# MIP80: MKR Compensation Guidelines

## Preamble

```
MIP#: 80
Title: The MKR Compensation Guidelines
Author(s): @CodeKnight
Contributors: @CodeKnight
Tags:
Type: Process
Status: Obsolete
Date Proposed: 2022-08-13
Date Ratified:
Dependencies:
Replaces: N/A
Forum URL: https://forum.makerdao.com/t/mip80-maker-compensation-guidelines/17235
Ratification Poll URL:
Extra: This MIP has been made obsolete by the passage of [MIP102c2-SP1](https://mips.makerdao.com/mips/details/MIP102c2SP1)
```
## References

* [MIP53: The MKR Compensation Guidelines ](https://forum.makerdao.com/t/mip53-the-mkr-compensation-guidelines/8012)

## Sentence Summary

MIP80 describes how MKR will be used to recruit, retain and align interest in the Maker community.

## Paragraph Summary

MIP80 details the annual amount of MKR each Core Unit will get for internal distribution among its members. The Guideline seeks to replace individual proposals from Core Units for MKR compensation. The guideline intends to fulfill the requirement of offering globally competitive compensation for critical Core Units, but also reward all contributors with a share of the Maker protocol.

## Component Summary

**MIP80c1: How the MKR Compensation Guideline work**

Describes the MKR Guideline proposal.

**MIP80c2: Proposed Compensation**

Describes the proposed amounts of MKR used for Compensation.

**MIP80c3: Recommended best practice**

**MIP80c4: Amending the MKR Compensation Guideline**

Describes how Maker can change the MKR Compensation Guideline's details by use of a MIP80c4 subproposal.

## Motivation

MKR compensation provides a safe way to compensate employees in a deferred manner. It additionally aligns incentives across the community. 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 Core Units might get everything they ask for while others end up with nothing. As such, a common guideline for MKR compensation is highly preferable.

This proposal focuses on the question of "What percent of total CU member compensation should be in vested MKR tokens?".  It does not intend to address "What should total CU member compensation be?".

## Specification / Proposal Details

### MIP80c1: How the MKR Compensation Guideline work

The guideline proposes that MKR is transferred to the Core Unit Facilitator based on the total salary of each Core Unit as specified in their MIP40 Budget. The Facilitator will then distribute the compensation to their team based on the situation that is most applicable to that specific unit. 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 upon ratification on a pro-rated basis, and every 6th of July and 6th of January thereafter.

To minimize disruption, Core Units currently using an alternative MKR compensation plan may choose to continue that plan until their next budget adjustment or budget cycle.

### MIP80c2: Proposed Compensation

75% of Core Unit salaries will be given as compensation, with a four-year vesting schedule plan. The amount of MKR to be streamed to the CU is set at the beginning of the vesting period, with the price based on the six-month trailing average.

### MIP80c3: Recommended best practice

1. Core Units receiving MKR are advised to adhere to this guideline when possible.

2. Core Units should include expected MKR vesting in budget requests.

3. Core Units may choose to receive less than 75% if they would prefer to focus on Dai compensation for example. In this case, they should state this in their budget requests.

4. If any Core Unit member is likely to receive over 200,000 USD worth of MKR, that should be disclosed in their budget request.

### MIP80c4: Amending the MKR Compensation Guideline

Example for clarity

A Core Unit has budgeted 2M a year for salaries. That is 1M per 6 month period. July 6th passes. Assuming the previous 6 month average price of MKR is worth 1K, the CU is assigned 750 MKR , which is vested over a 4 year period.