
Decentralized Autonomous Organization – the value of early contribution - trevisz2
I am trying to figure out the best way to reward early contributors during the development phase of a DAO.
The DAO has gotten some funding already but not enough to reward people with fiat money only. The &quot;salary&quot; needs to comprise of mainly future pretokens. This might be a good solution when we don’t know how big the “pie” will be.
Pretokens will be converted to stakeholder tokens at the point of valuation of the project, during ICO or open investment stage. These tokens are for investment and will be traded on exchanges with the potential of upscale or downscale depending on the success of the project.<p>Now, the questions are:<p>1. what is the value of the contributor&#x27;s time in pretokens. If a contributor would earn $100k&#x2F;year in a &quot;normal&quot; company what would be the real value of her&#x2F;his salary? For example, a 10% fiat-90% pretoken ratio taking into account the future value, risk of failure etc. The planned start date of the token trading on exchanges is 1 year from now.<p>2. If contributors are all around the world, should we consider the location when we set the salary or should it be universal?<p>3. How should we track the hours worked?
======
ConcernedCoder
1\. Just like any other startup, you're either paid salary or equity ( shares
or options ) or some combination. Salary is considered mostly risk-less, you
get paid on some schedule and you're never going to lose more than a paycheck.
Equity is considerably more risky ( as the value of that equity can go to zero
- in fact odds say that it will MOST LIKELY go to zero ), and for taking that
risk, your potential upside should CONSIDERABLE so as to make that option a
worthwhile endeavor. I view the "tokens" or whatnot as equity, and I think
they should be treated as such.

2\. It's not unheard of to consider location ( and therefore cost of living )
when setting salary / equity... in all fairness I personally think it should
be universal instead. My argument is why should someone get paid more for
CHOOSING to live somewhere more expensive? Shall I then just CHOOSE to live in
a castle in Singapore and get paid exponentially more than the guy sharing a
one room apartment in Nicaragua?

3\. The honor system should be your go-to solution there, I mean if you can't
trust your workers then what? That fact aside, why does the hours worked even
matter? Shouldn't compensation be based on total value created for the company
instead?

Just my 2 cents, hope it helps you.

( edited some typos )

~~~
trevisz2
Thanks for your answer, it absolutely makes sense. Would you happen to have
any insights into what a considerable potential upside should be in this case
i.e. what percentage salary can help cover the risk given that 90% of the
contributor's salary will be in future pretokens, or any commonly used model
which could be applied to the DAO system would be highly appreciated. Thanks
again ConcernedCoder!

~~~
ConcernedCoder
I wish I had a good answer for you but I don't. There are just too many
unkowns, but I'll do my best to lay out what I consider "fair" and some of the
unknowns that I think play into the calculations:

1\. Longevity - will people buy into the concept and the token or whatever?
will the project even be completed? For established projects with many
participating people / developers / companies - This multiplier might only be
2,3 or 5x... i.e. Ethereum has many owners of eth, miners, pools and
technologies that rely on it like token coins, etc... whereas
mySuperUnknownCoinThatDoesntEvenExistYet might not even have a whitepaper, in
fact it might only exist on the back-of-a-napkin or the creator/inventors own
mind... multipliers up to 1000x come to mind.

2\. Value - What's the value proposition and why is that valuable? Do/would
people even agree that it's valuable and want it? Can people exchange real
currency for it? Is there a way to cash out? - consider a well known crypto
like bitcoin or ether where so many people have assigned value to it, that
other companies have sprung up to participate in the idea, and even financial
institutions are creating products around it... then observe that even in that
case there's still so much volatility in its perceived value you couldn't be
sure that getting paid 10k worth of tokens today would be worth 10k next
year/month/or week. again multipliers from 2x to 2000x seem reasonable... (
possible solutions/mitigations? payments in "credits of value" or something
maybe where you'd credit 10k of value to a person, and someday if the project
doesn't go to hell, they can cash-out 10k worth of whatever. )

3\. Early vs late participation - this goes back to how well the thing is
established and how much work is left to be done. Just like any other startup
if I'm employee #2 vs. employee #200 there's a big difference in the amount of
upside I should be looking at. ( anything goes here for multipliers - this is
more of a negotiation point, but maybe set something up for the 1st 1-5
employees to get 500-1000x upside? 6-20 100-200x ? who knows )

Anyway you'd have to take 1,2, and 3 into consideration, add up all the
multipliers then lets say you were going to pay someone like me 100k of value
as your 1st coding hire ( let's say employee #2 or technical co-founder) for a
person/year of work...if I worked for you for 10 years with no raises I could
expect to get paid 1 million. ( realize I can take part of that cash and
invest it, making perhaps at least 10% a year ) Now if you wanted to pay me
like 10k in cash, and 90k in "credit" or "stock options" or equity-whatever...
that 90k of value today can't be invested, and might be worth ZERO in 10
years, so I think it should have something like a potential upside of
100x-1000x or 9million-90million in 10 years on a successful exit... which
could be getting bought or even going public. which is exactly like going to
las vegas and "investing" in the roulette wheel of startups... you put one
dollar on a number and spin... with any luck you win 36x your bet :) but
mostly you just waste time and money...

