Equity Opportunities for Giveth Contributors

Vesting is coming to an end my friends, we’ve reached nearly the end of this 2.5 year journey. Don’t call me sentimental :stuck_out_tongue:.

We should consider how we can continue creating opportunities for existing and incoming Givethers to hold equity in the Giveth DAO & GIVeconomy in the form of GIV tokens.

A GIVtastic Proposal :giv:

I propose we create an opt-in program where paid contributors can choose to be compensated partially in GIV and receive an additional bonus also in GIV tokens as part of their negotiated salary/wage paid out every month.

How much is compensated in GIV is what we can decide. The percent amount could take two forms: fixed or dynamic.

Fixed

We choose as a DAO a fixed amount to compensate in GIV for the contributors who wish to opt-in. For example we could say 5% + a bonus 3% of your monthly pay in GIV. This applies equally to all contributors who opt-in.

To visualize this, let’s say your pay for a given month is $1000, you would get $50 worth of GIV plus an additional $30 worth of GIV for a total of $80 worth of GIV and $950 worth of stable tokens, the total value of tokens paid to you would be worth $1030.

This has the benefit of being simple to implement and easy to keep track of in our accounting processes. The downside is that if a contributor wants to take more or less risk/equity they do not have the option.

Dynamic

Each individual contributor chooses the percentage of their pay they want to receive in GIV and the bonus is derived from a determined factor. For example we could say half of the percent you choose to take in GIV from your regular pay is the added bonus on top. The percent amount the contributor decides ideally does not change month to month.

Using this example we could say if your monthly pay is $1000, you choose to take 25% in GIV then you could receive a bonus 12.5% in GIV, that would be $250 worth of GIV + a bonus $125 worth of GIV plus the regular pay of $750 in stable tokens. The total value of tokens you would receive is $1125.

This has the benefit of letting each contributor choose an amount that is comfortable for them. The downside is this can add extra overhead to our accounting processes and the work involved in paying everyone every month.

Token Locking

We will be requesting that GIV tokens sent should be locked for a minimum of 4 weeks (two rounds) in GIVpower to prevent abuse by contributors who are receiving a bonus in GIV tokens only to sell them immediately.

GIV tokens will be distributed on Optimism.

Including the Galaxy

I would also like us to consider opening this opportunity to not only Givethers but to also General Magic contributors. Since there is SO MUCH cross-over between the two organizations it could be much simpler to make it more inclusive for those who want to participate.

That being said we’d also need to decide if/how GM reimburses Giveth for the spent GIV tokens.

What is to decide

There are :four: things in order we need to discuss regarding this proposal:

  1. Should we take up this initiative?
  2. What method should we choose for making compensations partially in GIV - fixed or dynamic?
  3. What numbers do we set related to the chosen method?
  4. Do we include General Magic contributors? If so, how is Giveth compensated for spending its GIV?
6 Likes

I like a fixed system - opt in or opt out… This already adds accounting bloat, but not as much as if every month someone wants to tweak things.

I think it’s worth including GM contributors… but I think it’s only fair if they are someone working toward supporting Giveth/the GIVeconomy… otherwise, it’s like paying out a token that someone doesn’t care about… and the incentive is too high to dump.
Maybe we could make a system where in order to “opt-in” contributors should explain why/how they are caring for the GIVeconomy?

3 Likes

I shared with mitch a doc i setup for dynamic choice on a token payout. % in token, and longer lock means bigger bonus. (3months, 6,12, and 18)
not impossible. no tracking after its sent out.
course, on/off is even easier.

1 Like

Maybe this will help to find an answer to the first two questions…

Which Method should we use for calculating Equity Distributions?

  • Fixed
  • Dynamic
  • Neither, I’m against this idea.
  • Abstain

0 voters

3 Likes

With the final vesting distribution nearly wrapped up we should move to figuring out how we want to do this.

On the GIVernance call April 15 we discussed how we prefer to do this and there was strong sentiment for using a dynamic distribution, using some pre-defined tiers to make it a little simpler.

We also discussed some lock-up periods as well as bonuses. Based on this discussion here is my proposal for Equity Opportunities:

Provide 4 tiers for which contributors can opt-in to receive a percent-based amount of their compensation in GIV + a bonus percentage, those are:

  • Low | 8% compensation in GIV + 3% bonus
  • Medium | 15% compensation in GIV + 6% bonus
  • High | 35% compensation in GIV + 12% bonus
  • GIVmaxi | 65% compensation in GIV + 25% bonus

When a contributor receives their compensation in GIV it is required to lock it in GIVpower for a minimum of 4 rounds.

Contributors can opt-in at anytime but cannot change their tier preference for at least 2 months after opt-in in or changing their tier preference.

