Salary, budget, and performance discussions have been some of the most contentious topics in our ecosystem. Traditional companies have a human resources department to handle these matters; decentralized orgs do not. In particular, under the SP model, we’ve seen three essential problems, which are 1) forcing those ordinarily unaccustomed to HR/management to take time away from essential job functions to serve in this role by necessity, 2) pushback against those questioning budget requests as violating the independence of SPs, and 3) consequently, no effective way to ensure accountability except on a quarterly or in some cases, a yearly basis.
It seems the solution either lies in decentralized HR tools, like Coordinape, and/or an independent committee that makes budget and salary recommendations across the ecosystem. This Temperature Check is an open discussion on the viability of this subject.
Howdy, this is an interesting topic of discussion for me in particular as I have had a diverse set of roles with the DAO over time, as many of the contributors have. I have had a grant and am now approved for another, have been a grants co-lead, half baller, baller, and Maxi. I have self managed my comp for the most part over time and as of recent limited myself to the lower end of the grants committee with a cut on Maxi pay when things were overlapping, even if my output might have been considered higher than that. With this all said, i would hope that this compensation committee would be well worth its weight in BAL or USDC if they need to be compensated as well. My perspective is that the governance process and SPs themselves should be acting in unison as the “compensation committee” and maybe we are doing that as we speak.
Internally at least, I have witnessed Maxis and Grants committee members elect themselves for pay scales they see fair, and be shy when it comes to asking for higher comp. I find that interesting enough alone in terms of the psychology of the contributors we have and think it attests to the ethos a DAO would want. The questions I would poise here are:
Who would make up this committee?
How much does it cost?
What type of unintended consequences would installing them have?
What is the goal here, to save or to properly compensate people? One might say both, but I feel valid arguments could be made that this committee may cost more than its worth in short medium and or long term. In both tangible and intangible terms.
Open to changes of course as the DAO is ever evolving, but I currently would lean towards the answer that comp can be handled as it is now and was the last few days, through open discourse, even if it is uncomfortable it can likely be the most efficient method.
Thanks for kicking off the conversation, brother. You’ve been doing great work as always, and your perspective will be very valuable going forward.
As it stands, the current SP structure needs improvement. While it furthers decentralization on its surface, we’ve created a system that’s reliant on trust, where SPs are expected to diligently self-monitor and individuals are expected to act in good faith. These are concepts foreign to web3, which advances the idea of trustless, permissionless environments. The SP system also creates a great deal of overhead, requiring 5 sets of books instead of 1, 5 “CEOs” instead of 1, forcing many ordinarily unaccustomed to specific job duties to adopt managerial roles, which takes away from the productivity of core functions, and adds to overall bloat. SP autonomy is important. But a decentralized, dysfunctional organization serves no purpose.
The vast majority at Balancer are good actors and do great work. I wouldn’t hesitate to say that the vast majority of people are good actors. Yet, the concept of Checks and Balances still exists–it’s the core of American democracy. Trust, but verify.
We currently have a very crude feedback system in place. Our standard process is a) a proposal is submitted, b) an individual makes a comment, c) public sentiment viciously turns on that individual, d) creating a chilling effect that ensures that individual will no longer make other statements in the future. The feedback system works for now, sure, but each cycle, it requires a new individual brave enough to make that first public statement until there’s no one left–everyone just throws their hands up and leaves. This has already been unfolding for some time now. We’ve somehow developed a culture where any feedback is considered toxic. Hopefully, this committee will begin to change that by abstracting away the most difficult decisions from individuals. But even if this committee isn’t formed, it’s my hope that we’re able to provide individuals w/ an opportunity to provide constructive criticism, perhaps through anonymity, without receiving hate for speaking up. A functional Checks and Balances system is vital to any vibrant democracy.
To answer your questions:
It’s vital that this committee be both independent and also respectful of Balancer’s current employees. Specific internal composition can be left open, but I believe that it should be composed of at least one third party, experienced HR professional, who’s able to provide standard compensation rates based on experience levels and locale, as a frame of baseline reference for making objective decisions, as they further their knowledge of Balancer’s specific components. That professional must also be open to periodic performance reviews from the community as well–checks and balances.
