Attributes:
- Author(s): @msa6867
- Category: Governance / New PIP-38 Compensation
- Replaces: PIP-38 Compensation Scheme
Summary:
PIP-38 was passed with intention to be supplemented with a follow-on proposal to fix perceived defects in the compensation portion of the proposal. @zaatar et al have proposed one fix to this section of PIP-38. This author finds the @zaatar proposal to be unduly complex, restrictive and burdensome. This alternative proposal, on the other hand, retains almost all the original wording of PIP-38 but offers a few tweaks to correct some perceived defects. The body of this proposal is presented in strikethrough (deleted wording)/Italics(added wording) format of the original PIP-38 text. The four changes captured by the strikethrough/italics are listed below:
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Reduces Shannon award by half each quarter starting end of Q3 2025 in the event that Shannon completion is delayed beyond Q3 2025. This preserves a feature desired by @zaatar et al, but does it more gracefully than declaring an all-or-nothing cliff in August 2025. (Language is ported verbatim from @zaatar as placeholder to define when the Shannon completion milestone is achieved; this language may need refining from the dev team)
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Limits Shannan and Milestone Remuneration rewards to 80% of DAO treasury at the time the milestone is achieved. This preserves a key feature desired by @zaatar et al to protect DAO integrity from an event that drains completely its treasury, but does so much more simply than the @zaatar proposal.
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Adds a 3-person DAO Remuneration Committee to approve Foundation-suggested remunerations, in keeping with @zaatar proposal, especially the comment by @o_rourke stating he was amendable to such a committee so long as it was to approve Foundation suggestions, not to initiate suggestions.
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Closes a loophole that allows the Foundation to unilaterally decide to remove the lock period associated with the rewards by making the DAO, rather than the Foundation, responsible to to correct defects in award lock if so advised by legal counsel.
Proposed Change to PIP-38 wording (in Strikethrough Italics format)
[nb:The following text is taken verbatim from PIP-38 recently approved by the DAO, excepting that: strikethrough text indicates proposed deletion of words from the PIP-38 text and italicized text indicates proposed addition of words to the PIP-38 text]
Summary: Each of the following is a proposed change remuneration package – the first to the developers of Shannon and the second to Michael O’Rourke individually. This omnibus form is proper, despite the language of Section 6.2 of the Constitution, because the proposed changes below are meant to be considered in relation to and combination with one another and these proposed changes cannot feasibly be divided into separate proposals without losing their meaning.
Reasoning: The goal is to align interests between the various parties building and promoting the Pocket Network.
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, and further subject to approval by a 3-person Remuneration Committee to be stood up by the DAO, 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**
** Maximum Shannon remuneration shall be reduced by half if Shannon rollout is not complete by end of Q3 2025, and by half again for each subsequent quarter that ends without Shannon rollout being complete. Shannon Remuneration shall not exceed 80% of the DAO treasury at the time Shannon rollout is complete. Shannon rollout is deemed complete when all POKT, nodes, and traffic have migrated to the new chain and the current chain is deprecated.
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
FoundationDAO, 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 package for Pocket Network developers and contributors.
Subject to the oversight and determination of the Foundation board of directors, and further subject to approval by a 3-person Remuneration Committee to be stood up by the DAO, 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. Each performance-based Remuneration shall not exceed 80% of the DAO treasury at the time the price milestone is achieved.
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
FoundationDAO, 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 .
Motivation
The goal is to quickly gain consensus on implementing the simplest and most salient fixes to the compensation language of PIP-38 without getting bogged down on the more complex and burdensome changes proposed by @zaatar. As this proposal ports and simplifies/modifies some of the main points of @zaatar, it is envisioned that the two pre-proposals may merge, hopefully in this simplified format.
The key objectives achieved by this proposal are:
- Incentive timely completion of Shannon by making Shannon award time sensive
- Prevent an event that drains completely the DAO treasury
- Add DAO oversight to preserve fairness and prevent self-dealing by the Fundation
- Ensure integrity of the lock-period put in place bu PIP-38
Rationale
Re time-sensitive Shannon remuneration:
This proposal seeks to strike a middle ground between the 3 years granted by PIP-38 to complete Shannon, and the one year cutoff proposed by @zaatar. This proposal gives full reward if Shannon complete by Q3 2025 (roughly 13 months) and cuts in half each quarter thereafter (preserving also the 3 year cutoff of PIP-38).
Re limiting remunerations to 80% of DAO treasury at time of milestone:
Attempt is made to greatly simplify preserving DAO treasury integrity compared to @zaatar proposed solution. Limiting remuneration to 80% of DAO treasury gives the Foundation much greater freedom to achieve its goals than the 20%/10% numbers proposed by @zaatar, and is much more in keeping with the spirit of the intention of PIP-38. It is up to the Foundation to manage emissions, DAO percentage and DAO spend in a way that will allow it to meet its desired award levels.
Overlapping milestone events are quite possible (e.g., Shannon and $0.50 may happen at or near the same time). if that happens, or if milestones are hit much quicker than the Foundation anticipated (and thus before the DAO treasury can build up sufficient tokens to meet a full award level), the Foundation will do whatever it needs to do to modify the award according to what is actually available.; they can’t spend what they don’t have. The DAO does not have to micromanage the Foundation and tell it how to handle such contingencies. This proposal simply makes the tweak that instead of “fact of nature” limit of 100% of treasury at the time of milestone, the hard limit is 80% of treasury at the time of milestone.
Milestones that hit the DAO treasury in rapid succession should not unduly stress the DAO. Suppose $0.50 and $1.00 are achieved back to back and DAO treasury is depleted by 96% (20% of 20% leaves 4% remaining). By dollar value, that 4% at or above $1 has roughly the same value as 100% of POKT level at current prices. Ditto if $3 hits not long thereafter.
Re DAO remuneration Oversight:
@o_rourke has already indicated he would be agreeable to this level of oversight to Foundation remuneration decisions. Oversight is sufficient to prevent self-dealing as opposed to turning the entire process over to an independent DAO committee, which goes against the spirit and intention of PIP-38.
Re Lock Period:
The phrase, “Except as otherwise determined by the Foundation, upon advice of counsel,…” leaves too wide of a loop-hole for the Foundation to unilaterally change the intended lock period of PIP-38. Should some actual legal challenge to the lock period arise, it is not too much to ask for the DAO to be involved in the loop to make the necessary corrections.
Dissent
(Will be addressed as it arises)