In the New PoolTogether DAO: Part I we discussed the new Team and Council structure: how Teams form and operate, and how they coordinate through the Council. The post also introduced the Team Budget Request (TBR), which is a specific type of PTIP.
Teams must include a budget breakdown as part of a TBR. The breakdown details all expenses, including team members and their compensation. The way in which members are compensated is a critical question; how much of the compensation is POOL? What happens to part-timers?
In this post the interim Council presents a unified compensation structure that Teams can use for their budget requests. We’ll present:
- The motivation for having a unified compensation structure
- The process by which the compensation structure is defined
- An initial compensation structure
Motivations
Our goal is to scale the PoolTogether organization by attracting and retaining great builders and leaders.
We want:
- Our compensation to be competitive with market rates.
- To align contributors long-term by having a portion of their compensation in POOL.
- To ensure that compensation within the DAO is fair. There should be no short-cut for acquiring POOL.
- To make compensation straightforward. We don’t want to constantly re-negotiate. It provides a template that teams can plug into.
- To ensure contributors are being paid fairly whether they are full-time or part-time
One of the most contentious topics is how POOL ownership is distributed. Right now, POOL is barely liquid and is near an all-time-low. It is very difficult to value POOL correctly. We believe we need a holistic compensation structure to ensure that contributors feel fairly rewarded; not only against market rates but as compared to other contributors within the DAO.
Council Defines the Team Compensation Structure
Largely, the compensation structure we define will be a social agreement. Teams will create Budget Requests that are aligned with that structure. By following guidelines, Teams will be much more successful in getting budgets approved. Of course Teams can negotiate custom budget requests, but if they don’t follow the formula they will need to explain the digression.
The most sensible place for the DAO to coordinate is through the Council. The Council is made up of at least one member from each Team, so the most important stakeholders are already present. Many members of the Council will be significant POOL holders. Therefore, the Council will define the compensation structure.
Since Teams will request their budgets in quarterly chunks, the compensation structure should be an updated at the start of each quarter. Teams can then align their budgets to the updated structure. The Council will update the compensation structure at the start of each quarter.
Budget Request Details
When a Team makes a Budget Request it must also list team member roles. Membership information must include:
- The role the contributor plays
- Who the contributor is
- The time commitment
- The total compensation amount
- Compensation rationale (advice process & compensation structure)
The role that a member plays needs to be at minimum the name, such as “software developer” or “copywriter”. More description can be optionally included.
The contributor name identifies who is doing the work. If the role hasn’t been filled yet, it can simply be blank. Open roles can be posted to the community.
The time commitment is the fraction of full-time that the user will be committing. For example: full-time would be “100%” and half-time would be “50%”. Full-time is 40 hours per week.
The total compensation amount is the total amount that the user will be paid in US dollar amount, including base pay and other tokens.
The compensation rationale should include at least two things: the compensation structure (i.e. Q4 2022) that the member is using (see renewal privileges below) and the advice process for salaries.
It’s important to use the advice process when determining the total compensation amount to ensure that the stakeholders and experts have been consulted.
Q4 2022 Compensation Structure
The Q4 2022 structure is built around our observations that:
- This organization is cash-poor and ownership-rich. Our compensation packages need to lean more heavily on ownership.
- Not all team members will be full-time. Part-time members can have similar expertise as full-time members, so their compensation should be pro-rata based on the time they are committing.
- We want valuable people to be long-term aligned: the portion of compensation in POOL should increase along with the total compensation amount.
Team members are contributors who fill a role on one or more teams. Casual contributors do not have any on-going compensation as part of the “Teams” framework; they receive compensation through tips, Coordinape, grants, or otherwise.
Compensation Formula
The compensation formula calculates a team member’s annual base pay (in stables) and ownership (in POOL) based on their total compensation amount and time commitment.
Formula Inputs
The formula takes as inputs the:
- Total compensation amount
- Time commitment
Total compensation amount is in US dollars.