From salary.com, the base salary for Human Resources Generalist I ranges from $62,069 to $77,097 with an average base salary of $69,267.
The obvious answers here would be potential employee dissatisfaction and attrition, if this isn’t handled properly. This is why it’s vital that Balancer leadership and the community have a voice in this process, and be consulted in depth before any public proclamations are made. It’s just as vital that whoever is onboarded develop a deep understanding of the individuals working here, so their statements are not callous or disrespectful. Recommendations of the committee should most likely be non-binding, to respect the sovereignty of SPs.
I believe both of those goals you mentioned are worthwhile, but I perhaps view the broader goal of this committee in perhaps a more idealistic way. It appears to be a missing key piece in our SP organizational structure, as it provides us with the necessary knowledge to make informed decisions, reduces the burden on individuals to police the ecosystem, and encourages a culture of openness and respect. There isn’t one Fortune 500 company that doesn’t have a HR department, and for good reason. Proper implementation will allow for the birth of a more vibrant, functional Balancer.
I don’t understand what this committee is really going to accomplish, it seems it could potentially be an unnecessarily layer. Ultimately the veBAL holders will decide if they will allow an SP to move forward or not, so if there is something in their proposal that is a no-go then it will get voted down and the SP can decide if they want to try again or not. We faced this very thing when we moved from subDAOs to SPs. Having a committee decide comp isn’t going to mean a SP gets voted in automatically. Lastly, in regards to the Maxis, we are only asking for a 3 month engagement.
I am also confused how this ‘temperature check’ spawned from the Maxi SP discussion. I have yet to see anyone else chime in on that discussion, so not sure how that warranted a side conversation on comp to be applied to the whole ecosystem.
I’ve pointed this out before back when Humpy was voting against the majority. I would like to think that this DAO is a community lead, collaborative effort that changes slowly over time to help move the protocol forward. Not one entity or small group of concentrated power making trying to force things through, but understand that may not be possible with the current structure of governance. Regardless, where is the outcry from the rest of the community that is asking Tritium to change his comp ask or demanding we install a compensation committee (I understand this post is only 16hours old)? If you speak on behalf of many others please let everyone know.
I personally think such a committee is a major step back.
I am seriously asking myself how did we end up here?
We are discussing PAYING someone to decide salaries for others in a DAO because they potentially are asking for too much? This is contradicting the entire spirit of a DAO: to be decentralized! In the end it’s about giving power to veBAL holders, not committees!
We are one of the most active DAOs with a striving community and a great product. Let’s keep it that way - we are already transforming quite a bit and are optimizing costs wherever we can.
I think it is much more efficient as well as sufficient to get open-source metrics in place like my DAO financials dashboard (Balancer Analytics) and use that as a tool to discuss if our SP landscape is in line with our income. I am happy to expand it to meet our community needs.
Anything else is just another layer of inefficient bureaucracy we don’t need
There is merit in at least having a discussion on this topic.
I understand it’s quite sensitive, potentially affecting people’s pockets or requiring supervision, or both, as it has happened in this case, which is understandable. It is also important to note that no topic should be taboo to discuss in public, especially regarding compensation of contributors. Instead, it’s healthy to start a discussion on what works, what doesn’t, and how things could improve, especially for previously untouched arguments.
My personal opinion is as follows:
The crypto landscape has no standard in terms of salaries. This is not true for any other job (you can quickly search “senior VP tech company USA salary” to have a reference).
Crypto salaries vary widely from DAO to DAO.
Crypto salaries are usually skewed toward tech people due to the very high demand we currently have for implementing smart contracts, front-end UI, and so on.
Evaluating crypto performances is often difficult and putting them into context because there is usually no “manager” with their own corporate targets/KPIs that are subsequently reflected in the FTE below. As a result, salaries are difficult to justify.
If we combine the above with the fact that the Balancer ecosystem is not only very big but also quite complex internally, there could be situations in which salaries, performances, and targets are not properly put into context.
I am not sure if we can, at this point, solely rely on public reports to assess the community because, many times, communities don’t have the best tools to evaluate data presented in a complex way (e.g., financial reports) and lacking granularity (e.g., actual spending) or presented in heterogeneous ways (e.g., two SPs in the same DAO can present data very differently). Relying solely on public reports has, for example, led to situations like the Orb one.
