# Fingerprints - Compensation Proposal
###### tags: `Fingerprints`

>This document presents a compensation model proposal for FingerprintsDAO, designed to preserve decentralization and honor the goals outlined in its organizational design document.

## Mutual Compensation Model

The proposed steps in the flow of compensation for member contribution are as follows:
1. Each area of the DAO shall have its general **activities and responsibilities** predetermined (refer to https://hackmd.io/@lucaspon/r1iCzrdlF);
2. **Key Performance Indicators (KPIs)** are chosen and agreed upon as a way to measure the performance of each area;
3. A **compensation period** is chosen as the time-window in which the compensation effort will occur (e.g. Monthly);
4. At the start of each period, the community approves a **compensation budget** to each area of the DAO, with a **split between fixed and performance-based** compensation for each area (e.g. 60% fixed, 40% performance-based);
5. *Work happens*;
6. At the end of each period, total compensation of each area is calculated based on its KPIs, like so:
$Total\ Compensation = Fixed\ Comp. +\ Performance\ Comp. \times \frac{KPI\ Score}{Max.\ Score}$
7. Contributors inside each area then vote among themselves (using Coordinape.com) for the division of compensation, where each contributor gets 10 votes to assign to other contributors *(can't assign to themselves)*. Individual compensation is assigned proportionately based on the share each member got from the total votes.
8. Compensation is paid with ETH;
9. A new compensation budget is approved for the next period, and the cycle repeats.

In addition to this, small one-time jobs could be assigned budgets for outside contractors. These can be proposed and settled by via a simple vote by members, attending to these rules:
* top expenditure amount of 2ETH;
* minimum quorum of 10 voting members.

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> Below this line is bonus content and food-for-thought.

### Commentary and Rationale
* Why the added complexity of a performance-based tranche?
* the purpose is to incentivize collaboration and keep compensation attached to performance instead of mere "effort". It also helps to align members around a specific goal. Without this, we increase the risk of running around in circles and compensating pointless contribution/discussion.
* Why not have all compensation be determined by performance, then?
* not all performance is directly attached to members' effort and initiative, there is always a portion of performance which is random and subject to external shock and things outside the control of compensated individuals. A fixed-tranche also provides a guarantee that contribution will be compensated, necessary for members who might depend on these payouts.
* Why no fixed roles/hierarchies?
* hierarchy and fixed roles aren't a goal in and of themselves for the DAO; what's important is that things get done. Hierarchy then is just a tool that can be used to organize people to increase performance (with its fair share of side effects). In honoring the spirit of innovation and decentralization, this model intends to premier an alternative to compensation which we believe is more interesting, flexible and meritocratic.
* having no fixed roles also minimizes the risk of litigation, as it helps us not getting confused with a typical business, **which we are not**.
* **as such, all members are expected to contribute at some point**, as opposed to relying on the effort of others.

### Predictable Issues and Possible Remedies
* The lack of hierarchy might lead to constant disagreement and fighting between members
* we believe leadership can be yielded by any member with good vision and proper articulation. The shared goal of increasing the performance-based tranche of compensation is expected to unite people around the best ideas.
* Inactive members can influence compensation (and maybe even sell their votes)
* this can be avoided by limiting access to areas of the DAO using the "vouching" system available in Coordinape, however this is undesired as it adds complexity and might exclude valuable members that are less connected
* Members might collude to exchange their votes
* this risk can be reduced by making votes public (and thus collusion becomes obvious) and by rewarding snitching
* Voting model might add pressure and competitiveness within the DAO, possibly straining relations
* members are expected to be professional and work together, as the whole economy is already designed around virtuous competition and seems to work most of the time