WDYT?

  • Let’s do it!
  • I have a different idea…

0 voters

2 Likes

The tiers looks good to me.

I think it would be great for the lock-in period and changing of tier preferences to be quarterly (calendar) same as with the previous vesting distribution. This way, changing of tiers would all happen during the same time (end of each quarter) for everyone. Although, they could opt-in anytime even in the middle of the quarter.

Question, after opting in, can the contributor opt-out anytime, say after 1 month? I think this is also an important aspect to be cleared out.

2 Likes

I think this is not quite proportional… Low is 3/8 = 39%, medium is 40%, High is 34% and GIVmaxi is 38%

Could we tweak it so there is an escalating bonus for taking more?

  • Low | 8% compensation in GIV + 3% bonus
  • Medium | 15% compensation in GIV + 6% bonus
  • High | 35% compensation in GIV + 15% bonus
  • GIVmaxi | 65% compensation in GIV + 30% bonus

And can I confirm what this actually look like?

Like if someone gets paid $1000 and they take the Low option, they would get $920 in USDC and $110 in GIV, and if they took the GIVmaxi choice, they would get $350 in USDC and $950 in GIV right?

4 Likes

That’s a great point! I might even make a slight tweak to make medium a bit more interesting:

  • Low | 8% compensation in GIV + 3% bonus
  • Medium | 15% compensation in GIV + 7% bonus
  • High | 35% compensation in GIV + 15% bonus
  • GIVmaxi | 65% compensation in GIV + 30% bonus

So using the above, for each case let’s use the $1000 payment example:

  • Low | $920 USDC, $110 worth of GIV, total value of tokens is $1030
  • Medium | $850 USDC, $220 worth of GIV, total value of tokens is $1070
  • High | $650 USDC, $500 worth of GIV, total value of tokens is $1150
  • GIVmaxi | $350 USDC, $950 worth of GIV, total value of tokens is $1300
7 Likes

Thanks so much for bringing the option of equity for our contributors :purple_heart:

I think there should be some sort of informed consent about the “volatility” of the GIV token before contributors decide to opt-in. Maybe a signed agreement or a very clear message before recieving their monthly payment.

Gitcoin used to pay their contributors in GTC, when the price was high. From the grapevine, I heard contributors who hodl-ed GTC lost significant amounts of money when the price of GTC dropped. I’d really not like for that to happen to our contributors without them not knowing the risks first of receiving GIV as a percentage of their salary.

7 Likes

That’s a good point @hanners717 - I think just a simple document or message communicated to those who opt-in would suffice.

I also want to cover here or in our next GOV call how we should ratify this? Snapshot vote? Should we define a budget as well?

I had a look at the amount of rewards sent out from Praise and Vesting and from the 64.5M GIV allocated we have about ~22M GIV left.

3 Likes

Thanks for bringing up this important point @hanners717!

I want to add to this - I joined Gitcoin when they were still paying in GTC but the price was relatively low and more stable. However, I also heard through the grapevine that at least 1 contributor (maybe more) who was paid for salary and/or equity in GTC at a high price held it on the way down, and not only were they stuck selling for a loss but they also were on the hook for the income taxes on the GTC at the high price it was given at… essentially a tax bill much higher than the GTC was now worth!

I think this was likely a US contributor and I have no idea if this could even happen in other countries, but for me, it was a strong reminder to try to keep my ducks in a row with everything token & tax-related. So I think it’s important to have a signed agreement about volatility and other aspects of being paid in tokens, and I appreciate you for bringing this up. :slightly_smiling_face:

2 Likes

Following up on the GOV call earlier this week. Let’s finalize these numbers:

  • Low | 8% compensation in GIV + 3% bonus
  • Medium | 15% compensation in GIV + 7% bonus
  • High | 35% compensation in GIV + 15% bonus
  • GIVmaxi | 65% compensation in GIV + 35% bonus

Also from @Griff 's comments on how to handle GM contributors, we can consider the payments we make back to GM every month as applicable for one of these options.

GM can choose whichever they wish. However if the amount owed to Giveth from GM is greater than the amount Giveth owes to GM then this will happen:

  • GM pays Giveth in stables for the amount it owes, minus the amount of stables it would normally get under the equity agreement
  • Giveth will send GIV to GM, corresponding to the amount owed from Giveth to GM, based on the equity option chosen by GM.

