Revised GMC Split Proposal

Governance
1

Background

On May 10, 2024, the Rocket Pool DAO approved RPIP-41, establishing stipends for members of pDAO committees. While this marked significant progress in fostering a stronger volunteer ethos among committee members, an emerging challenge has been attracting enough nominees for future committee roles. This issue is largely driven by the substantial time commitments and operating expenses associated with serving on the Grants and Management Committee. In light of the current proposal by haloooloolo to set the recurring spend for committee budgets (on-chain vote details), the GMC is revisiting its structure and compensation model to ensure sustainability and effectiveness.

Time Commitment

Following internal discussions, the GMC has determined that the hours of commitment outlined in RPIP-41 are no longer accurate. Based on an anonymous survey where GMC members provided independent responses, the committee proposes updating the target member hours from 13 to 20. This adjustment better aligns with the workload current members report as reflective of their regular duties.

Forms response chart. Question title: On average, how many hours per week do you estimate you spend on GMC duties?. Number of responses: 8 responses.

Expenses

In recent months, several members have established LLCs to ensure maximum compliance with current interpretations of crypto regulations. However, LLC incorporation can be costly. To reduce the financial burden on current and future members, the GMC proposes increasing the Global Stipend Rate from $30/hour to $35/hour.

Member Motivation

The GMC conducts annual elections to select its nine members. In year two, all 11 applicants were utilized to fill positions during the election period. In year three, 13 individuals applied; however, within just two months, two members have already stepped down.

Financial Breakdown

Current Financial Overview (RPL at $10)

Current Compensation

  • Monthly GMC Revenue: ~$47,000
  • Global Stipend Rate: $30 / hr
  • GMC Target Member Hours: 13
  • Member Compensation:
    • IMC Members: $3,510
    • GMC Members: $3,510
      Total: $7,020
  • IMC Administrative Costs: ~7.5% of monthly GMC revenue ($3,510 / $47,000)
  • GMC Administrative Costs: ~7.5% of monthly GMC revenue ($3,510 / $47,000)

Updated Compensation (Proposal)

  • Global Stipend Rate: $35 / hr
  • GMC Target Member Hours: 20
  • Member Compensation:
    • IMC Members: $4,095
    • GMC Members: $6,300
      Total: $10,395
  • IMC Administrative Costs: ~8.7% of monthly GMC revenue ($4,095 / $47,000)
  • GMC Administrative Costs: ~13.4% of monthly GMC revenue ($6,300 / $47,000)

Revised GMC Split (22.5%):

If the GMC split increases from 20.5% to 22.5% at the price of $10 per RPL, this would add approximately $4,700/month, providing additional flexibility for compensation.

With 22.5% GMC Split:

  • Current Compensation:

    • IMC = $3,510 (~6.8% of revenue)
    • GMC = $3,510 (~6.8% of revenue)
    • Total = $7,020 (~13.6% of revenue)

  • Proposal:

    • IMC = $4,095 (~7.9% of revenue)
    • GMC = $6,300 (~12.2% of revenue)
    • Total = $10,395 (~20.1% of revenue)

Conclusion

The proposed updates to the GMC’s compensation structure and operational framework address key challenges in sustaining and motivating committee members. By increasing the target member hours from 13 to 20 and adjusting the Global Stipend Rate from $30/hour to $35/hour, the GMC aims to align compensation with actual workloads and reduce financial burdens, particularly those associated with regulatory compliance. Additionally, increasing the GMC revenue split from 20.5% to 22.5% will provide the committee with the flexibility needed to support these adjustments while ensuring its continued ability to attract and retain qualified members. These changes represent a proactive approach to securing the long-term effectiveness and sustainability of the GMC, enabling it to better serve the Rocket Pool DAO and its community.

7 Likes
2

To partially put this in layman’s terms, the GMC is a lot more work than it use to be and it is kind of expensive to be on the GMC.

Right now, the pDAO portion of inflation gives the IMC 50%, the GMC 20.5% and the treasury 29.5%. This is asking to redistribute so IMC still gets 50% but now GMC gets 22.5% and treasury 27.5% to make up for increased stipends.

