PIP-39: DAO Oversight of Rewards for Shannon Rollout and Price Milestones

Proposals
1

TL;DR: This proposal preserves the parameters of PIP-38. What it adds is transparency and DAO oversight and control over reward allocation. It also fills in a lot of gaps. Michael O’Rourke committed to adopting these changes in order to secure passage in August 2024 of the proposal to assume control of the Pocket Network Foundation, PIP-38.

NOTE: This proposal includes revisions based on the feedback that followed its publication and that appears in the community member posts below.

Attributes

Summary

DAO-managed compensation for hitting price targets will replace the compensation scheme that was included as part of PIP-38. The DAO also will manage the compensation for Shannon completion.

Appointment of a DAO Compensation Committee

The DAO shall appoint a neutral compensation Committee of up to three members (“the Committee”) that shall approve PNF-recommended awards under the following remuneration plans. For further details see “Implementation” below.

Highlights

  • Preserves PIP-38 reward package sizes for price target milestones though Committee can reduce these.

  • Price milestone rewards to be allocated as per recommendation by PNF subject to possible tweaking and final approval by the Committee

  • Applications for price milestone rewards must be submitted to PNF by contributors and be based on published criteria

  • Nominations to Committee within 14 days of passage of this proposal

a. Shannon Remuneration

Approve the following incentive-based compensation package for Shannon developers and contributors:

  • Up to 48,000,000 POKT

Shannon rollout will be deemed to have occurred when all POKT, nodes and traffic have migrated to the new chain and the current chain has been deprecated.

Remuneration Package Terms:

  • This incentive will be time limited and will expire at midnight Pacific Time on August 10, 2025 (one year from the date of PIP-38’s passage). However, the Committee can extend this limit if the delay is due to circumstances beyond the Shannon team’s control.

  • Pocket Network Foundation (“PNF” or the “Foundation”) will recommend to the Committee how to divide the rewards among the Shannon team; PNF must justify this split to the Committee. (Any mention of the Foundation in this proposal refers to its board of directors.)

  • Payment in satisfaction of this incentive will come from the DAO Treasury, be held separately in a multi-signatory wallet controlled by the Foundation, and be distributed by the Foundation directly to the individual developers and other contributors in accordance with the decision of the Committee.

  • Except as may otherwise be determined by the Committee (or with its approval, by the Foundation), and if necessary, upon the advice of counsel, any POKT earned pursuant to this incentive package will be locked for four years from the date of receipt (delivery to the recipient’s digital asset wallet address), with 25% unlocking on the anniversary of that date each year thereafter, that is, over four years, commencing on the 5th anniversary of the receipt date.

  • All reward recipients must be KYC’d before receiving any funds.

  • If wrongdoing or a breach of any of the above conditions is suspected, the Committee may suspend this package, and following investigation, modify or rescind it.

  • Michael O’Rourke will be excluded from this incentive.

Total Grant Size

Total payout, up to a ceiling of 48m. POKT, though the Committee, following consultation with PNF, can reduce it.

  • In determining the total size of this reward, the Committee may consider any previous remuneration and incentives received from Grove (including tokens and equity) and any potential additional Grove remuneration. The Committee may consult with Grove and PNF or the prospective reward recipients personally on any matter relating to the rewards. At Grove’s request, or that of the prospective reward recipients, the Committee shall keep sensitive information, including on remuneration by Grove, confidential. Grove shall provide the Committee the names and POKT account addresses of the prospective allocation recipients.
For comparison, see PIP-38 Shannon Remuneration scheme (click here)

a. Shannon Remuneration

Approve the following incentive-based compensation package for Shannon developers and contributors.

Subject to the oversight and determination of the Foundation board of directors, the developers and contributors to the Shannon upgrade to the Pocket Network shall be entitled to the following grant of POKT:

  • 48,000,000 POKT

Remuneration Package Terms:

  • This incentive opportunity will be time limited and will expire three years from the date of approval.
  • Payment in satisfaction of this incentive will come from the DAO treasury, be held separately in a multi-signatory wallet controlled by the Foundation board of directors following grant and be distributed to the various developers and contributors at the Foundation board unanimous decision and discretion.
  • Except as otherwise determined by the Foundation, upon advice of counsel, any POKT earned pursuant to this incentive package will be locked for four years from the date of receipt, with 25% unlocking each year thereafter, , where receipt means delivery of earned POKT to the recipient’s digital asset wallet address.
  • Michael O’Rourke will be personally excluded from this incentive.

b. POKT Performance Remuneration

Approve the following incentive-based compensation packages for Pocket Network developers and contributors.