Time commitment is a percentage. Full-time is considered 40 hours per week. For example: if a user commits 10 hours per week, then their time commitment is 25%.
Calculation
The formula defines minimum and maximum compensation packages. These packages form the compensation boundaries. Each package defines the total compensation value and the percentage of that compensation that is ownership. The percentage is linearly interpolated between the minimum and maximum.
Initial Compensation Formula Parameters
The following parameters need to be determined by Council and published in the quarterly compensation structure update.
| Parameter | Value |
|---|---|
| Smallest Full-Time Total Comp | $50,000 |
| Smallest Full-Time Ownership Portion | 1.00% |
| Largest Full-Time Total Comp | $250,000 |
| Largest Full-Time Ownership Portion | 40.00% |
| POOL Price | $0.95 (the market rate at the start of quarter) |
You can see the calculations in the Q4 2022 Salary Compensation Formula Google Sheet. It’s interactive: you can enter a total comp + part time pro-rata and see what the numbers would look like.
Compensation Formula Results
Below is an excerpt from the above spreadsheet:
| Total Comp | Base (USDC) | Ownership (in $) | Ownership (in POOL) |
|---|---|---|---|
| $50,000 | $49,500 | $500 | 526.32 |
| $70,000 | $66,570 | $3,430 | 3,610.53 |
| $90,000 | $82,080 | $7,920 | 8,336.84 |
| $110,000 | $96,030 | $13,970 | 14,705.26 |
| $130,000 | $108,420 | $21,580 | 22,715.79 |
| $150,000 | $119,250 | $30,750 | 32,368.42 |
| $170,000 | $128,520 | $41,480 | 43,663.16 |
| $190,000 | $136,230 | $53,770 | 56,600.00 |
| $210,000 | $142,380 | $67,620 | 71,178.95 |
| $230,000 | $146,970 | $83,030 | 87,400.00 |
| $250,000 | $150,000 | $100,000 | 105,263.16 |
Updating Parameters
At the start of each quarter the Council will update and publish the Compensation Structure for that quarter. An update is required, because the compensation packages are calculated based on the POOL price at the beginning of the quarter.
Team Member Renewal Privileges
We want to encourage long term involvement and reward early contributors. To do so, we’re going to give renewing team members special privileges.
When renewing their compensation, individual team members can choose the compensation structure from any of the previous four quarters that they worked.
Renewal privileges are member-specific; new team members will use the current compensation structure.
This means that continuous team members can carry-over their favourite compensation structure for up to a year (as long as they were working those quarters).
If the next quarter’s compensation structure is better, then they may switch to the new one.
Since POOL is near an all-time-low, this means that contributors who join a team now will be able to carry over the current compensation structure for up to one year. When the carry-over expires they can still select from the best compensation package from any quarter in which they worked.
Example
Let’s assume that the only difference between each compensation structure is the price of POOL. This means that when the POOL price is low, lots of POOL is distributed that quarter.
Let’s say Bob started work in Q4 2022.
| Quarter | Comp. Struct. POOL price | Bob’s Comp. Struct |
|---|---|---|
| Q4 2022 | $1.00 | New member - Q4 2022 |
| Q1 2023 | $1.20 | Q4 2022 |
| Q2 2023 | $1.10 | Q4 2022 |
| Q3 2023 | $1.30 | Q4 2022 |
| Q4 2023 | $1.40 | Q2 2023 |
Summary
The above compensation structure was discussed and approved by the interim Council, but we still need to hear from you! We’d like to hear any feedback from casual contributors and future Council members alike. There are many existing contributors that will become Council members in the new structure.
It’s important to note that this is a living document. This structure will evolve alongside our DAO. We have the freedom to adapt it as we see fit.
This concludes the Team Compensation portion of the New PT DAO; the next post will propose the new Teams. The interim Council (and teams themselves) are hard at work. Stay tuned!