In order to secure the passage of PIP-38, Michael O’Rourke, now head of PNF, agreed to replace the PIP-38 compensation scheme with a DAO-managed alternative in line with this pre-proposal. The DAO scheme is being presented as a pre-proposal in order to allow for changes based on feedback from the community including Michael. Michael has committed to implementing the compensation scheme that evolves from this pre-proposal and is ultimately approved by the DAO.
NEW: Amended today, August 25, this preproposal now incorporates changes suggested by Michael and MSA’s suggestion to soften the 1-yr deadline for completion of Shannon. Further tweaks can be made based on community feedback. My goal is to achieve the broadest possible community consensus before putting it to a vote.
Attributes
Summary
DAO-managed retro compensation for hitting price targets will replace the compensation scheme that was included as part of PIP-38. The DAO also manages compensation for Shannon completion.
Appointment of a Committee
The DAO shall appoint a neutral three-member incentivization committee (the “Committee”) that shall by majority decision approve PNF-recommended awards under the following remuneration plans. For further details see “Implementation” below.
Highlights
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Preserves PIP-38 reward package sizes for price target milestones subject to 15% limit of DAO treasury (Committee can vary this percentage)
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Price milestone grants to be allocated as per recommendation by PNF subject to final approval and tweaking by Committee
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Applications for price milestone grants must be submitted to PNF by contributors and be based on published criteria
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Nominations to DAO Incentivization Committee due 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 is deprecated.
Remuneration Package Terms:
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This incentive opportunity 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, upon recommendation by PNF, the Committee can extend this limit if the delay is due to circumstances beyond the Shannon team’s control.
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Total payout shall not exceed 15 per cent of the DAO Treasury, though the committee, following consultation with PNF, can vary this percentage.
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PNF will recommend to the Committee how to divide the rewards among the Shannon team. If all team members are Grove employees, Grove could make this recommendation. However, PNF (or Grove) must justify this split to the Committee.
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Payment in satisfaction of this incentive will come from the DAO treasury, be held separately in a wallet controlled by the Foundation, and be distributed by the Foundation as directed by the Committee directly to the individual developers and other contributors in accordance with the majority decision of the Committee.
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Except as otherwise determined by the Committee (or subject to its direction and approval, by the Foundation board of directors), 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, with 25% unlocking each year thereafter.
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All grant recipients must be KYC’d before receiving any grant funds.
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In the event that there is wrongdoing or a violation of the spirit of this agreement, the Committee, by majority vote, may suspend, modify, or rescind this package.
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Michael O’Rourke will be excluded from this incentive.
Total Grant Size
In determining the total size of this grant, 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 grant recipients personally on any matter relating to the grants. At Grove’s request, or that of the prospective grant 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 grant recipients.
b. POKT Performance Remuneration
Approve the following incentive-based retro-funding rounds 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:
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$0.50
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$1.00
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$3.00
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$5.00
*All prices are the average trailing 120-day price based on data available at coingecko.com.
Remuneration Package Terms:
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For each of the first two price milestones, a total of 48m. POKT will be awarded, and for each of the last two, 98m. POKT. The totals will be reduced in order not to exceed 15 per cent of the DAO treasury. However, the Committee, following consultation with PNF, can modify this percentage.
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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 time frame by vote that terminates before the three years lapse.
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Retro grants will be awarded to applicants (devs, PNF directors, marketers, etc.) whose work is shown to have had a positive impact on the token price and on 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 Committee, or PNF with the Committee’s approval, can expand or modify the criteria for receipt of a grant.
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Anyone can apply to PNF for a grant based on the eligibility criteria. These applications must be made public.
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Based on the eligibility criteria, the Foundation will propose the distribution which must be approved by majority vote of the Committee. The Committee must treat PNF’s recommendations with deference. However, by majority vote it can modify the distribution recommended by PNF, though before doing so it must try and reach agreement with PNF.
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In the event that there is wrongdoing or a violation of the spirit of this agreement, the Committee by majority vote may suspend, modify, or rescind this package.
