MIP40c3-SP54: TechOps Core Unit MKR Budget

MIP40c3-SP54: TechOps Core Unit MKR Budget

Preamble

MIP40c3-SP: #54
Author(s): @simonkp
Contributors: @lukaszb, @wouter
Tags: core-unit, cu-tech-001, budget, mkr-budget
Status: Formal Submission
Date Applied: 2021-12-08
Date Ratified: YYYY-MM-DD
Forum URL: https://forum.makerdao.com/t/mip40c3-sp54-techops-core-unit-mkr-budget

Sentence Summary

This subproposal defines the MKR compensation plan for the TechOps Core Unit (TECH-001).

Paragraph Summary

The TechOps Core Unit supports the Sustainable Ecosystem Scaling Core Unit (SES-001) MKR Budget structure discussed here. This is a 3-year vesting plan with 1-year cliff vest.

The members of this Core Unit will take the start of the Feedback Period of this MIP (December 8, 2021) as the start date for the vesting schedule.

Key Parameters

Property Value
MKR/USD Lock-in Price (New) Trailing 6 month average from December 8, 2021
MKR/USD Lock-in Price (OG) 2,852.87 USD
MKR Price Floor -30% ($1,997)
Vesting Period 3 years
Cliff Vest 1 year
Vesting Schedule After cliff has expired, biannual MKR vesting
Vesting Interval 6 months
Manual Repricing yes
Auto-Renewal yes
MKR Expenditure Cap (Annual) 686.05 MKR
MKR Expenditure Cap (Total 3-Year) 2,058.15 MKR

The MKR Expenditure Cap included in the table above covers the total vesting schedule of 3 years for the projected 5.7 FTEs, including raises and repricing.

Current Estimated MKR Expenditure

The Estimated MKR Expenditure is our best guess of how much MKR will be used with the current team configuration with 3.4 FTEs. This would result in the vesting schedule below:

Vesting Date MKR Amount
December 8, 2022 257.31
June 8, 2023 128.65
December 8, 2023 128.65
June 8, 2024 128.65
December 8, 2024 128.65
Total 771.92
  • On average, this would yield 75.68 MKR per FTE per year.
  • Any changes to these amounts will be reported in our Monthly Budget Statements and reviewed by the budget auditors.

Reasons why the Actual MKR Expenditure could rise closer to the MKR Expenditure Cap:

  • New hires
  • A compensation raise for a member of the team
  • Repricing (and resetting) the program, in the case of bear market
  • Price floor: -30%. If any Contributor chose to reprice their program, they could do it at a maximum of -30% from the set MKR price.

Payment Implementation

  • As defined in MIP40c3-SP53 and in the Monthly Budget Statement will contain the MKR vesting schedule. This schedule specifies when in the future MKR is vesting, and how much.
  • To keep the risk acceptable for Maker governance as well as for the team, the MKR is moved from the protocol to the contributors in stages:
    • Following the MKR vesting schedule, any MKR that is vesting in 6 months or less, will be included in the top-up transaction which is added to the executive vote. This will move the MKR from the protocol to the TECH-001 Auditors Wallet, which then acts as an escrow wallet.
    • Following the MKR vesting schedule, after review and approval by the auditors, any MKR that is vesting in 3 months or less, will be included in the monthly top-up transaction that moves funds from the TECH-001 Auditors Wallet to the TECH-001 Operational Wallet.
    • When the MKR has vested, it is paid out to the contributor, either directly or through an intermediate payment processor.
  • Any excess MKR in the TECH-001 Auditors Wallet or the TECH-001 Operational Wallet will be returned to the protocol, following the monthly payment transactions.

This payment implementation makes no assumptions about the origin of the MKR. It can either be moved from the protocol’s treasury, newly minted, or obtained from another source.

The MKR that’s held by the TECH-001 Auditors Wallet and the TECH-001 Operational Wallet will not be used for voting, signaling, or any other type of governance participation. It will remain in the wallets untouched until it moves to the next step in the process.

TECH-001 may consider alternative payment flows compliant with DssVest if the standardized flow is compatible with the vesting schedule and that the risk is deemed acceptable by the team.

3 Likes

Edit: Payment Implementation is added

Once again I can’t get over how much compensation a new CU is asking for.

At current MKR prices 76.9MKR/year is equivalent to ~190k/year for each team member… This is in addition to their generous DAI salary.

