Taking care of payroll is onerous enough in a traditional corporation, but a Decentralized Autonomous Organization (DAO) doesn’t even have an accounting or HR department to carry out the task. So how can it reward its members based on their contributions?
Decentralized Finance innovator Andre Cronje, founder of DeFi aggregator Yearn Finance, has a solution. On Wednesday, he published details of a new product, Coordinape, which allows teams without top-down management—such as those that have formed DAOs—to autonomously allocate funds and reward contributors.
Cronje said he built Coordinape while working on the Yearn Finance DAO. At first, Yearn DAO adopted so-called governance weighted salaries—grants based on the number of monthly contributions to the platform. But this, he soon discovered, didn’t scale well because the process needed active management, voting and approval.
“These are my favorite kind of products since they originate out of a personal need, but can be generalized to help any other organizations/DAO’s struggling with a similar problem,” he wrote.
DAOs eschew top-down management and, with no contracts or HR department for salary negotiations, incentivizing and rewarding members is one of the most troublesome areas in their development. Offering a way to get paid to work on individual issues can attract more developers, and if DAOs are ever to rival corporations—as some believe they will—finding a solution to these problems is vital.
Explaining Coordinape - Decentralized payroll management for DAOs https://t.co/ISLJ6Pyq8n
— Andre Cronje (@AndreCronjeTech) March 31, 2021
Coordinape operates on a simple premise: members select the team members they’ve been interacting with during the past month, and allocate points to them, from a stash they’ve been given. “This,” wrote Cronje, “builds up a contributor graph that is weighted towards the members that have the most interactions and allocations.”
At the end of the month, contributors can claim their grants based on the points they’ve received.
The process, he said, is done via “sybil resistant social graphs,” attack-resistant models or representations of those involved in the network and how they are related.
Social graphs are not new; they're the means by which Facebook and Amazon algorithms know which posts or products to push or recommend to users. But what Cronje is working on sounds more like an evolution of the social graph, described as a “commercial graph” depicting relationships between businesses, based on their actual interactions.
Coordinape is currently closed source, but when it’s up and running anyone can register to contribute to the Yearn platform or their own DAO. It’s getting increasingly easy to set one up.