I think it’s worth at least starting a discussion on whether there are areas and ways to improve the current situation, ways to check outside the Balancer world how things are going in crypto, and if the standards are aligned and respected compared to other situations. Additionally, there could be better evaluation processes for contributors, for example, with an independent third party, and a fair way to track this metric.
I completely agree with your points. Compensation is indeed a complex issue in our industry, and HR topics can be challenging to navigate without clear management structures. While creating a centralized committee to make decisions about individuals connected to the DAO is one approach, I believe we can explore a different perspective, akin to managing outsourced services.
Rather than focusing solely on how the DAO compensates people, let’s shift our attention to managing service providers. Many businesses outsource various aspects of their operations, from production and operations to strategy and innovation. These providers operate in diverse ways, ranging from individual freelancers to specialized consultancies or large offshore centers.
In my view, we should consider managing service providers at the DAO level. If a team is performing well, being reasonable, and their costs align with what the DAO can afford, that’s great! On the other hand, if there are concerns about performance or the costs exceed what the DAO can bear, it makes sense to reassess budgets for those providers and explore alternatives. How the service providers handle budget cuts should be their prerogative.
To facilitate this approach, we can focus on the following questions:
What specific services does the DAO require and why?
How can we ensure that service providers are aware of any performance concerns well before they submit budget proposals? It’s important to avoid surprising them with feedback after they’ve assumed their performance was satisfactory.
How should we handle situations where service providers are occupying critical roles but are deemed to provide unsatisfactory performance or are costlier than their level of service justifies? How to we ensure that those deeming performance have sufficient context?
How do we determine fair and reasonable compensation for the services we need, taking into account that many roles around a DeFi DAO require a high level of specialization?
Addressing the challenges you raised through a compensation committee would require an executive to lead an extensive conversation and establish a robust HR program. However, such an approach would likely incur significant costs, both in terms of resources and time. Involving numerous external stakeholders beyond the managers responsible for employment decisions would further extend timelines, increase expenses, and raise the risk of failure.
Instead, if our governance structure excels in managing these outsourcing relationships, we can leverage that strength rather than duplicating efforts in HR. Let’s focus on enhancing our capabilities in managing service providers effectively.
Standardizing reporting about spend, and working towards good quarterly updates about accomplishments and spend that include robust community feedback, as you suggested, is a good start.
If the budget proposal moves forward as is, then the decision is often left in the hands of one large voter, Aura. If Aura’s vote is no, then a) this is a minority voice voting against the majority or b) this is a third party meddling with the sovereignty of SPs.
What the HR committee should seek to accomplish is to move budget decisions from a last-minute process to one that is ongoing. This will allow viable alternatives to be explored if necessary. If the vote still turns out to be no from a large voter, like Aura, then that was a decision that Aura made in conjunction with Balancer, not as an independent or minority opinion. Just these two functions alone give the HR committee some value worth considering.
We should be careful not to jump to conclusions. This is a temperature check, not a proposal. No entity has signaled that will be forcing this through. Even opinions we disagree with sometimes have merit and should be respected. Here, Fernando mentioned that this is a topic worth exploring. ZenDragon and Tritium, above, also seem to think so, myself as well. These are hardly random names. Even if nothing comes from this discussion, this discussion itself is important and worth having.
More broadly, I’d be interested in who you think constitutes our community. This is perhaps a separate discussion, but we’ve come a long way from last year’s vibrant forum discussions where there were many public voices chiming in on different topics. You’d be hard pressed to find any individual on the Balancer forum these days that’s not a paid contributor of Balancer or another financially interested protocol. There’s many factors at play here–proposal flooding, the general bear market, and the chilling nature of discussions, as I previously mentioned. But I like to think that we can start to turn this around with conversations exactly like the one we’re having now. If there’s an intellectually interesting topic worth exploring, let’s perhaps keep an open mind and give it a chance to breathe.
It’s important to clarify that this temp check is not targeted towards the Maxi proposal, which by and large, is measured and reasonable. The problems we’ve observed stem back to Orb, which set the standard for big budgets, low accountability. The lessons that we were supposed to learn from that experience is that budgets should be reasonable and oversight is important, yet application of those lessons has been difficult to achieve in practice.