The DAO shall reward developers and contributors to the Pocket Network when the POKT token price reaches each of the following targets:

  • $0.50

  • $1.00

  • $3.00

  • $5.00

*All prices are the average trailing 90-day price based on data available at coingecko.com.

Remuneration Package Terms:

For each of the first two price milestones, a total of up to 48m. POKT will be awarded, and for each of the last two, a total of up to 98m. POKT. The Committee, following consultation with PNF, can reduce these amounts.

  • The price targets must be achieved by midnight Pacific Time, August 10, 2027 (three years from the passage of PIP-38), though the DAO can extend this deadline by vote that terminates before the three years lapse.

  • Rewards will be paid to applicants (devs, PNF directors, marketers, etc.) whose work is shown to have had a positive impact on the token price including those who strengthened Pocket Network fundamentals such as Tier-1 exchange listings, increases in exchange trading volumes, paid relays and the number of gateways, drop in net inflation (supply growth - burn), and diversification of paid relay customers. The risk taken by contributors will figure prominently in determination of reward allocation. The Committee or PNF, with the other’s approval, can expand or modify the criteria for receipt of a reward.

  • Anyone can apply to PNF for a reward based on the eligibility criteria. These applications must be made public.

  • Based on the eligibility criteria, the Foundation will propose the distribution which must be approved by the Committee. The Committee may modify the distribution recommended by PNF.

  • All reward recipients must be KYC’d before receiving any funds.

  • Payment in satisfaction of this incentive will come from the DAO Treasury, be held separately in a multi-signatory wallet controlled by the Foundation and be distributed by the Foundation directly to the individual reward recipients in accordance with the decision of the Committee.

  • Except as may otherwise be determined by the Committee (or, with its approval, by the Foundation), and if necessary, upon the advice of counsel, any POKT earned pursuant to this incentive package will be locked for four years from the date of receipt (delivery to the recipient’s digital asset wallet address), with 25% unlocking on the anniversary of that date each year thereafter, that is, over four years, commencing on the 5th anniversary of the receipt date.

  • Contributors are eligible for only one reward for any work (e.g., Shannon developers are eligible for price-target rewards only for work done after Shannon rolls out - not for earlier work already rewarded by a Shannon completion allocation).

  • No single individual shall receive more than 25% of the payout for any price milestone, that is, 12m POKT for the $0.50 and $1 price milestones, and 24.5m POKT for the $3 and $5 price milestone payouts. The Committee can vary this percentage.

  • If a price target (or targets) has (have) been achieved before a funding round for the previous price target has started or if it has started but the application window is still open, the two (or more) rounds, together with their respective reward pools, shall be combined into one.

  • If wrongdoing or a breach of any of the above conditions is suspected, the Committee may suspend this package, and following investigation, may modify or rescind it.

NOTE: If the POKT token is renamed or redenominated before distribution of rewards under any of the above reward programs, the amounts paid shall be based on the denomination of POKT token when this proposal passes.

For comparison, see PIP-38 POKT Performance Remuneration scheme (click here)

b. POKT Performance Remuneration

Approve the following incentive-based compensation package for Pocket Network developers and contributors.

Subject to the oversight and determination of the Foundation board of directors, the developers and contributors to the Pocket Network shall be entitled to the following grant of POKT:

  • $0.50: 48,000,000 POKT*
  • $1.00: 48,000,000 POKT*
  • $3.00: 98,000,000 POKT*
  • $5.00: 98,000,000 POKT*

*All prices are the average trailing 90-day price.

Remuneration Package Terms:

  • This incentive opportunity will be time limited and will expire three years from the date of approval.
  • Payment in satisfaction of this incentive will come from the DAO treasury, be held separately in a multi-signatory wallet controlled by the Foundation board of directors following grant and be distributed to the various developers and contributors at the Foundation board unanimous decision and discretion.
  • Except as otherwise determined by the Foundation, upon advice of counsel, any POKT earned pursuant to this incentive package will be locked for four years from the date of receipt, with 25% unlocking each year thereafter, where receipt means delivery of earned POKT to the recipient’s digital asset wallet address.
  • Average trailing 90-day price will be calculated using the volume weighted average price (VWAP) for the preceding 90 days of trading using price data gleaned from CoinGecko .

