# MIP53: The MKR Compensation Guidelines ## Preamble ``` MIP#: 53 Title: The MKR Compensation Guidelines Author(s): @Planet_X Contributors: @Derek, @LongForWisdom, @Aes Tags: Type: General Status: Withdrawn Date Proposed: 2021-11-05 Date Ratified: Dependencies: Replaces: Ratification Poll URL: Forum URL: https://forum.makerdao.com/t/mip53-the-mkr-compensation-guidelines/8012 ``` ## References [Pre-MIP discussion](https://forum.makerdao.com/t/pre-mip-discussion-the-mkr-compensation-guidelines/7960) ## Sentence Summary MIP53 describes how MKR will be used to recruit, retain and align interest in the Maker community. ## Paragraph Summary MIP53 details the annual amount of MKR each Core Unit will get for internal distribution among it's members. The guidelines seeks to replace individual proposals from Core Units for MKR compensation. The guidelines intends to both fulfill the requirement of offering globally competitive compensation for critical Core Units, but also seeks to reward all contributors with a share of the Maker protocol. ## Component Summary **MIP53c1: Defining Components of the MKR Compensation Guidelines** Describes the MKR guidelines proposal. **MIP53c2: Proposed Compensation per Core Unit** Describes the proposed amounts of MKR going to each Core Unit. **MIP53c3: Recommended best practice** Describes recommended practices by the Core Units. **MIP53c4: The MKR Compensation Guidelines towards 2025** Describes the planned evolution of the guidelines. **MIP53c5: Amending the MKR Compensation Guidelines** Describes amendments to the guidelines. ## Motivation Maker needs to recruit and retain personnel for its Core Units, and additionally align incentives across the community. To this purpose compensating Core Units with MKR has been chosen. While budget proposals involving MKR could be proposed by each Core Unit separately and customized for each Core Unit, such an approach has the downside of consuming considerable time and resulting in much complexity. There is also the aspect of avoiding creating diverging incentives as these could lessen the cohesion of the community. Additionally, the discrete yes/no nature of voting meant that some units might get everything they ask for while others end up with nothing. Given these considerations, a common guideline for MKR compensation is highly preferable. ## Specification / Proposal Details ### MIP53c1: How the MKR Compensation Guidelines work The guideline proposes that MKR is transferred to the Core Unit Facilitator based on the number of full-time equivalent contributors in the unit. The Facilitator will then distribute the compensation to their team based on the situation that is most applicable to that specific unit. A small team with limited plans for growth could choose to divide the compensation equally, while a team with plans to recruit substantially with high demand for training and uncertain individual performance could choose a tiered system. This method was chosen to allow for simplicity for the Community as well as flexibility for the Core Units. Any funds not spent should be returned to the community. The MKR will be transferred to the Core Unit a full year after ratification of the guideline and once per year after that until the last transfer in 2025. ### MIP53c2: Proposed Compensation per Core Unit Some of the below listed Core Units have yet to submit for unit approval. Other Core Units have provisional unit size. Units not included in the below list could be proposed at a later stage through amendment. Core Unit Tier Unit size MKR per person per year for internal distribution Protocol Engineering 1 16 250 Oracles 1 16 250 Risk 2 10 50 GovAlpha 2 6 50 Real-World Finance 2 5 50 Governance Communications 4 5 10 Growth 3 7 30 Sustainable Ecosystem Scaling 3 50 30 Content Production 4 5 10 Marketing 3 5 30 Legal 2 3 50 UX & Frontend 3 6 30 Integrations 3 5 30 Smart Contracts 2 3 5 30 MakerDAO Shop N/A N/A 0 ### MIP53c3: Recommended best practice Based on internal discussions the MKR Compensation Group has the following list of best practices for Core Units seeking to apply for MKR compensation. 1) Core Units receiving MKR are advised to adhere to this guideline when possible. 2) The MKR compensation proposal should be placed in a separate proposal, not combined with the initial budget request. This allows a new team to start working for Maker and pay salaries to the team members. 3) There should be a minimum 3-month gap between core unit approval and the application for MKR compensation. This will allow the community a chance to evaluate the core unit before compensating the unit with MKR. ### MIP53c4: The MKR Compensation Guidelines towards 2025 It is the intention to inspect and if necessary revise the guideline periodically towards 2025 while maintaining the core principles of the document to provide a firm foundation for recruitment and retention. 2025 was chosen as the horizon limit due to the high rate of change in the world of crypto which makes it exceedingly hard to plan further. Periodic revisions will also enable the community to include lessons learned both from inside and outside the Maker community. Do note that as the protocol progresses, working for the various Core Units will most likely increasingly resemble a normal job with proportionally less risk and also less compensation. For the purpose of establishing a DAI value to the MKR used for compensation, the price is set to DAI 2250 per MKR, which was the price of MKR on 3 March 2021 when the Protocol Engineering group submitted their budget proposal. ### MIP53c5: Amending the MKR Compensation Guidelines Describes how Maker can change the MKR Compensation Guidelines details by use of a MIP53c5 subproposal.