AT_TIME_OF_CONTRIBUTION vs AT_TIME_OF_PAYMENT

[allancto]

Benefit to RChain

Resolving this issue within the bounty system itself will demonstrate that our discussion and consensus systems produce desirable outcomes.

Discussion

This month has seen high volatility in the market price of cryptocurrencies, including rhoc. The market price affects all of us as holders of rhoc and has strained relationships in some cases. Within the bounty system there has been some discussion to require adherence to a board resolution that has never been followed in practice, rather than our actual practice. For context here is a summary of the difference:

Policy "AT_TIME_OF_CONTRIBUTION" (actual practice throughout 2018)
Monthly market weighted average price calculated on Coinmarketcap.com during month of contribution.

Policy "AT_TIME_OF_PAYMENT" (board resolution 1/25/2018)
The price of RHOC/REV tokens for the purpose of calculating the quantity to be paid to employees and contractors of the Cooperative shall be calculated using a 30 day market weighted average price calculated on the day prior to payment, or the prior day’s listed price on Coinmarketcap.com, whichever is lower.

Analysis

Policy "AT_TIME_OF_CONTRIBUTION" makes sense. It's the policy we've used in actual practice. It's the same policy that applies to investors and to validators. It reflects standard business practice. It aligns bounty system contributors with the rest of our community, including all other holders of rhoc. This is the policy that has been our actual practice.

Policy "AT_TIME_OF_PAYMENT", is in my opinion was never intended cover the bounty system, or RContributors system as I'd prefer to be called. It's unfair to fellow rhoc holders who are not granted this kind of downside protection, It';s not in keeping with standard business practice and close to unworkable because the time of payment is not known in advance.

In my opinion RContributors are not employees and not contractors. The language AT_TIME_OF_PAYMENT was not intended to cover our system of contributions. Even if it were, this unusual downside protection would be unfair to those whose contributions are treated in a more standard way.

I believe it's important that we as members of the bounty system adopt this point of view and communicate that directly to the membership and our board. As @lapin7 has said, "Morals matter". You may find this quote in issue #968. In the same quote @lapin7 says "Get things Done". There is no reason we should wait for others to act. There is every reason to act ourselves. By doing so we will demonstrate to our Cooperative and community overall that the trust they place in us is warranted. That our system of discussion and Trustmetric voting within the bounty system is a workable real world model and deserves the support of our membership.

Budget and Objective

Estimated Budget of Task: $[TBD]
Estimated Timeline Required to Complete the Task: [3 days: conclude by Sept 19]
How will we measure completion? [consensus within the bounty system legitimized by some form of vote]

Legal

Task Submitter shall not submit Tasks that will involve RHOC being transacted in any manner that (i) jeopardizes RHOC’s status as a software access token or other relevant and applicable description of the RHOC as an “asset”—not a security— or (2) violates, in any manner, applicable U.S. Securities laws.

[AyAyRon-P]

Thank you for putting this together and addressing the concern around the issue @allancto

It's important that we have complete alignment and transparency on this issue, because as you said it's one that can cause quite a strain on all sides.

For anyone interested here is the board meeting minutes notes with the discussion of paying BOTH contractors and employees.

Above you stated:

RContributors are not employees and not contractors

I agree with you RContributors are not employees but anyone doing work in the US has filled out a W-9 form which is specifically for independent contractors. To date I haven't seen any documentation indicating the there is a new label for RAMs or ICs as RContributors. Can you explain the difference from a bounty rewarded RAM to an Independent Contractor to a RChain Employee to a RContributor?

The terms of the board meeting minutes clearly states for

....for employees and contractors

Meaning anyone being paid by RChain will have the same payment rate applied to them on the day of payment. To my understanding whether you're an employee, a contractor with an SoW, or paid from a bounty reward all payments made are on the same pay scale.

I look forward to hearing others input on this issue and finding a resolution to this in a timely manner.

[dckc]

@allancto writes:

Within the bounty system there has been some discussion to require adherence to a board resolution that has never been followed in practice

Yes, it has. In particular, for May, a significant correction was made to closer adhere to the policy.

Where was the AT_TIME_OF_CONTRIBUTION policy recorded? I don't recall seeing it.

Policy "AT_TIME_OF_PAYMENT", is in my opinion was never intended cover the bounty system

I don't see how opinions are relevant.

