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title: Deciding On An Incentive Model

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# Deciding On An Incentive Model

Having a clearly defined incentive model can streamline new contributor onboarding. It's important to consider the stage of the initiative the DAO is empowering and at what scale it's intended to operate at.

An incentive model for a DAO can and most likely will evolve over time. An effective incentive model is usually defined by the amount of curent contributors, how they can contribute, and how the DAO plans on scaling operations. 

Below are some questions to consider when exploring different models. 

1. how many contributors are currently in the DAO?
    - the more contributors, the more complexity
2. does the DAO plan to onboard more contributors?
    - if so, how many more (think %)?
3. can the public contribute to the DAO or are workstreams permissioned?
    - if public, will there be a task/bounty board?
    - if permissioned, what is the vetting process?
4. how do current workstreams operate?
    - does the DAO plan for more of a top down or bottom up approach?
        - are workstreams dictated or self organizing?
        - while bottom up may be considered more 'pure', having a top down model is sometimes more effective and is an important consideration when deciding on the right incentive model to align with the DAO's  vision and values.
5. how does the DAO sustain itself?
    - does the DAO earn revenue?
        - grants?
        - investments?
        - donations?
        - rewards? (competitions)

## Compensation Models

### Retroactive
Retroactive compensation enables contributors to complete tasks and be paid afterwards by the DAO for work completed.

Effective retro flow:
1. contributors complete work/tasks
2. a monthly [Coordinape](https://app.coordinape.com/) session is held for all contributors to participate
    - coordinape is a distributed way for value to be recognized and rewarded by a group via 'GIVE' point allocations.
        - there are some shortcomings in regards to recognizing backend value creation that may not be witnessed by all of the DAO members
        - generally the more vocal and socially active earn more
3. based on the GIVE allocations, compensation can be proportionally distributed from a pool (treasury/vault/safe)

### Commitment
Commitment compensation revolves around the idea of self-assessment. By one commiting a certain percentage of time/effort and self-identifying one's own value creation, guaranteed compensation can be defined based on those self-assessed metrics.

Here is a good example from a [DAOhaus Experiment](https://daohaus.substack.com/p/-experiment-in-the-haus-a-new-contributor?s=r)

Effective commitment flow:
1. decide on compensation tiers based on a matrix of (commitment*value level)
    - {insert matrix template here}
3. create and distribute a contributor self-assessment form
4. collect commitments from all contributors
5. list out the commitments, values and correlating compensation on a spreadsheet
6. have the DAO ratify it via a DAO proposal
7. distribute compensation accordingly

#### Bonuses
Bonuses can be distributed with the same method used in the retroactive example.

1. bonuses in form of payment (stable/native)
2. bonuses in the form of loot (treasury ownership)
3. bonuses in form of shares (governance + treasury)

By using Coordinape and based on GIVE allocations, the DAO can distribute bonus compensation in the form of payment or governance shares in the DAO.

## Intrinsic Value
Incentives outside of direct compensation and focused more on the intrinsic value created by participating in the DAO's mission should be considered.

Here are some relevant questions to consider when designing an incentive model and trying to determine intrinsic value incentives:

1. network building
    - how can value be measured by participating in a contributor network
2. reputation building
    - how can value be measured by the reputation earned via contributions
3. resource building
    - how can value be measured by the resources created and/or accessed by the contributors

## Various Resources

- DAOhaus Compensation Model https://daohaus.substack.com/p/-experiment-in-the-haus-a-new-contributor?s=r
- example model here
- 