MakerDao needs a Treasury to provide Compensation to its Workers post foundation (focus on workers for now)

 I originally wrote this as a forum post at https://forum.makerdao.com/t/makerdao-needs-a-treasury-to-provide-compensation-to-its-workers-post-foundation-focus-on-workers-for-now/1091 This first section is a bit of a preamble.

MakerDAO (Decentralized Autonomous Organization) as it stands today relies heavily on a centralized organization called the Maker Foundation. In order for MakerDAO to realize itself the organization must create transparent and decentralized functions to support its existence, necessary components include worker and treasury management. Intuitively it does not make sense to expect the foundation to create these frameworks. To create decentralization we must design tools and frameworks that render the foundation irrelevant (but maybe hope they build them ;)).

Right now we have three or four major teams and a couple proposed. Risk, Governance facilitator, technical and oracle team. A validation team has been proposed to offer reports, support and dissent for other teams work and the system as a whole. And a collateral coordinator may also be a necessary position (more on that will come soonish). The ultimate goal is to create a framework to review, accept, compensate and validate these teams and future ones, outside of any support from the maker foundation.

Each teams mandate was ratified by a governance poll. Rich Brown as interim governance facilitator, Nik k as interim oracle team and Cryrus ( and Vishesh + others?) as interim risk team. In order to bootstrap these roles the Maker foundation compensates and supports the individuals work. Considering MCD as the real birth of the financial aspect of the protocol, the state of decentralized management accompanying it is disproportionately underdeveloped.

The (majority) members of these teams work for the foundation, so while formal mandates are a positive step towards transparency and decentralization, little functional difference emerges from a foundation control standpoint (not that they are arguing otherwise). The future of the DAO depends on our ability to evolve beyond these concerns. While more pressing issues might exist, picking up the slack regarding worker compensation-relations confers more legitimacy as a DAO and resilience to regulation.

What would happen if the foundation and its operations experienced extreme disruption from some authority. What would happen to the protocol? (I know its on ethereum and whatnot, but what happens if all these business, marketing and technical development teams paid by the foundation all suddenly ceased operation?) The recent announcement of the Dai Foundation was a little hard to understand at first, but probably a good move covering against malicious actors attacking the protocol through symbol usage.

Here are some of the questions I see as necessary to formulate a resilient decentralized worker-operations framework.

APPLICATION AND RECRUITMENT

Recruitment

• Who does the recruiting?
  • Could existing workers get bonuses for successfully recruiting somehow that stays employed for some time
• An advantage is that people who work in their industry (weather, risk, legal, technical, logistics) likely know others that have adequate skills.
  • Some social bias I guess
• Reduces voter fatigue if current team heads facilitate the recruitment
  • Reduces control mth have on the individual worker

To avoid social bias in recruitment , an application process could allow interested and qualified parties to apply. Fairly basic/normal list of qualifications would be applied. Would we want people to apply as teams or individuals applying to pre existing teams? I’m thinking it would make sense if only team heads applied

Thinking about how an application system would work with our current voting system (considering the foundation has over 100 employees I believe) manifests a headache. Personally I see recruitment by domain teams as the most sense. Their expertise and social networks likely have access to the individuals we would want. A finders fee could be paid to a risk team or individual that successfully recruits a new member (once that new member starts making contributions).

In a recruitment scenario, the heads of each team however should still be voted in by MTH. Just like we have now. If a head decides to leave they can propose a replacement (likely from within the team) or people of maker can reach into their circles to find someone suitable.

COMPENSATION AND ACCOUNTABILITY

• What is fair compensation for each team?

  • 10 months ago I wrote about this issue after a governance meeting https://cryptofans.ru.reddit.com/r/MakerDAO/comments/acm2dh/reflections_on_governance_meeting_jan_3/ 2 . In that post I considered more competitive incentives. Rune commented proposing a framework more similar to academia. Comparing working for makerdao as a public service he also mentioned that looking at how researchers at universities are compensated as a potential model. Interesting (almost philosophical) question about how we want to compensate in general
    • From what I see their are not specific incentive structures for research scientists in the public sector. Salaries seem to range from 40k-100k depending on experience. For more information on research scientists salaries and feelings: https://cryptofans.ru.nature.com/nature/journal/v537/n7621/full/nj7621-573a.html 1

• Would individual teams be better compensated for “better” performance? What is better performance?