For example:

  • GM chooses option GIVmaxi
  • GM owes Giveth $3000
  • Giveth owes GM $2000
  • Based on GIVmaxi percentages, Giveth owes GM $700 in stables and $2000 in GIV tokens
  • GM sends Giveth $2300 in stables ($3000 - $700)
  • Giveth sends $2000 in GIV tokens to GM

Another example:

  • GM chooses option GIVmaxi
  • GM owes Giveth $5000
  • Giveth owes GM $7000
  • Based on GIVmaxi percentages, Giveth owes GM $2450 in stables, $7000 in GIV tokens
  • GM sends Giveth $2550 in stables
  • Giveth sends GM $7000 in GIV tokens

ONE MORE EXAMPLE:

  • GM chooses option GIVmaxi
  • GM owes Giveth $1000
  • Giveth owes GM $5000
  • Based on GIVmaxi percentages, Giveth owes GM $1750 in stables, $5000 in GIV tokens
  • GM sends Giveth nothing
  • Giveth sends GM $750 ($1750 - $1000) in stables, $5000 in GIV tokens

Let’s do this!

  • Yes
  • No
  • Abstain

0 voters

4 Likes

I’m excited that this is finally rolling out, and major praise to @mitch who has really been driving the effort forward. Just one thing:

I strongly suggest we increase the minimum lock time to a year.

Normally, equity in a company is not liquid, and is meant to really align people towards the mission. We want people in Giveth holding GIV because they believe that we will succeed and they are putting their energy into making that a reality.

A “holding” period of just 2 months imo is not really enough time to ensure that full contributor “buy-in”. It’s actually even shorter than most contributors’ “trial periods”.

I honestly think that distributing tokens now… Giveth is giving them out cheap, and if we’re successful, in 1 year … or in 5 years… these tokens could be worth a lot more… especially if people on the team who are getting the token are putting their ALL into its success.

6 Likes

Thats what i was saying. (and my demo was showing) 3m, 6, 12, 18m with the diff % rates.

1 Like

I agree with @karmaticacid in making the lock in period longer.

In addition to this, we should also make it clear that all GIV tokens should be locked - the compensation portion and the equity/bonus portion. (if this is what the DAO prefers)

At the moment, only the equity/bonus portion is required to be locked for 4 rounds. The compensation portion is just highly encouraged to be held and locked.

The next round of equity payout would be this month - June 2024, using the current guidelines. It would be great to see the changes on lock in period and required GIV locking starting July, and so everyone can fill out the form again.

2 Likes

I would disagree with forcing contributors to lock the non-bonus portion, it is reasonable for someone to have unexpected expenses come up during the month and making them lock up this portion of GIV can put at risk their financial stability between pay cheques.

We want to strike a balance between preventing harm to the DAO and GIV token while also providing an enticing equity plan; adding too many risks and restrictions will make it less likely that people opt-in.

That being said I would be down to increase the lock period from 4 rounds to 16 rounds, only because it might be nice to let people move their tokens from one chain to another as we continue to bring the GIVeconomy to new chains and as the GIVpower rewards distribution continues to refine itself.

1 Like

Based on the discussions here, this is the proposed changes starting July 2024. Please vote!

Should the lock up period be longer for $GIV distributed as bonus/equity?

  • No, keep the lock up period to 4 rounds (~2 months)
  • Yes, increase lock up period to 12 rounds (~6 months)
  • Yes, increase lock up period to 16 rounds (~8 months)
  • Yes, increase lock up period to 21 rounds (~10 months)
  • Yes, increase lock up period to 26 rounds (~1 year)

0 voters

Another thing we want to update is adding an option for 100% GIV tokens, no stables (yes, there’s a demand for it :star_struck::rocket:). This is the proposed option changes:

  • Low | 8% compensation in GIV + 3% bonus
  • Medium | 15% compensation in GIV + 7% bonus
  • High | 35% compensation in GIV + 15% bonus
  • GIVmaxi | 65% compensation in GIV + 35% bonus
  • GIVUltraWhale | 100% compensation in GIV + 55% bonus*

Approve the new equity options?

  • No
  • Yes, add GIVUltraWhale option :whale:

0 voters

Should we have vote on if both the bonus & salary parts should be locked? Or just one? Or we make separate lock up periods for the bonus part and the salary part.

@karmaticacid I think that’s a good idea to open it up of what the others think about this. What are your suggestions on the options?

I think in general we should try to have people not sell their GIV unless they have to/not ask for GIV they plan to sell soon after, and I personally think that the entire GIV allocation should be locked for a year, so it really is a “buy in” on the mission / “equity” concept.

We are putting effort into increasing holders, decreasing sell pressure, and overall, increasing the adoption of GIV… and it’s kind of shooting ourselves in the foot to put out huge allocations to contributors thinking/planning that they should sell it soon after to pay their bills.

I think people should ideally ask for stablecoins for their salary needs… and choose the equity option & bonus in GIV that they would be very willing to hold for at least a year…

I also think it reduces complexity if people know that they are supposed to take the GIV they get, and stake & lock for a year.