Furthermore, note that the IMC stipend is also paid by the GMC funds.

5 Likes
3

Generally in agreement with this, directionally. The previous 20.5% split has always seemed somewhat arbitrary to me and the GMC isn’t exactly flush with cash, so maybe we should just revise this to a 50 / 25 / 25 split.

4 Likes
4

This seems like a good idea to me. Not speaking for the entire GMC, btw.
If someone objects to this sort of an increase in split or objects to stipend changes, please let us know. It’s okay.

1 Like
5

I’ll be the (gentle) Contrarian on this. I’ll break this up into a separate topics though -

Increasing the GMC’s share of RPL inflation

This is good. RPIP-41 assumed that the MC stipends would just come out of the GMC’s budget which has inherently meant the GMC had less to spend on actual grants and bounties. Increasing their share of inflation to partially offset this is good.

Going much beyond 22.5% I’m leery of though. The PDAO should still be budgeting for the 5% of total inflation that the dev team has gotten the past couple of years, and the costs of instituting a security council in the future also need to be considered. Some basic math - of the 28.5% of inflation the PDAO gets, the 5% the team usually gets represents 17.54% of the PDAO’s share. The IMC is getting 50%. This proposal would allocate 22.5% to the GMC. That leaves 9.96% for a future security council. And there’s some discussion about re-boosting the the ODAO’s share. So going beyond the proposed increase to 22.5% needs to be carefully considered, or needs a reduction from something else in the budget.

Increasing the GMC’s Target Member Hours

This is fine. If GMC work is consistently requiring more time per member then is allocated, then by all means. This doesn’t even need PDAO input. RPIP-41 allows a committee to raise its own target hours with a public unamimous vote of the committee members.

That said - the broad and fairly flat distribution between 3 and 7 hours in the poll tells me that maybe the GMC’s practice of having flat per-member pay may not be ideal. As the guy whose been coordinating the IMC’s stipend allocation, I get that the complexity and overhead of doing anything else may not be worth it. But, the results of that poll should prompt that discussion within the GMC.

Increasing the the MC Global Hourly Rate

I’m somewhat skeptical of this part. Knowing the demographics of the MC’s - even the boosted wage of $35/hour is still probably far below the usual pay that the members get in their IRL work. So, I’m not sure how much extra motivation the additional $5/hr will provide as compensation that’s indended to be a stipend, not market rate pay.

In addition - I certianly empathize with committee members wanting to protect themselves by creating LLC’s, and I do think that folks in that situation should be compensated for those costs. That said I’m not sure raising the global pay rate is the way to do that. This effects some MC members, who are also unambiguously PDAO members, in some jurisdictions. A global pay change doesn’t necessarily fit that. A better way to get these costs compenstated may be with a retro grant - and put that up for a vote. This also give the PDAO the opportunity to ratify that the identity of the affected MC members is indeed the LLC and not the individual who was originally selected.

2 Likes
6

These are all legit ideas that have also circulated around in the GMC discussions. I’m sure more people will weigh in.

Either way, I want to make sure the community is aware that it is getting increasingly difficult to recruit and retain GMC members and it is unfortunately still a bumpy road ahead.

7

Classic bureaucracy in action, lol. Committee deciding to pay the committee members more.

Ideally management costs should be very low like <1% or 5% but not more than 10%, that’s just getting ridiculous.

On the other hand, Gitcoin DAO spends millions per year to pay an army of grifters and there’s no visible progress to show, so I’m very happy with our GMC.

GMC is doing a very good job evaluating applications and making sure there’s no grifting taking place. It sometimes means rejecting applications or approving large projects which may cause backlash.

To minimize the pain of backlash, the committee is incentivized to thoroughly evaluate and discuss each application which takes time (and so costs money). Right now it’s $30/h or $390/m. It’s decent money in many parts of the world but not that much in the west where most of the current members are based. The proposal increases it to $35/h or $700/m per member for a half day work per week. I think this should be enough to incentivize people to nominate themselves in the next election. If it’s not we should increase it as much as it takes to get enough interest. But this increases the administrative costs vs revenue.

