The Crypto Pay Guide is a series of articles that will be authored and released by C3 over the coming weeks. Each article will cover a unique compensation topic, focusing specifically on practices for full-time web3 employees or contributors (referenced as “employees” for the remainder of this guide). These employees dedicate their entire capacity to a single organization and receive some form of fixed compensation for their service, whether that be an annual base salary or token award (e.g., front-end developer, UI designer, business development lead, Chief Technology Officer). This series will cover compensation for part-time contributors at decentralized autonomous organizations (DAOs) in a future installment.
Trailblaze. Unfortunately, very little has been written on this topic thus far. There are plenty of resources covering compensation best practices for start-ups, private companies, and corporations, and, although these are helpful reference documents, none of them are tailored to web3’s unique governance structure and operating model (more on that later).
Standardize. There are little to no compensation governance standards within the crypto industry. Organizations are making decisions in a silo because they are isolated from practices conducted at their peers.
Protocols are grappling over seemingly mundane and administrative issues, such as: who should be evaluating compensation levels and ownership, and how often? What market data do we use? How often should employees receive tokens? What is the most appropriate vesting schedule? etc.
Web3 organizations do not have human resources professionals in-house to tackle these issues. Leaders are not compensation experts and are thereby forced to rely heavily on prior experience or investors to design compensation plans.
Provide transparency. Public corporations are required to disclose pay levels and compensation plan design for their named executive officers. Web3 organizations are not required to report anything compensation-related (yet). Therefore, compensation information is limited to what is electively disclosed on governance forums and Twitter. The Crypto Pay Guide is an attempt to summarize the current state of compensation within the crypto industry. C3 will also leverage our experience working with start-ups and public corporations to provide insight on where we think compensation is headed for this industry.
Compensation is a key risk area for any organization and the crypto industry should ensure it is taking the appropriate measures to mitigate such risk. Leaders, investors, and communities need to start evaluating employee compensation regularly.
A global pandemic has caused workers to rethink their careers and/or strongly consider remote jobs (i.e., The Great Resignation). Companies are no longer competing for workers locally, which has spawned a tight labor market, specifically for technology jobs given major technology firms now allow remote work and have the resources to raise wages meaningfully. The war for tech talent is fierce and, when combined with an already low supply of web3 natives, results in a tense labor market for the crypto industry.
The loss of developer talent may be the single greatest controllable risk factor that has yet to be addressed. Organizations that fail to regularly evaluate compensation levels for their employees will be at a competitive disadvantage. We have seen DAOs struggle to manage internal issues that may or may not have been caused by a lack of ownership and/or low pay levels. Compensation standards will ensure retention and employee motivation.
For web3 organizations, having an established compensation philosophy and process will avoid criticism from regulators and investors. Regulation is coming – and organizations that have an established compensation process will be ahead of the curve in meeting reporting requirements.
For communities, ensuring organizations follow compensation best practices will create a pay-for-performance model that will drive token value long term. Performance-based compensation has yet to be fully explored and utilized in this industry, which is ironic given the inherent flexibility of tokens.
The Crypto Pay Guide is a series of articles that will be authored and released by C3 over the coming weeks. C3 will dive deep into key compensation topics. We will cover current practices in the crypto industry and provide our insight on where things are likely headed. Future articles will address:
And perhaps more…stay tuned!
C3 is the world’s first Crypto Compensation Consulting group. We advise web3 organizations and communities on compensation levels, incentive design, and governance practices. We have experience advising both large public corporations and small technology start-ups.
Please read more about our firm and services on our website. If you are a leader, investor, or community member who would like to work with us, please contact us at firstname.lastname@example.org or via Twitter. Follow us to stay up to date on future installments of the Crypto Pay Guide!