• How to negotiate terms and pay?

  • For the domain team member compensation would negotiated with the team head. If a workers work is short term maybe be better off as a lump sum.Potentially different in different situations
  • For the Domain team head I think we would need a bit more sophisticated incentive structure.
    • Maybe a monthly salary with yearly raises
    • “Stability” bonus for keeping things “stable”
    • “Growth” bonus for demonstrated enhancement of the protocol

• Part of compensation paid in mkr, giving workers more voting rights over time and another monetary incentive?

  • Domain heads will need to specify an address for compensation, not sure how changing the address could occur (in the case of compromised keys)

• How do maker holders hold workers accountable? Who conducts the ‘performance’ reviews and how?

  • Domain team head can cut out work of a team member and revoke whatever access they previously had
  • I’m thinking we need a procedure for MTH to call for a review of a domain team head. Maybe this would occur after some botched operations or something else.
    • If we have an operational treasury I think MTH would just vote to cancel the contract, thus ending payment from the treasury

BUDGET/TREASURY

Here are the questions I don’t have solutions. All I think is that we really need to start specifying how Maker will control its finances post foundation. This is a prerequisite for compensation of domain teams.

• When are we going to seriously consider a treasury under the control of maker holders?
  • This is obviously imperative for compensating various teams and viability of the DAO in general. How does the DAO have budget awareness?
• Who monitors expenses, assets and liabilities?
  • Will we try to keep them private or public?
• How do token holders ensure an effective strategy for employing revenue?
  • Do we need to get some accountants?
• Why shouldn’t the DAO take out safe CDPs for financing?
  • Should we invest in tokens and maintain cdps of various collateral types?

What sort of smart contract capability is necessary for these ideas. Development has to start at some point. What best ensures the fininacle future of the DAO?

In general I suspect MTH will allocate budgets to domain heads who determine how to best use those funds. A report on how the funds were used should happen every so often.

FLEXIBILITY

Unforeseen circumstances can reduce or eliminate an individual’s ability to do work for Maker. How should governance structure agreements and prepare for these eventualities? This is a broader question that’s definitely being discussed in other contexts, but especially pertains to managing people since they can be kinda wild.

DISPUTES

How do we settle disputes? What will be the first big governance split?

Aragon is working on their decentralized court system based on various economic incentives. https://github.com/aragon/aragon-court Anyone know of other possibilities? Heres an except from the github:

Aragon Court handles subjective disputes that cannot be solved by smart contracts. For this, it employs jurors that need to stake a token to the Court which allows them to get drafted to adjudicate disputes, that can earn them fees. The more tokens a juror has activated, the higher the chance to get drafted and earn more fees.

"Aragon Court attempts to find what the subjective truth is with a Schelling game. Jurors are asked to vote on the ruling that they think their fellow jurors are more likely to vote on. To incentivize consensus, jurors that don’t vote on the consensus ruling have some tokens slashed. Jurors that vote with the consensus ruling are rewarded with ruling fees and juror tokens from the jurors that voted for a minority ruling.

A design goal of the mechanism is to require very few jurors to adjudicate a dispute and produce a ruling. A small number of jurors is adjudicated by default to a dispute, and their ruling can be appealed in multiple rounds of appeals."

It unclear whether Maker needs this sort of mechanism. I haven’t heard much talk of it in the community, but I know the team is well aware of Aragon. It doesn’t hurt to bring this up again. Disputes occur, and some will likely challenge the legitimacy of an executive outcome at some point. How will we deal with those disputes externally from the voting protocol.

I’ll leave it at that for now. Sorrry if I was roundabout. Basically all I am doing is pointing out that to be a DAO we need to control the finances and obligations to workers that power the protocol. Implicit in this is a recognition that translating between various national communities is essential in creating a more diverse and skilled pool of talent.