Payroll Swarm Discussion

First Principles

• Contributors, of all skillsets, are at the heart of 1Hive's ability to adapt and improve
• 1Hive must attract and retain contributors who are intrinsically motivated and whose values align with the DAOs vision of a freer and more bountiful world for all.
• It is in 1Hive's interest to maximize contributor stickiness, defined as persistent contribution week over week, month over month
• Incentive mechanisms should maximize autonomy and self-determination at all levels: individual, swarm, DAO
• Compensation should be proportionate to contributor commitment, value delivered, and scarcity of skills employed
• Compensation should be equitable (not necessarily equal). Given a tradeoff, incentives should skew in favor of creating the greatest benefit for the largest proportion of contributors.
• 1Hive must recognize the fact that current and potential contributors have many opportunities to be rewarded for their contributions, and the "competing" orgs in the labor market offering rewards includes DAOs, corporations, and volunteer initiatives

Problem Statement

• 1Hive's contribution reward mechanisms do not offer sufficient stability and predictability to enable high contributor stickiness
• 1Hive's contribution reward mechanisms do not offer a sufficiently valuable reward to enable high contributor stickiness
• Suboptimal of contributor stickiness significantly diminishes the quality of work life for remaining contributors, as it leads to "choppiness" of work pace, dropped threads, and fewer teammates to provide feedback and motivation to keep contributing
• This problem is especially keenly felt with contributors who possess high-demand skillsets such as programming. Tulip swarm, in particular, has had its development team hollowed by contributors migrating to outside orgs and other swarms

Current Incentive Mechanisms found in 1Hive and swarms

• Hourly rates paid out on a weekly basis
• Pollen distribution
  • SourceCred accounting that rewards activity on GitHub, Discord, Discourse
• Ad-hoc Honeypot proposals for individual contributions (usually after the fact)
• Bonus allocated through Coordinape
  • Tulip is experimenting with a 3 HNY / week allocation

Gaps in Current Incentives

• Hourly wages offered are below market rate freelance work in most OECD nations

Rates quoted for Tulip as of Aug 16, 2021

• No source of long-term alignment with swarm or DAO
  • No vesting schedule or options
  • Opportunity for Tulip to pay contributors in COMB

Considerations

• How to structure compensation so as to align incentives of the contributor with the swarm and DAO (stickiness, consistency, alignment)
• How to decide appropriate reward amounts and forms
• How to determine who and how reward amounts and forms are agreed on
• How to validate that contributions are valuable in a decentralized way (turn streaming on/off, scaling comp)
• How to organize compensation decisions and administration (DAO, swarm, individual)
• How to fund big outlays, which would require big conviction votes from the Honeypot

Research [especially need help here]

• How are other DAOs approaching this challenge?
  • Yearn
  • Maker
  • DAOhaus
  • Sushi
  • Balancer

Incentive Mechanisms to Consider

• anticipatory incentives (pre facto)
  • streaming rewards
  • "signing bonus"
• incentive for contributions performed (post facto)
  • hourly rates
  • performance bonus
• incentive for continued contribution
  • vesting rewards
    • token
    • options
    • cliff / accrual schedules

To consider:

• Form of payment
  • stablecoin
  • HNY
    • Nectar? Redeemable for HNY
  • swarm project tokens, eg COMB, AGVE

Tools Available

• Disbursement
  • Gnosis
  • Colony
  • Moloch
  • Aragon
    • Payroll app (stable+equity)
  • soon Gardens
• Streaming payments
  • Superfluid
  • Sablier
• Options
  • UMA
  • Hedgey
• Performance allocation
  • Coordinape
• Stablecoins
  • RAI
  • DAI
  • USDC

CALL NOTES Aug 20, 2021

• Goals of the call:
  • identify next steps, possible solutions to the problem statement
• Payroll decision-making should happen at a swarm level
  • should allow room for experimentation
• Let's start simpler and iterate
• Pay rates are holdover from seed era, might be time to update / increase
• Biggest missing piece may be long-term incentive
  • (!) How do we decide who receives those long-term incentives?
    • Swarm decides amongst its own contributors as a group
      • Coordinape or Aragon dot voting
• Important to attract the 'right people', i.e., intrinsically motivated folks

Framework for long-term incentives:

• Swarm drafts framework for short-term + long-term rewards for contribution
• Swarm achieves consensus / agreement from swarm contributors
  • how do we define consensus in this case?
• Swarm stands up smart contract (DAO) to hold long-term funds
• Proposal submitted to Honeypot specifically for swarm budgeting, longterm (separate from short term wages funding)
• Swarm has autonomy to decide management (spreadsheet or more programmatic method), amounts + vesting schedule, token vs options etc. and administrates from the commonly held smart contract

Open question: can swarms pass big enough funding proposals from Honeypot?

• One possible solution: swarms accumulate 5-10 HNY a week or a month? towards building up a treasury reserve for long-term incentives
• If swarm has their own token, they should think about ways to use it towards creating a long-term incentive structure

Open question: should swarm treasuries think to request stable amounts or hold stablecoin for weekly payouts?

Open question: what's a reasonable way to structure a recurring stipend, if desired? what's a good way mechanism for cutting off a contributor from the stipend?

Open question: what's the right way to structure governance inside a swarm? token-weighed? etc. What's the right DAO smart contract to

Next steps / Action Items:
* Share notes on Forums
* Set up another call next week to push convo forward
* Encourage swarms to start internal discussions about how they'd like to structure governance / incentives

Some initial visualizations of payroll funding

Proposed Tulip Swarm Compensation Stack:

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