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All grant recipients must be KYC’d before receiving any grant funds.
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Payment in satisfaction of this incentive will come from the DAO treasury, be held separately in a wallet controlled by the Foundation, and be distributed by the Foundation as directed by the Committee directly to the individual grant recipients in accordance with the majority decision of the Committee.
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Except as otherwise determined by the Committee (or subject to its direction and approval, 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 that the price target is deemed to have been met, with 25% on the first anniversary and 25% unlocking each anniversary thereafter.
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Contributors are eligible for only one grant for any work (e.g., Shannon developers are eligible for price-target grants only for work done after Shannon rolls out - not for earlier work already rewarded by a Shannon completion grant).
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No single individual shall receive more than 5% (2.4m POKT) of the payout for each of the first two price milestones, or more than 2.5% (4.9m POKT) of the 3rd and 4th price milestone payouts. The Committee, by unanimous decision, can increase this percentage.
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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.
New Incentives
PNF may choose to allocate funds from an incentive-based package other than for retro-funding. For example, it may wish to set up a rewards program for long-term POKT staking, or it may wish to do an airdrop. Or PNF may wish to launch such initiatives using totally separate DAO funds. PNF shall submit any such proposal (using price milestone money or new funds) to the DAO incentivization committee for approval.
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 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 five individuals have thrown their hats into the ring, the nomination phase will be extended for further 14-day periods until at least five people have self-nominated.
Committee members will be precluded from applying for a share of any compensation package. Further, they must not be related in any way to, or employed by, any grant applicant. For example, re the Shannon rollout rewards, they must not be part of the dev and contributors team or related in any way to any member of the team.
Committee Member Remuneration
Fourteen days from the closure of applications, the DAO will vote on the composition of the Committee. To compensate for their time and the opportunity cost of not being able to contribute in other ways, making themselves ineligible for price-target grants, active Committee members will receive, to be divided equally, one per cent (1%) of the total rewards package of each price-milestone distribution event on the same terms as the other recipients. Alternatively, they may opt for payment at a rate of $200 per hour with a 35-hour weekly ceiling, which rate and ceiling will also apply to work on the Shannon rollout.
The Committee shall consult, as needed, with the Foundation’s counsel on how to execute the terms of this proposal (e.g., any agreement on non-disclosure of information provided by Grove or Shannon rollout grant recipients) and take the steps needed to give these terms effect (e.g., possibly constituting under the Foundation’s umbrella).
Once the Committee is formed, it will draw up and publish on the Forum (Discourse) the terms of its operation in consultation with Foundation counsel.
Votes on 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. Voting on a change to the Committee’s membership must be initiated within 30 days of the Committee completing its work on the previous funding round, and no vote may start once a new price target is hit. Any community member can initiate a vote; if no one does so within 30 days, the Committee’s composition shall remain unchanged.
If a Committee member is suspected of impropriety, a combined vote by the other two Committee members will trigger their suspension, or, if two Committee members are suspect, the 3rd member and two of three PNF directors will trigger the suspension. The DAO would then vote on removal and, if necessary, replacement. The 30-day time frame noted above would not apply to this vote, or to a vote to replace a member who resigns or is unable to continue in the role.
Why DAO-managed Compensation is Superior to the Scheme Provided by PIP-38
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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.
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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. Leaving the decision on how to apportion compensation to the directors will lead to an untenable conflict of interest. Even if they were to recuse themselves from voting on their own compensation, having the directors vote on compensation for their co-directors is equally unacceptable.
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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.
Dissent
For the price targets, having to maintain a price above a given milestone for 120 days is too long; 90 days is acceptable. For a currency as volatile as POKT, a period of that length is very difficult to achieve. We could hit $1 per token even before we manage to get a 120-day time-weighted average price (TWAP) above $0.50.
Why reward people for something that isn’t maintained? Hence, the longer the TWAP, the better. If we’re convinced that long-term value creation isn’t viable, why even pay out rewards in the millions of tokens when price milestones are reached? If long-term value creation isn’t possible, then this is a blatant pump scheme which the community shouldn’t support.