC/wskLIMA.

      good to know about the second suggestion 🙂 thank you.

      will look forward to clarification on what DAO owns vs what the treasury owns. that distinction has been pretty straightforward in my mind and even based on how previous KIPs are written. e.g. USDC was said to be only held in the DAO treasury to use it as needed, but since it was taken out of POL, it should belong to the treasury.

      Locking comp would make working full time for the dao impossible for some. I know I use my comp to pay bills and cannot afford to lock it right now 😢

      • Z33 replied to this.

        My first thought - this is a cool idea and I love it.
        I can see how partial locked wsklima compensation can align incentives better long term while also reducing sell pressure from compensations.

        However, on second thought I have some concerns.

        1. There are contributors who work full time for KlimaDAO and depend on 100% of their pay for bills. It would be counter-productive to inconvenience those people who we need most in these times. See reply from @goats_on_drugs-5 for instance.
        2. We have a dwindling contributor runway of Klima (KIP-24), making it hard to pay in Klima at all going forward until we regain more premium.

        If this was proposed a few months ago, #2 wouldn't have been an issue, and we would only need to tackle #1.
        I would love to hear thoughts from Operations on these concern and whether or not we can mitigate them to get some of the benefits of this approach.

        Hi Z33, thanks for this!

        Currently working on a contributor value propositions right now so that we can help attract & retain key talent for growing the protocol.

        The difficulty I see in locking up Klima payments is that it only pushes the problem down the line (though to be fair the USDC proposal is doing this too). If market conditions improve, then great, it bought us time. If they don't then we're stuck having to pay out in even worse conditions.

        Meanwhile—as pointed out above—full-time contributors relying on compensation for needs will either be forced to leave or deal with increased stress & likely burnout.

        Your second proposal seems reasonable to me, though I think team budgets would be easier on ops to continuously report & would serve a similar function. Definitely open to listing by contributor, if kept anonymous. Not a fan of linking identities. I feel this opens the door to harassment while delivering little in value.

        As for the 0% loan that makes sense to me, though I should point out that KlimaDAO is currently collecting 30% of the bond fees while I think OHM collects 100%. Part of the reason we're here today is that we have gone so light on fees. If we're considering paying back the USDC it may also behoove us to increase those fees as a war chest for any future downturns.

        goats_on_drugs-5 Sorry man. I understand something like this could put some pressure. it doesn't have to be 50% locked. It could be a lower number, it could also be a progressive number where 50% is locked for contributors that are paid more and than progressively less percentage is locked for lower paid contributors.

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