Algorithmic "Bonus" Program

Reading [Temp Check] Community Contribution & Steward Performance (CCSP) Awards Campaign; I remembered an idea I had for an algorithmic “steward bonus program” smart contract for ENS (this idea isn’t really related to the above linked thread, but similar). This “bonus” smart contract would do the following:

  • Maintain a “rolling average” of ENS monthly revenue (configured to observe past N months).
  • Set a “target growth rate” (perhaps the DAO expects ENS monthly revenue to grow 5% month-over-month, as a base case)
  • Set a “bonus rate”, whereby XX% of revenue received above the target growth rate is able to be withdrawn by the stewards multi-sig for monthly discretionary spending (maybe we’d let stewards withdraw 25% of this “above and beyond” revenue).

I think this mechanism has a few beneficial features:

  • It aligns incentives. Stewards are incentivized to do things which build revenue (a proxy for ENS network growth), and are rewarded with discretionary budget.
  • Bonus deposits can provide monthly funding outside the normal biannual budget process. This allows stewards to react quickly to growing trends.
  • We should set the expectation that monthly bonuses are to be spent within the next month (within reason). Longer term initiatives are better budgeted via RFP or normal budget process.

I’ve noticed that the stewards (and DAO in general) are fairly conservative in spending money.
This is a noble trait, and something I personally appreciate, but I think it’s equally important that stewards are encouraged to “have fun” and take risks on interesting or “out there” ideas without the pressures of being labelled irresponsible bean counters.

To that effect, I think stewards should be trusted to spend their “bonus budget” on whatever they think is cool/interesting, without DAO voting, community consensus, or an “innate bias towards penny pinching” getting in the way. For example, maybe after the “Ethmoji spike”, stewards could commission some ENS emoji art pieces from contemporary artists. Or after the 10k club, they could donate $XXX,000 to some foundation which teaches math to poor kids. Or after a really successful hackathon, give personal payments to those members who organized the event. Something like that. Nothing too serious, but a fun and wholesome reward for having a big month, managed transparently and automatically with a smart contract.

Anyone think this is a good idea?

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Any circulation of treasury funds would benefit the entire ENS ecosystem, but right now the community seems to think that millions of dollars are better off sitting dormant.

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This area of expertise is my forte and my degree from The University of Durham in Business Finance relates to the Principal Agent theory (Jensen and Meckling 1973).

I believe that the DAO should set remuneration based on several components. A wage, token options, pension. I don’t recommend any remuneration based on revenue, rather tied to the value of the token and the returns token holders receive.

Please peruse my dissertation for an refresher on the subject.

To be clear, this is not a proposal on “renumeration” per se, rather a process by which money can flow to Stewards to perform “bonus” activities (the thread title is a bit misleading, so I understand the confusion. I’ll change that).

I couldn’t access your link, but maybe it would help to summarize your main points here if you think it’s applicable.

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I very much like this idea, especially because it pushes ENS to get out of its slumber. The money made in the bull season is best spent in the bera market to build tools and infrastructure for the next cycle. The success ENS is seeing these days is built on the work of TNL in the past. Inadequate governance by the DAO now will show its results later. It is a difficult task to balance spending and hoarding though. For reference, Gitcoin has a severe spending problem at the moment; ENS is on the polar opposite end of it. My only concern so far is that the majority of stewards have not yet shown the capacity to handle the responsibilities in their WG; this makes giving them a free hand on any funds a very risky thing. Our hope should be to elect adequate working members in 20 days and then this program will be ideal. But do not be surprised if this proposal gets no traction; most ideas usually get thrown under the bus.

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I love the initiative of enabling initiatives.:innocent:

One idea related to this might be to have a few metrics (as opposed to only revenue) that the stewards propose ahead of time w what level they expect us to achieve.

This would address concerns about just incenting revenues - which classically could be gamed through spending - and instead have an ongoing 2-4 metric view. Again the stewards would be asked to help establish these for each period and then would be scored based upon them.

Tl;dr - more than revenues? And a discussion about which metrics each period matter may itself be instructive