Implementation

Would-be Members Have 14 Days to Self-Nominate

Following the passage of this proposal, the DAO shall appoint the Committee, to consist of no more than three members. Interested individuals will have 14 days to submit their names to act on the Committee along with any information they wish the DAO to consider. If fewer than three individuals are approved by the DAO, the Committee may begin operations with one or two individuals. Nominations to fill out the Committee will be accepted and voted upon until the Committee has reached a complement of three. Committee decisions are by majority vote. However, if only two people are manning the Committee, its decisions must be unanimous.

To avoid conflicts of interest, Committee members must recuse themselves from voting on their own payouts, or those sought by a family member, employer, or other employee of the same employer. (If the Committee has just one member, approval of rewards where said member must recuse, must wait till at least one more member joins the Committee.)

Committee Member Remuneration

Fourteen days from the end of the nomination period, the DAO will vote on the composition of the Committee. Committee work will be paid at the rate of $100 per hour. It’s estimated that no more than 30 hours of work in total (e.g., 10 per member) will be needed for each reward event: Shannon compensation and the four price milestones.

Changing Committee Members

The DAO may vary the composition of the Committee between funding rounds, including after the Shannon completion grant, after the Committee has completed its work on that round. No vote on a change to the Committee’s membership may start once a new price target is hit. Any community member can initiate a vote.

However, a vote can be held at any time to add a second or third Committee member, where the Committee is operating with fewer than three members; to replace a member who resigns or is unable for any reason to continue in the role; or to replace a Committee member who has been removed for impropriety as set out below.

If a Committee member is suspected of impropriety, a unanimous vote by the other two Committee members will trigger their suspension, or, if two Committee members are suspect, the 3rd member and a majority vote by PNF is required. If the Committee has only one member, suspected impropriety will trigger suspension upon majority vote by PNF; if the Committee has two members and one is suspect, a vote by the second member along with a majority vote by PNF is needed; and if both members are suspect, a majority vote by PNF will trigger suspension. If, after investigation, impropriety is proven, the Committee member shall be removed and, if necessary, replaced by DAO vote.

Why DAO-managed Compensation Is Essential

  • Avoids Egregious Conflicts of Interest. Having the DAO make decisions on the compensation spending will address the inevitable conflicts of interest that arise when PNF directors seek a piece of the compensation pie. Even if they were to recuse themselves from voting on their own compensation, having the directors vote on compensation for their co-directors (where there are more than a single director) is equally unacceptable.

  • Flexibility. The DAO can decide to reduce the reward pool size if necessary to protect the token value or health of Pocket Network. This makes it possible to avoid large payouts that could drain the treasury, leaving the DAO unable to pursue other important activities.

  • Better for Decentralization. DAO keeps control of its treasury. There is absolutely no justification for the DAO to relinquish control (to PNF) over the distribution of its treasury funds as part of a compensation scheme; maintaining control over compensation spending in no way interferes with PIP-38’s core objectives - revitalizing Pocket Network and lifting the token price.

2

we should just endeavour to stay our of Mike’s way. Let him spend every moment pushing price up.

3

If my calculation is correct, that would be 158K (Shannon) + 158K ($0.5) + 158K ($1) + 323K ($3) + 323K ($5), more than 2 million dollars package, or $200 per hour * 35 (weekly) *4, a payroll of 28K dollars per month, 336K annual.

I don’t understand the necessity of the payment this high even beyond a full-time COO’s salary. Could you elaborate the workloads of this position, as well as the required skills, abilities and talents, so we can know if this payroll is reasonable?

1 Like
5

Agreed, and I can see no reason why such committee would need to have 35 hours per week for this, when a single review of eligible participants at each price point would suffice. Seems like an unnecessary administrative fee on top of the compensation packages.

6

Committee Remuneration: What Community Deems Fair & Reasonable

Let me start by saying that the Committee remuneration numbers can be adjusted to reflect what the community believes is fair and reasonable.