@SES-Core-Unit needs to find a better way for the DAO to properly negotiate these deals. Continuing to launch new CU’s with this level of compensation is the opposite of sustainable.

@MakerMan @PaperImperium @rune

2 Likes

TL;DR

If you can find a team that will do the job for less, please put us in touch.


You bring up great points, @Zarevok. I’ll try to answer in a succinct way, but this is part of a broader discussion.

Performance and Compensation

The DAO needs to have different methods to evaluate offers and the performance of the Core Units. Ideally, we build frameworks to do this at scale, and all Core Units should be evaluated (both current and future).

The compensation to perform different tasks should be evaluated against market prices as well. Some people have argued that in the past as well.

The idea of a Core Unit to perform different types of audits is being floated by different members at the moment.

Market Research?

Saying “we’re paying [this group] too much” is not particularly helpful. Mainly because it seems like an opinion. Also: happy to be corrected if you have some data about market prices.

Competition and the SES Incubation Program

Having multiple Core Units performing overlapping functions increases the resiliency of the DAO and makes us stronger (more decentralized). If you happen to find a group of talented individuals that can do any critical functions for the DAO (including TechOps, Smart Contracts Development, Oracles, and a long list of et cetera), please put us in touch. We will be happy to discuss how to bring them on board.

SES is happy to incubate any team that will help scale the DAO. We do have limited bandwidth (both in terms of talent and funds) so we need to prioritize and choose our battles.

2 Likes

I do not have an opinion here, but this is from the Dai Foundation budget. I am not sure if it is comparable since the scope of work may be different, and is only offered as a possible data point.

I also have what I believe are an up-to-date list of MKR vesting to all CUs (annualized at 10981.36997 MKR if all proposed CUs are approved, and 10287.59997 excluding the SF-001, TOCU-001, MT-001 proposals), including broken down by FTE. If anyone needs those, feel free to reach out to me or start a new thread.

This is, again, only provided for informational purposes and does not represent any position of myself personally or GFX as a delegate.

1 Like

I don’t think that the Dai Foundation is using TechOps that spin up Ethereum nodes? So someone without crypto experience might do the job.

I might be wrong, though.

1 Like

Spinning up an ethereum node isn’t difficult. If that’s the bar to receive 190k in MKR comp where do I sign?

I think I’ve said this before, but just in case it was not clear:

If you’re a talented TechOps with a Crypto background and you want to put in the work, please reach out. You don’t even need to go through the incubator, you can directly propose a Core Unit.

I haven’t gone through the TechOps budget yet - hoping to do that between Christmas and New Year, but I have no opinion on it as of now.

I want to add some context to the Dai Foundation budget post for TechOps operations.

Be aware that

  • It was an estimate I made and not based on any actual service offer
  • The service level Dai Foundation requires is similar the service level we for example have with our financial services provider. We have a need which is logged and then the provider puts it into their backlog and solves it as part of their operations within normal working hours within a reasonable number of days.
    Dai Foundation has in general no requirements for
  • having a full team available 24x7 with a diverse set of skills ready to respond at any time
  • having advanced monitoring solutions built and maintained
  • etc

The needs of Dai Foundation are very different from supporting an infrastructure that need to work all the time where there need to be the right resources to respond immediately to critical incidents.

Different service levels and breadth of services have different price tags, so I don’t think the Dai Foundation budget item can be used a benchmark here.

4 Likes

Why is there such a large gap between the current and key parameter MKR compensation (76.6 MKR per FTE vs 108.9 MKR per FTE). Is this baking in promotions every year? This is a 42% increase and I don’t believe I’ve seen any other CUs do this.

1 Like

Hey @Aes, as stated we’ve utilised the SES reward structure, formulas of which are as follows:

[Initial Annual FTE Incentive Value in USD] = MAX( 
    2.45 * [Annual FTE Gross Salary] -275,000 USD; 
    [Annual FTE Gross Salary] * 0.35
)
[Initial Annual FTE Incentive (MKR)] = 

    [Initial Annual FTE Incentive Value in USD] /
    [MKR/USD Lock-in Price (180 day average MKR price)]

The above were used to calculate the averages expected per FTE per year.

Now remember “MKR Expenditure Cap (Annual)” value in the Key Parameters table is an absolute possible maximum MKR amount, opposed to the actual average per FTE. The big difference in values is because instead of using the 180 day average MKR price in the second formula above, the “MKR Price Floor” was used instead (for reasons see above, mainly repricing); and also the salary was scaled by 10%.