PiePay: Fair Payouts for Teams
This is a description of the PiePay team compensation allocation tool by DAO Masons, tied to the proposal on the Allo Capital Builder Fun on Gardens. This tool is based on a system we use internally, and we’d like to formalize it and share it with other teams. Share and enjoy!
Note: While this document includes “Capital Tokens” for completeness of concept, these features will not be part of the first implementation.
Inspiration
This system draws inspiration from the the Slicing Pie dynamic equity model by Mike Moyers, the “Ritual of Light” and “Ritual of Echoes” governance processes developed by the DAO Masons and token-based payroll/equity systems used at HolacracyOne and Encode.org.
Motivation
Distributed and decentralized collaboration environments struggle with equitable compensation models that accurately track and reward individual contributions. This system addresses these challenges by implementing a transparent contribution reporting mechanism tied to a token-based economic model that allows for immediate compensation while tracking organizational debt when funds are limited, ensuring contributors remain engaged during resource constraints.
The system benefits include improved contributor engagement through fair valuation of different work types, enhanced financial transparency, and stronger alignment between individual incentives and project success. By allowing contributors to reinvest compensation into Capital Tokens, the system creates pathways for long-term stakeholder alignment. The project lead verification process ensures quality control while proportional distribution mechanics guarantee all contributors are compensated fairly relative to their contributions, even when sufficient funds aren’t immediately available.
Description
In this system, contributors are whitelisted into a project team by a project lead. Contributors may submit contribution reports to the project. Contributions are logged as hours worked alongside a valuation factor for the work performed. Valuation factors are configured during project setup and tied to an hourly pay rate.
Future versions will include contribution reports beyond hourly paid work including completed deliverables (e.g. bounties, contracted outcomes) and salary or regular pay.
Project leads verify contributions and valuations and approve or reject. If approved, the contribution enters the ledger for that pay period by assigning contributor “Profit Token” (P-Token) tokens based on work duration and assigned valuation factor.
At the end of each pay period, payroll manager distributes available payroll funds (typically revenue exceeding mandatory expenses). Funds are used to purchase P-Tokens from contributors at $1 per token on a proportional basis. If funds are insufficient to purchase all P-Tokens, the system issues D-Tokens for the remaining balance. When funds are adequate to purchase all P-Tokens, any excess is used to purchase existing D-Tokens from previous cycles at $1 per token on a proportional basis until none remain.
When contributors receive payment for their P-Tokens or D-Tokens, they have an opportunity to reinvest that capital back into the organization by purchasing “Capital Tokens” or C-Tokens. C-Tokens default to a price of $5 each and are available for purchase until the end of the next pay period.
Payroll manager has the option to make a capital distribution, proportionally to all C-Token holders after all P-Tokens and D-Tokens have been purchased.
Roles:
- Contributor
- Makes contribution & valuation claims
- Project lead
- verifies & approves contribution claims
- Payroll manager
- initiates distributions
- User
- any viewer accessing the system
Terms:
- Proportional Basis Payout
- When distributing funds to token holders, each person receives an amount proportional to their percentage of the total tokens. For example, in a team where A holds 20 tokens, B holds 30 tokens, and C holds 50 tokens (total: 100), a $60 payout would distribute $12 to A (20%), $18 to B (30%), and $30 to C (50%).
Contributor User Stories
- As a contributor, I want to submit contribution reports with hours worked and a valuation factor of 1-5 so that I can be fairly compensated for my work.
- As a contributor, I want to view the status of my submitted contributions so that I know which are pending approval, approved, or rejected.
- As a contributor, I want to receive P-Tokens for my approved contributions so that I can be compensated at the end of the pay period.
- As a contributor, I want to receive payment for my P-Tokens at the end of a pay period based on available funds so that I am compensated for my work.
- As a contributor, I want to receive D-Tokens when there are insufficient funds to purchase all of my P-Tokens so that I can track the organization’s debt to me.
- As a contributor, I want to reinvest my payments by purchasing C-Tokens so that I can participate in capital distributions.
- As a contributor, I want to view my total P-Tokens, D-Tokens, and C-Tokens so that I understand my overall position in the organization.
Project Lead User Stories
- As a project lead I want to create a new project and supply a project name, description, a whitelist of contributor addresses and a valuation rubric so that the project is available to begin collectingcontributions.
- As a project lead, I want to whitelist additional contributors into my existing project so that they can begin submitting contributions.
- As a project lead, I want to view all pending contribution reports for my project so that I can review them for approval or rejection.
- As a project lead, I want to approve a contribution report so that the contribution is logged and available for compensation.
- As a project lead, I want to reject a contribution report so that the contribution is not eligible for compensation.
- As a project lead, I want to provide a comment on approved or rejected contributions so that contributors understand why their submission was or was not approved.
- As a project lead, I want to view all approved contributions for my project so that I can track overall project progress and costs.
Payroll Manager User Stories
- As a payroll manager, I want to add funds to the payroll pool for the current pay period so that funds are available for distribution.
- As a payroll manager I want to schedule a payroll distribution for the end of the pay period so the system can calculate distributions for contributions made since the previous payout.
- As a payroll manager, I want the system to perform payroll distribution calcuations and to determine how many P-Tokens will be purchased from each contributor on a proportional basis so that all contributors are paid according to their percentage of the total contribution.
- As a payroll manager, I want the system to calculate how many D-Tokens it will distribute to contributors when funds are insufficient to purchase all P-Tokens so that debt is properly tracked.
- As a payroll manager, when all P-Tokens have been purchased, I want the system to automatically use excess funds to proportionally purchase D-Tokens assigned in previous cycles so that organizational debt is reduced.
- As a payroll manager, I want to make a capital distribution to C-Token holders only after all P-Tokens and D-Tokens have been purchased so that investors receive returns.
User (General) User Stories
- As a user, I want to view the current P-Token, D-Token, and C-Token distribution across the organization so that I understand the debt and equity structure.
- As a user, I want to see the transaction history of token purchases and distributions so that I can track the financial activities of the organization.
- As a user, I want to access educational resources about how the token-based compensation system works so that I understand my participation in the organization.
Technical Details
We plan to implement this using a custom Allo Protocol strategy to hold and distribute funds according to the ruleset described above.
We’ll use an Envio indexer to display contract state.
We will build a simple and effective user interface to display token balances and projected payouts with an emphasis on clean UX and simple user flows.
Contributors
Jordan Lesich - DAO Masons
Lead Developer - Grant Ships, ask.haus, DAOhaus
github: jordanlesich
Matt Davis - DAO Masons
Operations, Design, Developer - Grant Ships, ask.haus, DAOhaus
github: UI369
Deliverables
Contributor stories 1-5 and 7, excluding C-Token view.
Project Lead stories 1-7
Payroll Manager stories 1-5
User stories 1-3, excluding C-Token view
These stories include the contribution logging and P-Token & D-Token payout mechanism. It excludes C-Tokens to be added in a future version.
Links, Demos, Resources
Allo Capital Builder’s fund:
https://app.gardens.fund/gardens/10/0x1eba7a6a72c894026cd654ac5cdcf83a46445b08/0xd3345828914b740fddd1b8ae4f4d2ce03d1e0960/123
(Had to drop 3 links due to new user restrictions, see gardens post)