Pay for work on Shannon is hourly only; there is no option for a percentage of the total payout.

For the price milestones, Committee members can choose between hourly pay or receiving one third of one percent of the total payout, which has a ceiling of 48m. or 96m. POKT tokens. The actual payout totals may be much lower as they’ll be limited to 15% of the DAO Treasury. (The ⅓ of 1% payments will be locked for four years and released at the rate of 25% annually thereafter.)

The DAO could change the Committee membership for each milestone to ensure that no one gets paid for working on more than one reward event. (This proposal could be amended accordingly.)

Committee Members Barred From Applying for Rewards

Why are the Committee token rewards so high and why the high hourly rate?

The payments are generous because it’s anticipated that those who self-nominate to serve on the Committee will be giving up participation in the massive retro grant programs. For context, under these programs, a community member who contributes to POKT’s success is eligible for a piece of the four payout pies that could total as much as $24m., $48m., $288m. and $480m. Qualifying community members stand a good chance of receiving at least ⅓ of one percent- and likely more - of the total payout for each price target: 1/3 of 1% being $80K, $160K, $960K and $1.6m respectively. The reason the Committee percentage numbers seem so eye-popping is because they’re based on potential payout totals that are even more eye-popping (especially for the $3 and $5 targets).

That said, upon further consideration, it seems fair to limit the remuneration for Committee members who opt for a cut of the POKT token reward pie to $80K for all four price target reward events (a dollar figure that could be adjusted).

Equally, forgoing the opportunity to get a piece of the rewards pie as a grant recipient is one reason why the hourly pay for Committee members is as high as $200. (This reasoning does not apply to work on the Shannon rollout compensation.)

Keep in mind also the vital importance of the Committee members’ role. They’ll be protecting the DAO and its treasury by exercising oversight over the allocation of upwards of $24m. for each of the first two reward events and significantly more for the next three. (And while comparisons are hard to draw, hourly legal fees in the crypto industry can top $1000.)

Definitely Not a Full-time Job

To Bruce’s question on the “workloads of this position, as well as the required skills, abilities and talents,” the members will need to understand the skills and the complexity and value of the contributions of the Shannon team, and for the price milestones, those of the grant applicants. Among other things, the Committee members will need to know crypto industry standards and norms for the work that’s being rewarded and what constitutes fair - albeit generous - remuneration versus a cash grab.

The Committee work is not a full-time job “with an annual $336K salary.” It will require occasional part-time work. (Accordingly, I’ll delete the “35-hour a week ceiling” as it’s misleading.) Work related to Shannon will consist of reviewing the appropriateness of the allocations recommended by PNF. I’m guessing that no more than 20-40 hours of work will be needed in total. As to work on the rewards for the price targets, the Committee’s role is primarily to review the criteria PNF sets for grant eligibility and its recommendations for reward allocation based on the corresponding grant applications.

Ensuring the Process is Transparent and Fair

For all reward events, the Committee is tasked with ensuring that the process accords with the terms of this proposal, and that it’s transparent and fair.

The committee work would be limited to what’s necessary to achieve these goals, so that it not become (in Jinx’s words) ”an unnecessary administrative fee.”

7

As far as I know, Michael or PNF have not released the incentive plan for community contributors. Is this something solid or assumption?

I assume to earn such huge incentive package, the contributors would do tremendous efforts or make a breakthrough or reach a milestone. I am not trying to belittle the committee work, but in my opinion, it’s unfair to compare the relatively easy work in committee to the more hard work.

With all due respect, based on the workloads, I don’t see any extraordinary skill or talent beyond other community contributors is required, so I am not fond of the huge potential cost for this committee. If the cost have to go this high, I’d rather to propose DOGE it.

8

TLDR:

  • Mike is taking a huge amount of risk, without a salary. For taking such high risk he should have a suitably high reward for POKT hitting these ambitious price targets.

  • These reward tokens will be locked up for years and years, not creating sales pressure.

  • This proposal is framing PNF’s rewards as a RetroPGF. Any RetroPGF to reward the community should be separate to PNF’s compensation proposal.

