Status: Proposed
Author: @Matthew_Graham, @Pepperoni_Joe, @ElliottWatts
Reviewers: Index Council, @prairiefi
Summary
Index Coop currently has five full-time contributors, with no new hires since July 2021. To ensure the long term success of our organization there is a need to offer compensation packages to secure talent and provide a foundation for future success.
Abstract
In this proposal, we present the initial step towards securing a core team. We will be upgrading our compensation framework and offering 28 contributors priority hire packages. The package consists of fixed compensation, equity and the ability to participate in the Dynamic Staking Model (DSM).
We have listened to the community, discussed it greatly and collectively decided to act with the goal of retaining a core team of highly skilled contributors critical to the long term success of Index Coop. There are more proposals to follow as we continue to migrate towards a newly refined compensation structure across the Coop.
Specification
In this section, the core pillars of the proposals will be touched upon. A contributor’s Impact Level underpins the fixed compensation and equity, meanwhile, the DSM component distributes equity incentivising INDEX ownership.
Impact Levels
In an attempt to onboard at scale, the following structure around base fixed compensation and equity led to the development of nine Impact Levels. Each Impact Level’s compensation is based on competitive market rates. The inclusion of Impact Levels enables onboarding a core team to support the DAO and its operations without the time-consuming nature of individual negotiations.
In a departure from prior full time hiring practices, the refreshed process communicates offers privately thereby protecting the privacy and security of contributors. Following in the footsteps of Yearn, Index Coop will not be sharing the Impact Level of each contributor on a public internet forum. The Impact Level as a corresponding remuneration package is shown below.
| Owl Level | Impact level | Fixed Compensation | Equity* | Number of Hires |
|---|---|---|---|---|
| Neon | level 9 | $350,000 | 5,100 | 1 |
| Gold+ | level 8 | $205,000 | 4,500 | 2 |
| Gold+ | level 7 | $185,000 | 4,500 | 3 |
| Gold+ | level 6** | $170,000 | 4,500 | 7 |
| Gold+ | level 5 | $140,000 | 4,500 | 5 |
| Gold | level 4 | $115,000 | 3,000 | 10 |
Note:
*Equity is distributed once each month and has a 6-month lock on each entitlement.
**Level 6 is the Index Council
The contributor has the choice to receive the fixed compensation in one of three ways:
- 100% USD Stable Coin
- 100% INDEX
- 50% USD Stable Coin and 50% INDEX
The INDEX to USD conversion rate will be the same as the contributor reward process of the time (currently a 5-day moving average to the date of payment). People will only have the option to consider swapping between one of the three options above on a quarterly basis.
In addition to the rewards listed above, contributors are eligible to receive further ownership to be delivered through the DSM allocation mentioned below.
It is worth highlighting that not all contributors have received “Full Time” packages, and some of the Core Team packages offered are scaled down (linear) to reflect the reduction based on the time commitment. Ie: 50% committed, receive 50% of Fixed Compensation, Equity and DSM.
The specified compensation at each level may be subject to change - and individually may move between impact levels in future. This decision will be made by the Index Council and communicated alongside the broader periodic model review.
Dynamic Staking Model
The DSM component is directly linked to how many INDEX tokens a wallet holds and Owl Level and is complementary to the “Fixed Compensation” and “Equity” remuneration package. For further information on the DSM, please refer to Community Ownership & Compensation | V2 Proposal.
The flexible aspect of the DSM is intended to provide holders with an APR based upon their token holding at the end of each month. The below charts provide details of token payouts on a monthly basis. The monthly community allocation chart shows how INDEX holding influences monthly token distribution. The x-axis represents token holdings and the y-axis APY and Monthly Token Payout respectively.
The DSM component could represent a significant proportion of a contributors remuneration package relative to the Equity component.
To ensure the model is working as intended the input parameters and performance of the model will be reviewed over a 4-week period leading up to each 6-month interval. The first review cycle will conclude on 31st July 2022.
Outside of these periodic review cycles, Finance Nest will monitor the distribution of INDEX alongside the Retention Rate OKR and present any findings to the Index Council.
The Index Council has the ability to propose parameters changes to the DSM which will alter INDEX distribution. If the Index Council wish to alter the parameters of the DSM, discussion on this will take place publicly for at least 5 days. During this time any individual has the right to “challenge” the proposed changes. In circumstances where there is a challenge, the final decision will be confirmed through IIP - with token holders voting to “approve DSM parameter changes”, OR “do not approve DSM parameter changes”.
| Owl Level | Impact level | INDEX Holding | DSM* | Number of Hires |
|---|---|---|---|---|
| Neon | level 9 | 4,500 | 4,060 | 1 |
| Gold+ | level 8 | 3,600 | 3,430 | 2 |
| Gold+ | level 7 | 2,880 | 2,926 | 3 |
| Gold+ | level 6 | 2,304 | 2,523 | 7 |
| Gold+ | level 5 | 1,843 | 2,145 | 5 |
| Gold | level 4 | 1,475 | 1,507 | 10 |
Note: *DSM is distributed once each month and has a 6-month lock on each entitlement. This yearly DSM amount earned stated above is based upon an estimate of INDEX holding at each level.
