This post has been written with the following principles in mind: Liberty, Decentralization, Transparency, Resourcefulness, and Continuance.
tldr: Core contributors can choose to trade 10% of their fixed fiat income for a higher variable SNT income.
UPDATE - Based on Treasury decision the new terms are as follows: To be part of The Experiment / Alternative Structure, a minimum of $500 should be contributed to the SNT pool. Up to $1000 this is matched by Status by 50%. An individual may choose to contribute more than $1000.
Let’s say a core contributor makes 10k a month. They give up 10% of their fiat income, i.e. $1000. Additionally, 50 other core contributors choose to do the same. This means the total funds available is $50k. Status then matches these 2:1 in SNT in what we’ll call a SNT pool. This SNT pool thus has the equivalent of $100k in SNT in it.
In exchange for a core contributor doing this, they get two things:
a) the privilege to fund projects with the amount they gave up
b) access to the SNT pool through potential compensation being paid out
How does this SNT pool work? It is dedicated to DAO-like compensation mechanisms. This roughly means:
- crypto based (compensation paid in SNT)
- delegated/decentralized in some fashion (voting/multisig based, liquid pledging/DAC, bounties)
- generally in line with current thinking of DAO structure
For example, a participant might choose to delegate their funds to DAC0 or a specific idea in SITG Experiment #2 - DAC0: Liquid pledging and Breaking Whisper. Additionally, they might choose to participate in an idea sponsored by this DAC. If a milestone is reached and they are responsible for this, they would get that money as additional compensation.
What does this mean for this person’s compensation? If before they made 8k in USD and 2k in ETH, $10k in total, now they would make 7k in USD, 2k in ETH and 0…N in SNT. Assuming all core contributors are equally productive (in the sense of, solving problems that are highly valued by SNT pool funders / individuals of Status), the individual would make 2k in SNT. Before: 100%, after: 90% (minimum), 110% (average), or more (no specific upper limit).
Assuming the individual is productive and accountable for valued outcomes, it would be a win for them.
Additionally, it gives them direct influence over what Status works on through the use of individual funding, which is a coordination-free mechanism for resource allocation, as it is acts similarly to a price discovery mechanisms which doesn’t require consensus.
Next up is how this looks from Status Finance point of view, feel free to skip this section.
(Optional for core contributors) Status Finance
How does this look from Status Finance point of view? First, it moves compensation from USD to SNT, which is a desirable goal on its own. Additionally, it creates transparency in terms of where funds are allocated. It shifts the focus from employees and its associated centralized concern (people leads, performance management) to the funding of specific outcomes that are highly valued. Finally, it gives us a way of creating an alternative structure with a voluntary win-win approach that can slowly increase in saturation over time.
The big question here is: how does this scale and how is it sustainable? One thing we want to do avoid is the well-known double spending problem, where we pay twice for the same amount of work. At the same time, we want to give a carrot to people in terms of encouraging adoption, starting with the most brave ones and then working down the tail to the laggards.
In terms of matching ratios, one way of thinking about this is as a form of ‘inverse regressive tax’. With this setup, the premimum Status can be expected to pay is roughly 25%, assuming 100% adoption. Additionally, this creates another carrot for people to get in early, as that’s where the matching ratio is the highest.
The first question is: what is the % of fiat compensation we want people to give up for this SNT pool? I suggest the following aggressivity scale with associated names for a phase 1:
- Tiny: 1%
- Small: 2.5%
- Decent: 5%
- Medium: 10%
- Aggressive: 20%
- Reckless: 50%
- WTFBBQNAU: 100%
Assuming 100 core contributors at 100k/y or 10k/m (rough round numbers), for a burn rate of $1m/m, ‘decent’ would come out to at ~50k/m. As an example of calibration, SITG 1 experiment around drinking champagne is at around ~10k (free additionally money right now).
Here are the propose incentive for matching funds:
- Tiny: 10x (already done)
- Small: 4x
- Decent: 2x
- Medium: 1.5x
- Aggressive: 1.2x
- Reckless: 1.1x
- WTFBBQNAU: 1.05x
This works as a form of inverse regressive tax. It’s not exclusive with other types of solution This would mean the total capital cost to Status would be: 1*10=10%; (2.5-1)*4=6%; (5-2.5)*2=5%; (10-5)*1.5=7.5%; (20-10)*1.2=12%; (50-20)*1.1=33%; (100-50)=52.5%. I.e. in total 10+6+5+7.5+12+33+52.5=126% or roughly 25% premium for:
(a) moving completely from USD to SNT
(b) having more fine-grained control over funds and outcomes in a decentralization fashion.
Of course, specific numbers can be tweaked but this can serve as a guide.
(Optional) Additional problems this address
The following points require some additional context and might not make sense in isolation / without further discussion. Including them here for people who are intereested.
Centralized, employee like compensation leads to mismatch between permission-less (work on what you want) ideal model vs funding/burn rate reality (work on what ‘we’ need). First, we must survive. Concerns regarding this might not (and probably shouldn’t!) be top of mind for everyone. That said, as a collective we need to ensure criticial things for the Status network are done, and bottom up decentralized funding allows for this, without any form of top-down interface. In the limit case, 100% of compensation is funded through a DAO and the initial salary point acts as a form of bootstrapped reputation system for weighted votes in a meritocracy.
Crypto compensation is too low (~5%) and USD burn rate too high. This is unsustainable from a DAO POV. With gradual opt-in to a DAO that is voluntary and a win-win, and doesn’t require any sudden changes.
Loss aversion and lack of win-win in using own funds in e.g. sitg-two experiment. Moving to DAO like compensation requires double burn for SNT, which is unsustainable. With the approach above the money used for funds is already “gone”, and by being given access to the SNT pool it becomes a win for the individual funder.
Lack of accountability for specific needs (as defined by other nodes in the Status network with their money) and outcomes, at least in the idealized work-on-what-you-want model. By allowing people to vote with their money, things that are criticial for the collective are more likely to be taken care of, and individuals would more critical in terms of their money is being spent (did you actually solve the problem or just move code around?). This feedback mechanism is now done by proxy with defunc people leads and delayed performance review.
In the short term, easier accounting/legal situation for individuals as the variable reward can be dealt with in batch. This is useful while smart contracts solutions are being built out.
Your time to act
Status Finance - Write in this thread if you would fund this idea or not.
Core contributors - Write in this thread if you’d agree to these terms. (See example below)