Risk // Reward:
To achieve any of the price targets outlined, in a relatively short period of time as defined in PIP-38, is a major, major milestone. (Ignoring the 48mn for shipping Shannon as Mike has already recused himself from these rewards). There needs to be a suitable incentive package for hitting any, especially all, of these targets.

As a reminder: Price has to hit and stay at the target for 90 days and the tokens are then locked up for 4 years and vested after that. This gives ample time, literally years, for others to sell before any recipient of the PNF rewards has a chance to sell this reward package.

If Mike can get us to a sustained $5 POKT price, I have absolutely no problem with him receiving such an amount of locked POKT as a reward. He’ll deserve it.

Penny Wise, Pound Foolish:
A regular director of the Foundation would take at least $150k/yr salary, if not more depending on POKT price. That’s a cost now we would have to pay. We alleviate this cost, when currently every dollar counts, to some future payment only when we are in financially healthy position.

being too abstemious now can have real consequences in the present. If we Nickle/Dime Mike and other critical members over far off payments, will that make it more likely they leave? Get fed up and throw in the towel? The effect on POKT’s price if Mike left now would be far more costly to all of us than PNF members receiving however many tokens in the far future.

RetroPGF:
A lot of this proposal seems to be turning PNF’s rewards for hitting major milestones into a RetroPGF. I think this is wrong for several reasons:

  • This is a reward package to PNF/Mike. If he hits those targets it should be his choice and his alone what he wants to do with his rewards. He’s been generous in the past and been very keen to make sure key contributors are well rewarded. But it fundamentally should be his decision who he wants to give tokens to from HIS rewards.

  • I believe that Mike will continue to be generous even with money that is ‘his’, as evident from giving up any remuneration for the first reward package. But equally, if he decided to keep the whole of the rest of the remaining packages for hitting key milestones, I just wouldn’t have a problem with that, he would have earned it.

  • I personally don’t like RetroPGFs. I think they are popularity contests mixed with politicking and Oliver Twist-esque ‘Please ser, can I have some more’. I think it’s better that we pay community members well for their work and not have them rely on the possibilities of pay days down the road.

  • However, the above pay package does not stop the DAO from holding RetroPGF events. They should be considered separate from this compensation package, and/or other ways of rewarding community contributors.

Numbers:
If this proposal is to go ahead, I would suggest amending some numbers suggested:

  • Why is the compensation package capped at 15% of the DAO treasury? Mike could just ramp up the RTTM to have enough tokens to fully pay the compensation package.

  • I assume that the answer to the above is: For the DAO to have enough money to continue paying contributors unimpeded. For this, either the DAO should have a minimum of 3 months costs as the needed amount that can not be transferred to the compensation package, or if this is too complicated/controversial a number, then I’d suggest something closer to a max of 80% of DAO funds used for the compensation package.

  • The cap on individual contributors is far too low. A few key people should receive very high amounts. I would cap it closer to 50%, if at all.

  • I think the issue of the committee remuneration overlaps too much with the idea of a RetroPGF. If we are to have a RetroPGF, finding committee members who are both knowledgeable about Pocket, respected in the community and do NOT want to apply for rewards greater than 0.3% of the total prize pool will be hard. However, I think that is a separate discussion, and in this case - Mike get’s to decide who he wants to reward and how much.

I appreciate the passion and hard work that Zaatar and others has put into this and it is a conversation that needs to be thrashed out in the community. I just fundamentally believe in high rewards for taking high risk.

2 Likes
9

Totally agreed. This is stipulated on PIP-38 and got super majority approved. Seeking to reverse or alter it per another proposal when nothing goes wrong would be a extremely terrible example for the governance.

1 Like
10

Let’s Get the Facts Straight

Wrong.

Wrong again.

PIP-38 says the reward package is for “Pocket Network developers and contributors” and is to be “distributed to the various developers and contributors at the Foundation board unanimous decision and discretion.”

The only reason PIP-38 got a super-majority is because a few people changed their vote after Mike committed to giving the DAO control over the price-target reward allocations. To use Bruce Yin’s words: It would be an “extremely terrible example for the governance” if Mike could renege on that commitment.

PIP-38 also called for a three-person board of directors in order to ensure that Mike did not rule by fiat. Since PIP-38’s passage, two of those three (Shane Burgett and Steve Tingiris) have left. This makes DAO oversight over reward allocations even more vital.