Similar to prior Full Time hires, Finance Nest will continue to have the right of first refusal to buy back INDEX from any contributor on a Priority Hire package.
This calculator also allows you to work out what your expected Index Reward will be via the DSM.
This proposal only funds the DSM for the core team. However, we will continue to work to explore options to expand the access to the DSM to a wider spread of contributors once a final eligibility framework (Owl Levels) has been approved.
Priority Hiring selection process
Given the sensitive nature of remuneration, the Index Council has acted to balance empathy, transparency and has also put the long term success of the DAO front of mind.
The selection process for the core team of hiring has been an incredibly difficult and challenging task - there is simply so much great talent across the DAO. Given the nature of the task at hand the Index Council, after much deliberation, determined the best course of action was to hire in the first round, Level 4 and above - with Level 3, 2 and 1 potentially forming part of future hiring rounds. Below is a summary of the process
Offer Acceptance & Renegotiation Process
For candidates who receive an offer, the following can be expected:
- All offer letters will be sent out prior to 19th January 2022
- The offer will be valid until 31st January 2022 and the candidate has the following options:
-
Accept
i. Transition to the new remuneration package commencing 1st February 2022
ii. For existing full-time hires who have not yet hit their cliff, acceptance will mean a one-off transaction will be executed which will transfer the vested INDEX accrued to date to the individual. They will then transition onto the new compensation framework in exactly the same manner as individuals who are not currently on FT contracts. -
Decline
i. Continue via current contributor reward construct
ii. In this instance, there may be follow up attempts to identify an alternative candidate to fill the Priority Hire position. -
Request readjustment
i. An interview will be set up with some Index Council members to discuss further
ii. Potentially, a revised offer will be presented
iii. The candidate has the option to accept or decline the offer
iv. This is to all occur before 1st February 2022
-
Resignation and Termination
In instances where an individual resigns from their position, the expectation is that the contributor would provide a 1 month notice period.
Forced termination is a challenging topic to navigate. When necessary, the proposes will work as follows:
-
Clear expectations: The Index Coop aims to be transparent in our expectations and measurement of performance.
-
Attempt to resolve: Any failure to meet these measures will first be discussed by the Index Council and other relevant parties
-
Decision: The decision to terminate will be discussed by the Index Council and put into effect by the Finance Nest in the event that performance expectations cannot be met.
Timeline & Next Steps
The above concludes the initial offers for the core team hires with the details relating to the Fixed Compensation, Equity and DSM allocation detailed above.
Funding Approval
To support the core team hiring the following budgetary spend is being requested for the period 1st February 2022 to 31st January 2023.
- Fixed Compensation - $3,837,500 in either USDC or combination of INDEX & USDC
- Equity & DSM - 179,017 INDEX
This equates to a grand total at the current market rate of $12.56 per INDEX is $6,085,953. This equates to ~4.84% of the total INDEX supply or 9.22% of the total allocated community treasury which at genesis was 5,250,000 INDEX. At the time of writing, the combined Treasury and Operations Account holds $28M of INDEX (this does not take into account the balances yet to vest into the Treasury). This proposal looks to ring fence 21.7% of this to pay the priority hires outlined in this post.
If all core team contributors took their fixed compensation USDC, this would leave ~5.5 million USDC in the Treasury after year one. This leaves Index Coop with around a ~2-year runway on stablecoin holdings.
The core team will be funded via the Operations Wallet, with periodic requests to fund the Operations Wallet being from Index Coop Treasury by Finance.
Close
The single most valuable asset to an organization is its people. To retain our people we need to offer a compelling compensation and ownership package to keep the best at Index Coop in a white-hot web3 labour market.
The proposal presented here represents the culmination of months of work and is something we truly believe will sustainably set Index Coop up for success in the years to come.
Funding Approval
It is worth noting that per IIP-118 decision making power for Priority Hiring was passed to the Index Council, without the need for individual hiring IIPs. However, given the extent of the hiring proposed here, the Index Council feels it is right to approve this proposal and associated spend via IIP.
Voting
FOR:
DO approve budgetary spend as detailed above.
AGAINST:
DO NOT approve budgetary spend as detailed above.
Copyright
Copyright and related rights waived via CC0.
