On DAO contributor compensation

Came across Daniel Schlabach’s insights today on DAO contributor compensation, and I resonated with it & thought to share it here. The individual contributor’s work and expertise should always be acknowledged and validated in order to attract and retain the best people to any project. Key contributors are often motivated by these intrinsic elements, as much if not often more so, than financial compensation. They want to know their work matters and that they themselves are respected and valued in the community they serve. Do you concur? What are your thoughts or experiences in this context?

My first thought is what makes a DAO different from any other organization? I suppose that the stakeholder relationships are a bit different since everyone that works for the DAO is freelance, might have equity in the DAO (through tokens), and governance is usually very democratic. This strikes me as very similar to cooperatives, except that DAOs aren’t necessarily as democratic as co-ops are because they can’t guarantee “one person, one vote” (at least for the moment) which leads to situations where the number of governance tokens held by an individual can influence voting outcomes.

Is the psychological contract of a DAO different from a co-op? I suppose it could be. DAO’s strike me as more precarious than co-ops because the latter often aim to provide more support to members than just the work, itself. Of course this could simply be that DAOs haven’t been around as long. The onboarding of members becomes increasingly important to setting culture and self-selection.

I can’t help but feel that DAOs are trying extra hard to set themselves apart from every other kind of organization out there and I’m not sure that this is warranted just yet. It might well become so in the future but I’m not sure we have seen the future yet in this regard. Maybe when DAOs are home to just as many AI bots as they are human, we might see a significant difference in how the stakeholders have to be managed.

We are still dealing with humans - at least for the time being - and I think Maslow’s hierarchy of needs still applies. Perhaps, as people increasingly work in freelance or team-based collaborations, the need for self-actualization increases in importance, as does self-starting. So, instead of putting self-actualization all the way at the top - the thin end of the wedge - it might need to go further down towards the base of the pyramid. Here in the post-industrialized economies we are being encouraged to all become entrepreneurs. Self-sufficiency is all the rage.

The relationship between retaining good people and financial compensation has been debated throughout my life. I have enjoyed reading studies in which the most boring jobs were carried out more effectively by people whom were paid the least but were able to form better social relations with their colleagues (oftentimes, as a consequence of being paid less). There is something unifying about being in the trenches together especially when you are doing something really unglamorous.

At the same time, I know plenty of people for whom money is a major factor and wouldn’t consider doing anything - even something they felt passionate about - unless it paid them exceedingly well. It seems we are all motivated by different factors in different amounts at different times in our lives, even when we share commonalities.

There’s also a very clear demographic dimension to all this, particularly here in the US. For example, people in their twenties and below seem very keen on ‘meaningful’ work in which they are certain they can make a difference, right now. They do not want to waste time ‘earning their spurs’ or ‘paying their dues’. This is very different from my generation who were told to shut up and get on with it. This was not always a good thing!

I am a Gen Xer and we experienced an awful lot of bad luck economically during our formative years. This is probably why so many X’ers are split into two extremes: those that went ‘off the grid’, are skeptical of institutions and just want to be left alone; and those that milked the system for all it was worth because you got to get it while you can (the ‘Less than Zero’ yuppies, perhaps).

I’ve rambled, so I’ll try to wrap this up. I figure that successful DAOs will find ways to appeal to a variety of stakeholders who are motivated by different things but who all feel part of a strong culture which might take the form of a collective goal, a mission. This isn’t very different from Open Source development as it stands at the moment. The main difference between DAOs and open source is probably the expectation of financial compensation and for this reason the DAO cannot avoid the topic.

Personally, work has always been the most rewarding when I was paid enough to not simply survive but secure enough to take on more risk. DAOs might do best to think of financial compensation as a reward for a ‘job well done’, for hitting the goals and milestones of the community, rather than as a guarantee (as is a salary).

It looks to me like salaries are out and rewards are in. That’s probably what DAOs are pioneering at the moment - a new type of reward structure for organizing capital, energy and labor.

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Terrific insights here as usual David, though I’m not sure I align with the notion that salaries are out and rewards are in – not in an outright ‘either or’ scenario anyway. I think it’s ‘both and’ (but to your point, maybe some of that is generational). I definitely agree that for me, work has been most rewarding when I’m doing something I’m enthused about and paid well so that I can afford to take more risks. Somehow our base expenses to run our lives must be covered. And it will be interesting to see how DAOs (and the mindset of those within that structure) shape rewards structures and compensation moving forward as things evolve further.

in related news - check this out (source: Inside Cryptocurrency - 03.25.22)

Web3 salaries have soared to as high as $900,000 as companies compete for the best talent. Much of the compensation comes from token incentives; nevertheless, they are still 2-5X as high as traditional silicon valley software jobs.


  • A senior Solidity dev from lending protocol Silo Finance reported a salary ranging from $300,000-$750,000.
    • For the $750,000 job, $300,000 is the base salary with $450,000 coming in tokens.
  • Olympus DAO fork TempleDAO posted a job ranging from $300,000-$900,000.
  • OpenSea competitor LooksRare offered compensation packages reaching $600,000.

Coordinape is “reinventing DAO compensation”. It’s a very simple and powerful idea that resolves how to allocate rewards (such as money) to teams working for a DAO. The answer is to provide each member of the team with tokens that they must allocate to other members of the team in whatever amount they think best. The final result determines the payout from the treasury.

Lest we not forget history, this is variation on a theme of 360 degree feedback - in this case being used for compensation.

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This is very interesting conceptually – I’ll be curious to see how it works in practice. Definitely a step in the right direction in terms of a more egalitarian structure for compensation models based on peer observations & feedback.

Here’s a good article / overview of Coordinape in action.

I’m noodling on how it can inform my approach to Jamit royalties. In the original concept, Jams had their own royalties pools and each participant (Jammer) had points in the pool. How many points? That was determined by their contribution of value to the Jam and could be doled out / rebalanced by the Jam Leader. It was also the Jam Leader’s responsibility to resolve disputes.

Because Jams had to Jam off of other Jams, there would eventually be an elaborate graph of Jams related to one another as a giant lattice of nodes and branches. If any Jam was monetized then there would be a history of related Jams that got it to that place in time which stood to be recompensed. The reward mechanism was to factor all the points in all the pools to arrive at royalties to individual Jammers.

This mechanism could be envisioned as a cascading waterfall from the tip of a branch all the way down from Jam to Jam to the origin. Or, Jams might be arranged along the way in parallel as well as in a series to derive at different royalty calculations.

I prefer the Coordinape approach to compensation and will think upon the idea of Jamit teams as ‘circles’ (in Coordinape parlance).

It also reminds me of an idea I had put on the back burner and forgotten about which was to consider Jamit as blockchain where block rewards are given by virtue of “proof of value”. In other words, if a Jam is picked up and re-jammed (or used as a building block in other Jams) then that proves its worth as something of ‘value’. The more it’s reused, repurposed, etc, by others then the more value it has to the community as a whole. This should have the effect of minting new tokens that then go to the royalty pool participants of the Jam in question.

In re-reading my DAO pontifications (above), I think of DAOs as being an interesting challenge to traditional organizations in that they allow for projects and teams to mimic corporations, to enshrine rules that are similar to what companies use to govern themselves (and by laws to participate in society and markets at large) except that they can be a much smaller atomic units that don’t have to have as much friction as a company (does legally) to incorporate themselves.

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