If you read my answers to ZenDragon’s questions, above, I’m neither proposing an additional layer of bureaucracy, nor a centralized committee to make binding decisions. That’s not something I would support. Perhaps committee is an incorrect word choice here, a HR advisor or a HR consultant would perhaps be more apropos. We currently have only one individual guiding our legal program, so perhaps a committee isn’t even necessary; one advisor might be enough.
What we’re currently lacking is information. For example, how do we answer these questions in a vacuum?
For example, instead of people “thinking” or “suspecting” that Tritium is overpaid, forcing him to defend his work product, it would be more than helpful if there were a knowledgeable professional that could tell us, directly, that a 43 year old IT professional living in Germany with 10 years of experience working 50 hours/week should expect 100-120K/year. From there, we could then add a subjective premium on Tritium’s value to the ecosystem. That should end most discussions. If Tritium decides to proceed with an overinflated salary anyways, then voters now have enough information to make an informed decision.
Comparables across protocols would be quite helpful as well. For example, X similarly-sized protocol to Balancer recently did a website re-vamp in X months with X devs, with each dev making an average of X, which is the standard for our industry. I would personally find this type of information incredibly helpful, and I believe most voters would as well.
What I believe would be most beneficial, however, is that with this process in place, we no longer need to leave decisions to the last minute, and face down vote-or-die situations, like the one above. Projects or individuals themselves could consult with our HR professional ahead of time, understand what he or she is recommending, and bring their budgets and timelines in line with industry standards.
I think this is a great approach and should probably be in place already. My concerns with this are, and these are very similar to ZenDragon’s initial questions, which were:
For myself, committee composition is the most important aspect here, because I simply do not believe that self-monitoring or internal monitoring works effectively, no matter how good intentions are. Checks and balances is important, both in democratic and non-democratic organizations.
It is good to see the discussion moving to a specific topic instead going as replies in one that was not meant for that. This is an important issue that needs to be discussed in depth.
I want to add some points in this discussion that others touched on briefly here and in past conversations:
Balancer don’t live in an island/bubble. With that in mind, how are our costs compared to others? With the same size? Within the same market? Not only salaries but other relevant costs as well. Why is that important?
How is our current runaway projection? The last update I found specifically about this subject was State of the Balancer Tresury: Resources. Did we improve our financial situation? How is the outlook for the Y2 ~6 months after our last public report?
A bunch of random dudes (and girls) in a web forum may not be the best choice to analyze/propose budgets and salaries. It can be in the best interest of the DAO to have a dedicated person/entity to study (or benchmark) costs. It may add a healthy and needed distance to view the situation with a technical lens. It seems this worked (to have someone with a technical background to handle the task) with the treasury management by karpatkey. This is something we should consider.
What transparency level do we want, as a DAO, in this matter? Are we ok to move to a model where we make a reverse auction to several SPs and choose the lower cost and don’t care how they will handle the tasks? Do we want to see all invoices and wire transfers between the relevant parties? Today, the DAO delegates this granularity to the entity responsible for the payments and only receives a summarized report. I’m not arguing in favour of any model, but this has an impact on the topic too.
IMO, it is a positive scenario to have a better structure to address funding requests than the current setup. We need more information to make educated choices. I probably didn’t find all sources on this topic (costs x revenue), but it would be nice to have an update on this front.
The impression is that we still have bull market costs (salaries in special) with revenue that didn’t drastically improve in the last six months. While we made adjustments to address this situation, like the selling of 250k BAL, how sustainable are we?
On the point about being given binary decision points with other SP proposals, did anyone ask them to make adjustments and tell them not post the snapshot until they were made comfortable? It is probably just me, but i’m finding it difficult to believe that a 3rd party is going to be able to work with each (what should be) independent SP that will lead to a much different outcome. How is this HR person going to know what is expected from the community for each SP proposal? I guess I just don’t understand why each SP proposal can’t be critiqued by anyone that has a problem with it instead of making the entire DAO adhere to some additional layer for the comp portion of a proposal.
I also get that this is a temperature check, however the origination of this post seems to be a quick escalation due to Tritium’s ask, why didn’t this come earlier due to the Orb or OpCo threads which you highlighted in your response to my post?