Let’s not get sidetracked

Legitimate concerns have been raised about the cost of the Committee that PIP-39 would create. The pay can be adjusted and a fair rate agreed upon.

But let’s not lose sight of the reason for PIP-39.

PIP-39 is about setting up a mechanism to ensure that the many millions of dollars in the DAO treasury are fairly distributed with proper oversight to reward the Pocket community for their contributions. PIP-39 is about avoiding the huge conflict of interest that would exist if Michael O’Rourke (and potentially other PNF directors) were to have the final say on how much money to award themselves. PIP-39 is about giving control to the DAO over its own treasury. The money in the treasury belongs to the DAO - not Mike or PNF.

If you agree with these objectives, you’ll vote for PIP-39.

(I will add that I’d agree to increasing from 5% the percentage of rewards that any single recipient can receive in order to fairly reward Michael and possibly others for contributions to the protocol.)

PIP-38, which handed Michael the reins of PNF, does not refer to an “incentive plan.” This is one of the gaps that PIP-39 addresses; lack of a plan invites arbitrariness. PIP-39 sets up a transparent process whereby any contributor can apply for a grant. PIP-39 calls for the publication of grant criteria by PNF under the committee’s auspices and an open process, subject to the Committee’s review, for PNF consideration of grant applications and PNF determinations on which applicants should get what rewards.

I may reply later at greater length to Cryptocorn’s comments.

1 Like
11

DAO oversight sets the correct tone of governance for the project and may potentially boost tier 1 listing efforts,however we should do it in a manner though that does not decelerate the rate at which things should happen.
Remunerations packages,work loads etc I believe that is something that could be adjusted,changed as needed.

12

Based on the following facts:

  1. “Super majority” stands for 2/3 in most of place, but 3/4 in Pocket’s governance, an unreasonable threshold.

  2. Even if PIP-38 failed in the term of 3/4 approval, a proposal to amend the definition of “Super majority” to the common 2/3 also can be submit and no reason to get rejected.

  3. Based on the common definition of super majority, PIP-38 literally already reach the super majority approval. The few swing voters are critical in the last phase, but without the approval from most of voters, the swing voters could not do anything for the voting result.

Saying that is the only reason neglects the voice from literal super majority, and exaggerate the impact of it.

I am not against having a committee to admin the reward distribution, but strongly against a committee with such high cost, the exaggeration of the impact from few swing voters and the neglect of the voice from the super majority of 2/3.

1 Like
13

Does that mean the rewards Michael can get is capped at 5%? If so, I believe it’s pretty unfair to the risk he took and the efforts he performed.

14

Stay tuned. I am crafting a very affordable payment scheme for the Committee; I’ll post it shortly. Thanks for your feedback!

3 Likes
15

Not RetroPGF Grants

The PIP-38 reward packages and RetroPGF grants are similar but Cryptocorn is right to differentiate them.

The price milestone reward packages, as provided by PIP-38, are for “Pocket Network developers and contributors.” They’re intended to reward those responsible for the rise in token price including those who strengthen Pocket Network fundamentals. PIP-39 makes this clear.

But unlike RetroPGF grants, the PIP-38 (and now PIP-39) payments also are meant to compensate contributors for risk. I will make that clear. And given the risk element (with mostly Michael in mind), I’ll increase from 5% to 20% the maximum percentage of the reward pie that any single person can receive per milestone . The Committee can increase this percentage.

Cryptocorn is right that we should “pay community members well for their work” and not defer payment into the future. Indeed, everyone contributing to Shannon’s completion (Grove) and all those who will be contributing to the rise in POKT token’s price (including PNF and those under contract to it) are getting paid (except for Michael who’s forgoing payment for now).

Excellent point. I will remove the percentage restriction and modify accordingly.

2 Likes
16

New Committee Funding Formula

Below is the revised funding formula for the Committee members. The proposal has been amended accordingly.

“Committee work will be paid at the rate of $100 per hour. It’s estimated that no more than 30 hours of work in total (e.g., 10 per member) will be needed for each reward event: Shannon compensation and the four price milestones."

As this compensation is limited, Committee members may apply for rewards at each milestone. However, to avoid a conflict of interest, they must recuse when the Committee votes on for their own allocations.

2 Likes