We could reduce the administrative costs by simply having fewer members. Right now it’s 9. We have multiple members to have more opinions, reduce the workload of each member, redundancy and also to prevent collusion.

If we have fewer members on the GMC and the GMC colludes to award large grants to its friends the pDAO can veto the decisions. There’s not much we can do today if the GMC colludes to steal the treasury but it could be solved with a small Gnosis Safe module that freezes the funds if something suspicious is happening.

If we go for 5 members on the GMC then we’d spend $700/m * 5 = $3500 which is $3500 / $47,000 = ~7.5% which is about the same as today.

1 Like
8

After reviewing feedback the GMC has revised the proposal:

Committee Splits Revised

To accommodate oDAO fatigue and GMC expense issues.

TLDR

  • Increase oDAO pay 1%
  • Increase GMC pay from $30 → $35 per hour and hours from 13 to 15 per month
  • Both of these at the expense of the treasury

GMC, at its discretion, can give a one time +X hours to members for business startup fees. This would be from the GMC budget

Details
As an example, the last period of 2024 (approximately one month) will be used where the RPL inflation was 77888 RPL. At the time of writing RPL was a little over $10.

Currently, inflation is split:

  • NO: 70% (54522 RPL)
  • oDAO: 1.5% (1168 RPL)
  • pDAO: 28.5% (22198 RPL)

Shift 1% to oDAO from pDAO. This avoids GMC overhead of having to reimburse oDAO. The GMC is not against capping oDAO payments with increasing RPL value, but prefers action be taken sooner rather than waiting for this implementation.

New Split :

  • NO: 70% (54522 RPL) ← unchanged
  • oDAO: 2.5% (1947 RPL) ← +779 RPL (approx $8000 divided among 16 NOs)
  • pDAO: 27.5% (21419) ← -779 RPL

Next, due to business overhead for the GMC and increased workload, the GMC recommends two fixes, a stipend revision and one time reimbursement addition:

Stipend Revision (would come from increase in GMC split)

  1. Increase monthly hours from 13 to 15 per member (due to increased workload)
    Hours beyond this per individual can be dealt with on a per case basis by GMC
  2. Increase hourly pay from $30 to $35 per hour (due to increased yearly expenses)
    With the new hours, this increase covers new business expenses, it is not meant to compensate with a fair wage, but to not decrease stipend due to yearly fees, self-employment taxes, etc.

One Time Reimbursement (would NOT come from increase in GMC split)
The GMC may, at its discretion, offer a one-time reimbursement for business startup expenses by allocating a fixed dollar amount to eligible members. This reimbursement would be converted into an equivalent number of hours for the GMC rewards system. For example, if the reimbursement is $2,000 and members are compensated at a rate of $35 per hour, this would equal approximately 57.14 hours for one rewards cycle.

The reimbursement amount would be the same for all eligible members, regardless of individual circumstances, to ensure fairness and consistency. To maintain privacy, the claims process would be handled internally, with members providing details of their reimbursable expenses to the GMC. Claims would require an absolute majority approval from the GMC for processing.

This reimbursement would be funded from the regular GMC budget and would not require an increase in the GMC split. If deemed unnecessary in the future, this expense could be discontinued without impacting the GMC’s ongoing operational structure.

Split with new oDAO % copied from above:

  • NO: 70% (54522 RPL) ← unchanged
  • oDAO: 2.5% (1947 RPL) ← +779 RPL (approx $8000 divided among 16 NOs)
  • pDAO: 27.5% (21419) ← -779 RPL

Current pDAO splits (using number from above) :

  • pDAO: 21491 RPL →
  • IMC: 50% (11068 RPL)
  • GMC: 20.5% (4563 RPL)
  • Treasury: 29.5% (6567 RPL)

To make up for the stipend increase, the new pDAO splits would be :

  • pDAO 21491 RPL →
  • IMC: 51.7% (11068 RPL) ← unchanged
  • GMC: 21.9% (4685 RPL) ← +122 RPL
  • Treasury: 26.5% (5666 RPL) ← -901 RPL
3 Likes
9

Thanks for your comments. I do just want to go into this a little:

The current stipend is $390/month or $4680/yr.