If this is something that everyone wants that’s cool, but I am pointing out my skepticism and curiosity around the timing.
I’d be more inclined to favor this option, rather than a whole new committee.
Initially, I thought the Foundation/OpCo board of directors could lead this powwow between SP leaderships, I wasn’t expecting this idea to escalate so quickly over the weekend, drifting away from our legal framework. The board has always been the entity responsible for streamlining the accountability mechanisms through transparency and budget oversight.
If Aura/veBAL thinks and independent professional (specialized in that nature) will add value to these discussions, that’s probably something more people could be comfortable compromising, as long as we are not creating yet another wasteful layer of complexity and bureaucracy.
I doubt an independent contractor could do much better than the actual leaders working and hiring these contributors, though. But we could run a one-off state of the art and see how it goes. If it makes veBAL voters happy, I’m happy.
On our end, no. We don’t usually have direct lines of communication w/ SPs pre-proposal, neither do we view it as our place to proactively take action anymore, unless we’re specifically asked to comment on a proposal pre-forum. We’re just voters–we evaluate the proposals on forum–by which time the binary decision point has already been given.
I don’t expect the HR pro to come in on day one and have a full understanding what the community wants. There’s 2 issues here. First, as before, what is the meaning of community? Even if we define the community to be just the Balancer Maxis, or all-Balancer, ex-Aura, it’s always difficult to achieve universal agreement. Second, arguably, this HR pro will be more helpful if they are giving us baseline information both w/ and w/o “community” input, meaning that I would expect them to provide the following data points:
What is the salary for X individual w/ X duties at X hours/week at X location?
What is the salary for the job that X individual will be taking on?
What is the suggested salary for X individual at Balancer?
Both 1 and 2 are fairly objective data points that can be provided w/o significant pre-existing knowledge. Based on my personal experience w/ headhunters, this shouldn’t be a particularly effort-intensive task too, so we might not even need to onboard a full-time HR pro. The controversial part is 3, and that will naturally take time, sensitivity, reputation, familiarity with the ecosystem, and all the points you mentioned, to make a reasonable and respected call. The HR pro might not even be able to get to stage 3 no matter how much time they spend here. But just points 1 and 2 already seem to be helpful enough to settle most disagreements through hard data. It provides a valuable service to voters, and hopefully, we’ll be able to tone down the level of contention as well, since almost all disagreements these days either stem directly from budget proposals or the resulting side effects of implementation.
Similar versions of this idea have been kicked around internally for some time now, but there hasn’t been an opportune time to propose this. Here’s what we went through:
Orb funding proposal went up, counter-proposals, lots of noise, peace, it didn’t really seem like proper time to add in a oh, by the way…
Beets proposal went up, numbers went up, employees went up. The new Beets marketing budget is, from my recollection, quite a bit more than Orb’s former marketing budget in its last days. However, we justified it because Beets had been doing great work, so no action needed.
Maxi budget went up, very reasonable, one outlier, we asked about that issue privately. Trit requested we move the discussion to forum, back and forth, and here we are.
Just saw grants went up, haven’t looked at that in detail.
Next up is integrations, haven’t seen it yet, from my understanding more big numbers here as well.
I haven’t done the math, but it seems like adding everything up, we haven’t saved anything from the Orb days except for Jeremy’s salary. Overall spend should be up, performance has yet to be seen. The birth of this present topic would be more congruent had it originated from within the OpCo proposal. But given its implement-or-else structure and Trit’s call to action, there was no opportunity to do so.
Quite frankly, it’s exhausting monitoring these things; it’s tiring just describing them. There needs to be a better way. Solutions should come from the Balancer side, internally. We shouldn’t be reliant on third parties like Aura to police the ecosystem. It’s a thankless job. Some sort of checks and balances system seems to be the correct direction, whether it’s a version of what Trit proposed above, or this HR pro, and between the two options on the table so far, it seems that the HR pro is less of a logistical layer, has better defined goals, is more direct and elegant, and being a public solution, has additional value in returning a semblance of normalcy to all of our relationships as well.
