Incentive factors for consideration

Listing the different factors that will be considered for each funding incentive approach

The methodology used for this approach comparison is documented separately.

Budgeting complexity

• Description - Contributors need to plan out the budget required for their submission so that their contribution efforts can be fairly compensated. The proposal submission will detail how the compensation would be used. Where the incentive is attached in funding will impact the complexity of budget planning.

• Maximum score - 5, Very important. Budget setting is something that will deeply impact the submission information and level of detail that is required. Higher complexity can lead to incorrect incentive outcomes or disengagement from the process due to the time it takes just to participate in making a submission and the issues that can occur when those budgets are not fully accurate.

• Scoring questions - What budget planning is required to make a submission? What benefits does that budget planning approach provide? How difficult is it for those estimations to be accurate? How often could the budget be under or over estimated and how does that complicate the distribution of incentives over time and impact the initial budget planning?

• Scoring - Lower complexity is good (Score - 5). Higher complexity is bad (Score - 1).

Voter decision complexity

• Description - Budgets attached to submissions will need to be understood and compared by voters so they are informed when selecting which submissions are fair and reasonable and also which submissions could be the most effective at generating impact for the ecosystem.

• Maximum score - 5, Very important. Where and how the incentive is attached to submissions will directly influence the amount of complexity there is for voters to understand and compare the differences in submissions and their proposed budgets.

• Scoring questions - How much does the budgeting approach increase the complexity for voters? Does it take just more time to compare the submissions or is the comparison now also far more complex to understand? Can the voter reuse information when making comparisons?

• Scoring - Lower complexity is good (Score - 5). Higher complexity is bad (Score - 1).

Governance complexity

• Description - Governance of the incentives will concern what checks and balances are necessary for the incentive approach to function effectively and who has control over the assets as they flow from the treasury towards the contributors involved in different initiatives. The incentive approach can influence how funds are managed and disbursed.

• Maximum score - 5, Very important. Governance over how the incentives are managed and distributed could either increase or decrease the chances of misuse and the amount of shared complexity between the contributors involved. The larger the incentives become the more important it is to think about how the incentives flow from the treasury to the contributors.

• Scoring questions - Who has influence and control over how the budget requested will be used? Are there increased risks of corruption or tension between contributors due to the approach? What checks and balances might be needed to ensure the incentives are used correctly? How can voters intervene when an issue emerges?

• Scoring - Lower complexity is good (Score - 5). Higher complexity is bad (Score - 1).

Game theory risks

• Description - Incentives will play a large role in influencing certain outcomes based on how voters and proposers could most benefit themselves in different ways by interacting with each incentive approach.

• Maximum score - 5, Very important. Contributors and voters will respond to the incentives that are placed in front of them. How those incentives are structured and distributed will lead to certain responses based on the game theory that those approaches create.

• Scoring questions - How could voters or contributors act to increase their chances of receiving the available incentives and what impact could that have on the effectiveness of the funding process? What emergent behaviours could occur due to how the incentives are structured? Does the incentive approach make it more or less likely that novel initiatives get funding that could generate large amounts of impact for the ecosystem?

• Scoring - Lower risk is good (Score - 5). Higher risk is bad (Score - 1).

Contribution flexibility

• Description - Ideas and priorities can change as new information emerges or when preferences or the environment changes. Contributors can benefit from being able to respond to these changes by reallocating their contribution efforts towards initiatives that can generate the most impact for the ecosystem. How incentives get attached to the funding process can influence the amount of complexity there is for contributors to change how they allocate their efforts.

• Maximum score - 5, Very important. If an ecosystems contributors are not able to be responsive to important changes that happen in the ecosystem there is an increased risk that incentives are wasted due to contribution efforts being allocated to non impactful areas. If an emergency happens in the ecosystem the available contributors will need to be flexible and able to respond to these emergencies as fast as possible.

• Scoring questions - What influence does the incentive have when it is attached to different parts of the process? If contributors suddenly change what they are working on does this compromise the original intent of the incentives? What complexities can emerge when peoples contribution efforts get redirected to other areas?

• Scoring - High flexibility is good (Score - 5). Low flexibility is bad (Score - 1).

Income stability

• Description - Where the incentives get attached to the funding process will influence the income stability for contributors. This will be based on how likely it is they get under or over compensated for their contribution efforts and also how consistently they are able to get selected for receiving future compensation.

• Maximum score - 5, Very important. Contributors who have to handle unstable income will need to spend more of their time planning and accounting for these problems. Some contributors might decide to simply not participate in the environments where income is not stable as they cannot afford to not be paid for their contribution efforts. Higher income stability means that contributors can spend more of their time focusing on their contribution efforts and generating impactful outcomes for an ecosystem.

• Scoring questions - What is the likelihood of a contributor receiving future compensation based on how it is being attached to the funding process? How often could contributors be under or over compensated for their contribution efforts?

• Scoring - High stability is good (Score - 5). Low stability is bad (Score - 1).