Suppose a new GMC member elected in November was advised by an attorney to not serve on a dao committee without forming a business for tax/legal purposes etc.

Fees to form a business as advised ($1900)
with dedicated hardware wallet ($200)
and requisite state fees and registered agent ($300)
since the new year is crossed, next year’s state fee and registered agent ($300)
comes to about $2700.

Since the year was crossed, start up costs can’t be fully deducted, they can be spread over the next 15 years. Why does this matter? Well, now in the first full year of service, the member would be paying their new self-employment tax (15% on top of income tax) on mostly their full stipend (approx. $700 in new taxes).

The new member has now paid $3400+ to join the GMC and gone through all this effort. Hopefully they don’t need to pay a CPA. They could save some money by registering as an s-corp of course with only a little more bureaucratic overhead.

The point is that the GMC is not trying to get a raise to get rich off GMC work. There are things in the works to hopefully try to reduce this monetary and bureaucratic burden on GMC members. For now, this reformulation is a stop-gap measure for members who feel like they have to do this to serve. It has been a significant issue with already felt consequences within the committee.

It is an interesting point, and one that has been previously entertained, to reduce the number of GMC members. It would increase the pressure on existing members but would save money. Something like that could be discussed, though.

1 Like
10

This adds up to 100.1%. I’d also still prefer if we rounded up to more reasonable numbers. E.g. 52.5% / 22.5% / 25% or the 50% / 25% / 25% split I suggested in the other post. I think 25% still leaves us enough room to budget for a solid security council.

2 Likes
11

The extra .1% is a rounding error from the RPL being rounded before the percent was calculated. Although if we can figure out how to get more than 100% out of the RPL, that would be helpful.

I think GMC would generally be fine getting a higher percent to make the numbers nicer (like 22.5%), but considering the above counter points and/or pushback, I’m not sure we want to go as high as 25%. IMO, obviously.

3 Likes
12

If we can simplify the numbers, that would be excellent. But, I do agree with Dr. Doofus on reducing the proposed split amount if it helps address budgeting concerns from some community members.

13

Given the discussion so far, I believe we are ready to proceed to a vote and continue the initiative that haloooloolo started here: On-Chain Vote: Recurring Spend for Committee Budgets.

To implement the proposed changes, the most efficient governance process would involve sequential on-chain votes. First, a “Yes” / “No” vote on revising the oDAO split, followed by a “Yes” / “No” vote on revising the GMC split.

Dr. Doofus initially proposed revising the oDAO split to address member fatigue, as outlined here: Is oDAO Fatigue an Issue?. The current proposal revises the oDAO split to 2.5% by adjusting the pDAO share.

  • NO: 70% (unchanged)
  • oDAO: 2.5% (currently 1.5%)
  • pDAO: 27.5% (currently 28.5)

Please indicate if you believe the pDAO is ready to vote on “Revising the oDAO Split to 2.5%”:

  • Support moving to an on-chain vote
  • Oppose moving to an on-chain vote
  • Undecided
0 voters

This poll will last one week and will automatically close at January 22, 2025 01:00 UTC.

2 Likes
14

Support, but with the caveat that we should adjust the on-chain quorum to 15% ahead of this.

1 Like
15

I concur (post must be at least 20 characters)

1 Like
16

I want to provide a bit of context on one thought from peteris here. I don’t have insight into GMC, but here’s an IMC look. The “base” pay is in blue and the work-based pay is in red (from talking to partners, signing, building txes, etc, etc). You can see that we have several members there essentially as backups, which kinda hints to “we can go smaller”.

image
image1173×322 2.29 KB

That said, if we removed 3 of the blue bars, that’s only a 5.1% savings - so this is a pretty marginal benefit (ie, most of the active work would still need to be done). This is a place where GMC might have more overlapped work between members (a number of folks reading the same thing etc), which has strong benefits but obviously has a monetary cost.

Not really offering an opinion here, just some musings and context.

1 Like