Authored by Milamber on 16 Feb-23 with review from the Treasury Council
Workings: https://docs.google.com/spreadsheets/d/1TE53wolq4BdK9Fx1Bc_tDDggcNzXosDHyiLrTzHUlqs (Development Team Incentive Plan tab)
We propose to establish an incentive scheme for the development team (comprising all full-time engineering and design team contributors) in order to ensure their long-term motivation, incentivise them to ensure that product development milestones are hit and to maintain the high work standards displayed to date. We propose to ring fence a total incentives pot of 1.25m PDT to be shared across the milestones of the DAO’s three key development projects in 2023 (Player Management, Guildr, Priming)…
This scheme is intended to mimic a short-term sales/dev incentive scheme (instead, using the governance token) and does not preclude team members from participation in any other bonus or incentive scheme the DAO may implement.
It is common practice in tech businesses to incentivise engineers (or other departments such as sales) with short-term rewards for achieving agreed deadlines and targets in order to ensure their motivation to work hard and that those product development milestones are hit within the stated timeframes.
This is particularly important for the DAO as its products are being built concurrently with one of its primary investments (Parallel TCG) and needs to meet the same time frames to be ready for launch. The DAO will not earn significant revenue until its products are built and players/guilds are using them.
The Treasury Council has recently completed the buyback of 9.9m PDT tokens from inactive founders at significantly discounted rates (in addition to Defi Ted donating his own 1.2m share), and also halved the DAO’s Uniswap liquidity resulting in another c.11.5m PDT coming back into the Token Treasury multisig.
As such there is an opportunity to repurpose some of this recaptured PDT and model a viable incentive scheme for the development team to support long-term participation and effort at a relatively low cost.
The founder buyback successfully recaptured 9.9m PDT tokens (vested and unvested) for $211k or roughly 2c per PDT. After the full redeployment of Uniswap liquidity, the Token Treasury received a net 11.5m PDT tokens in. Combined, there is a maximum 21.4m of recaptured PDT for consideration.
The full-time development team consists of Tea (CTO), Grand Inferno (Design Lead), RarityCapital (Priming Lead) Firekeeper (Smart Contract Lead), CodeNinja (Web3 Full Stack Dev) and f-sky (Web3 Full Stack Dev). The DAO is also in the process of hiring additional dev team support who would be eligible. New team members will be eligible for future milestones and not paid out retroactively, therefore the shape of future rewards today will change as the makeup of the development team changes over time
A fair and balanced plan will be created, rewarding each team member relative to their salary and participation in each project, without using an excessive amount of treasury funds. The draft proposal below suggests a total pot of 1.25m PDT to be allocated to the three core projects (Player Management - 375k, Guildr - 375k, Priming - 500k) and split between their MvP, v1 and v2 phases 40%/40%/20%. Post-feedback, this should be voted on and ratified by both the Core Contributor and Treasury councils.
A new multisig, controlled by the Treasury Council, will be created and the maximum PDT award (1.25m) transferred to it so that funds are not mixed with existing treasury assets to be used for operations.
Each eligible team member will have their personal milestones for each phase of a project agreed and updated throughout the year if required. At the end of each month, the Executive Team will assess whether the milestones for each project have been achieved and if so the team member will be eligible for their award for that phase. These payments will be executed at the end of each month by the Treasury Council, subject to satisfactory performance and eligibility of the contributor in question.
The workings below show the proposed incentive scheme structure based on the current eligible team members. This suggests a total pot of 1.25m PDT split between the three core products, and the three phases of each, which have been weighted according to capital allocation to those projects and the importance of earlier (MvP, v1) vs. later (v2) phases. A hidden tick box denotes eligibility for a phase, and the amount allocated to that milestone is divided amongst all eligible parties. Salaries are redacted.
A successful and fair remuneration scheme in start-ups or other performance-driven organisations has several elements to them, which has informed the logic used here to create this proposal:
All current working full-time development team members are eligible for all phases of all projects on the scheme, which is an acknowledgement of i) the fluidity of movement of staff between projects; ii) the interconnectivity of all projects in the full-scale solution the DAO is building; iii) the support offered by team members to each other across projects even where they may not have their own specific milestones/targets; and iv) that we want to avoid unhealthy competition, negativity, envy etc.
What this means in practice is that on a particular project phase (e.g. MvP of Guildr), some will have specific milestones allocated to them directly and be paid out when these are hit, with remaining team members paid when ALL milestones have been hit (i.e. the project phase has ended/shipped in full).
We are in the process of hiring new development team members who will contribute to achievement of these milestones and therefore they should be able to partake in this scheme. As they are hired they will be added into the plan for consideration against future milestones. The Executive Team will use its discretion where a project phase is significantly complete as to whether it is fair they are included in it.
In order to remove all bias, awards are made relative to the number of people eligible for a project phase and the contributor’s salary (i.e. higher earners get a larger award). This is an acknowledgement of seniority and contribution to a project and to the DAO as a whole.
Each dev team member has a base salary in place to remove financial stress and which should be sufficient remuneration to allow the individual to enjoy a good quality of life day to day. This incentive scheme is intended to be an extra “carrot” in the first year (where it is most important) to ensure that critical milestones are hit, and is in effect additional remuneration on top of base salaries.
The DAO may review performance annually and may choose to award personnel with an additional payment as a thank you for their hard work. The DAO does not yet have a general incentive scheme in place, however the development team will not be excluded as a result of introduction of this scheme.
We recommend the above proposed structure for the Development Team Incentive Scheme is enacted. We believe the base amount to be reasonable at today’s prices (c.$75k), and fair for team members on top of their base salary and other benefits. Additionally this represents only a small part of the total recaptured PDT from the founder buyback.
It is common practice in tech businesses to incentivise engineers (or other departments such as sales) with short-term rewards for achieving agreed deadlines and targets in order to ensure their motivation to work hard and that those product development milestones are hit within the stated timeframes. This is particularly important for the DAO as its products are being built concurrently with one of its primary investments (Parallel TCG) and needs to meet the same time frames to be ready for launch. The DAO will not earn significant revenue until its products are built and players/guilds are using them. This scheme will ensure the team remains properly motivated and committed to meeting expectations.
9.9m PDT tokens were bought back from inactive founders at significantly discounted rates (c.$0.02c average), as well as another net c.11.5m PDT coming back into the Token Treasury multisig from the Uniswap LP redeployment. This proposal seeks to redistribute just 5% of this PDT to the development team who are critical to ensuring the DAO succeeds in its mission.
The grant is equivalent to $75k at today’s market value, which is a small price to add additional comfort to ensure critical milestones are achieved. Being that most of these tokens were rebought at $0.02c, the true cost is even lower at c.$25k across all team members.
This proposal is intended to capture the development team, however they are not the only contributors to the DAO who are critical to its success. A separate proposal will be shared alongside this focused on the Executive Team, and in future we intend to implement a general scheme which captures all personnel across the DAO so that everyone shares in its success.
Within one week of this proposal, subject to Treasury Council approval at its next meeting.
Total cost of 1.25m. The outlay represents a $25k cost to the DAO (being repurposed founder tokens bought back) or $75k at today’s market value.