These points that James mentions are key:
We should all have this information instantly available all the time. (Perhaps this is something Xeonus could help out with.) Every SP should be required to analyze this information in detail, cite it in their BIP, as they propose budgets. Otherwise all we’re doing is pulling numbers out of a hat, knowing that if you submit the proposal late enough, no one will have time to respond. It simply makes no sense to be spending money as it comes in with no sense of tomorrow. It makes no sense to take increasingly risky bets in an unending pursuit of revenue to make up for budget shortfalls. We don’t do that in our personal lives, neither should we do it here.
Thanks for being open to the idea, brother. This HR pro approach falls neatly within Balancer’s current legal framework, and resolves many prior issues that came up quite neatly, in particular issues with individuals or the DAO itself meddling w/ the independence of SPs. Complexity and bureaucracy should also be reduced, because ideally, those ordinarily unaccustomed to HR duties within SPs will no longer need to spend as much time on certain HR related matters themselves if a professional is freely available to assist.
it’s impossible to give current runway projection without having all SP budgets in for year 2 yet. once we have that then it’s a very simple calc. if you want the most recent up to date calc please review here.
if HR pro can do this without having all SP budgets then should hire em asap.
to say no one is tracking this or taking it into account is arrogant and completely wrong. it’s actually laziness on the part of the ppl raising this not doing their own DD.
Not only that, we should also define what is regarded as liquid and what are “untouchable” assets. We have quite some funds under Karpatkeys management which could extend our runway significantly (e.g. the Compound USDC position).
All in all I think this whole endeavor could be simplified:
Define liquid assets that are theoretically assignable to comp SPs
Take the last 6 months of fee collection as a base line for revenue income
Based on these numbers define a yearly budget until we would become “net negative”
SP proposals should reference those numbers when applying for funding and do a small impact section like we Maxis do (e.g. x% impact on BAL reserves, Y% impact on liquid asset reserves).
I still believe a full-time HR pro is not needed. A simple recommendation or something like that after a short consultation would be enough, maybe on a quarterly basis. We are already taking it very far here.
Also curious how other DAOs are handling this topic. Any insights?
The discussion is quite lengthy, sometimes heated, and also interesting. I understand the various points of view from different parties here. The fact that there is friction when discussing certain sensitive topics is perfectly normal.
We should take the best of the current discussion, understanding that this is just a temperature check to improve and address a key point that has rarely been properly discussed.
I really like the idea of all service providers (SPs) being able to present themselves, both financially and from their inception, as a percentage impact of the liquid treasury or assets set aside for payments and costs for the DAO. I also appreciate the concept of having an independent third party serve as a bridge between the robust web2 HR framework, cost evaluation, and salaries, and the web3 industry, which is more agile and younger, thus requiring adjustments to the existing frameworks and evaluations.
I would love for this independent third party to engage with the most important leaders of the Balancer ecosystem, to understand the key performance indicators (KPIs) of every SP, the individuals comprising the SPs, and why these people are crucial to the DAO. This interaction would be similar to how managers relate to HR and report on why their cost centers are what they are.
It would be beneficial for everyone involved to position Balancer as an organization that puts more effort into improvement compared to other DAOs. There is no better starting point than making compensations and costs more objective and justified.
An alternative could be to flip the current model on its head and start with the budget.
This would allow for more robust runway planning.
Overall total budget breakdowns could be submitted and voted upon annually based on required domains eg. X% Development and innovation, X% BD and marketing, X% legal etc. with justifications.
SPs could then apply, along with competing SPs, for each domain, outlining their proposed use of their allocated budget and deliverables. VeBAL voters would then vote on which SP would be responsible for that domain for the term.
The pay for each individual would be decided by the SP itself, and the performance of the SP as a whole would be held accountable.
Very reasonable points are presented here. This is a good start for budget planning, as we have an income/revenue prediction, and then we can check what we can pay for the services we want to be provided without touching our “savings”. Or, at least, know how much we expect to deplete it taking, for example, the adjusted previous funding requests.
It is usual to know how much we expect/want/can spend taking into account our income/revenue, and not the other way around (try to find ways to pay for everything we want to buy).
Budget planning always comes with uncertainties. But it gives us an overview of the current situation and what needs to be changed/adjusted to safeguard our financial situation.
We’ve been seeing some bullish updates the last few days. I think we can just let this one go sideways for now, just leave it open for general comments. Thanks, everyone–great discussion all around.