The board resolution is clear. For reference, from Jan 25 minutes:

WHEREAS, the Cooperative wishes to incentivize its employees, contractors, and other
members to choose to accept RHOC/REV in exchange for work provided to the Cooperative.
RESOLVED, the policy of the Cooperative shall be that the price of RHOC/REV tokens
for the purpose of calculating the quantity to be paid to employees and contractors of the
Cooperative shall be calculated using a 30 day market weighted average price calculated on the
day prior to payment, or the prior day’s listed price on Coinmarketcap.com, whichever is lower.
Further details will be in the Compensation Committee’s policy for the Cooperative.
FURTHER RESOLVED, the Compensation Committee shall control revisions of this
policy going forward, and to effect a change to this policy the Compensation Committee shall
submit a written proposal for an amended policy for Board approval.

So anyone who wants to change the policy should be talking with the compensation committee.

[barneycinnamon]

It is bad practice for the Coop to say things will be done a certain way and then do them a different way.

If the board meets and publishes a formal decision, that should reset expectations to match. The Coop cannot make a promise about the future price of RHOC on a particular date, but it can make a commitment with respect to the formula it will apply to the RHOC price on one or more dates in order to accomplish a task. That is what they've done here.

@allancto I agree with the plan you are proposing in your issue, but I think it's important to make changes like the one you proposed prospectively so that everyone impacted can revise their expectations and make informed decisions. Making those decisions retroactively is unfair unless everyone involved consents to the change, and that's usually impossible.

I think this issue suggests that workers should accept RHOC as payment from the Coop only if they can tolerate substantial risk with respect to the dollar value of their payment. This entire discussion is about how much currency recipients will be able to trade their RHOCs for, because timing otherwise wouldn't matter. If you were going to hold the RHOCs longer term, you'd be prepared to weather that price volatility.

Consequently, it might be best for the Coop to pay some workers in dollars, where there can be certainty on both sides about the cost of the work and the payment for it. Or pay below-market in dollars but add a RHOC component that pushes the compensation to or above market in expectation.

If the bounty system has access to RHOC funding but not to USD funding, then the bounty system has to accurately communicate to participants at all steps what they can expect. To the extent that the policy is different in practice than it is on the books, the policy needs to be revised to reflect how the Coop intends to act. It is not okay to disregard our own policy but it is perfectly fine to change it through the appropriate channels.

[allancto]

@AyAyRon-P I'm not an expert in tax law but i believe w-9 is a general form used with 1099 to report any payments subject to tax reporting, including rewards voted for contribution to a project. I am NOT qualified to give a professional opinion, but here is the official description.

[allancto]

@dckc i missed the "WHEREAS" portion of the the resolution, thank you for providing it!

@barneycinnamon yes, It is bad practice for the Coop to say things will be done a certain way and then do them a different way. If the board meets and publishes a formal decision, that should reset expectations to match.

@Ojimadu has there been any discussion within the compensation committee about revising the resolution to match our actual practice, as discussed on #bounties on June 20 and 21 (regarding the May correction?)

[AyAyRon-P]

@allancto you're right that a 1099 is used to report information while the W-9 is used to gather that information. In my experience as a contractor and small business owner, it is always best to fill out a W-9 when you first begin working. That way, if I earn over $600 in the tax year, I’ll already have the information needed to complete the year-end 1099.

@AyAyRon-P comment above edited to say W-9 (my typo)

[AyAyRon-P]

@allancto here is the only thing I saw about the revision of May

as discussed on #bounties on June 20 and 21 (regarding the May correction?)

Maybe @Ojimadu has some further insight for us?

Since there was a revision to May in June will this also be the case for July? It was determined for the month of July the RHOC was value at $.67. It's always been fair and accurate but this is the first time I'm seeing it so "off" from market value. Here is the close date of the market on the 10th, the day prior to payment.

That's a 29.1% difference from the day prior market close value and the calculated net 30 rate which we were paid at. A +/- of 5% to 10% is reasonable but a 30% disparity is substantial.

For this month we're experiencing a similar difference in the invoices where the RHOC is valued at $.36 but yesterday's market close was $.26, a 27.8% difference. I will only speak for myself but I think it's only fair we not get paid $1 today for something valued at $2 yesterday.

@allancto no worries on the typo, it gave me an opportunity to review and make sure I knew what I was talking about.

[motionfactory-digital]

Tks for the time you took to create this in-depth costing / pricing analysis, it really helps one see the bigger picture...seems you are spot on..that's a massive difference when you look at it that way.

[barneycinnamon]

Observation: The payment process as it functions now is effectively the equivalent of getting paid on the first of the month (the date when the formula is applied) with a 15-22 day lockup (the time until the RHOCs are in your possession and liquid).

[dckc]

@allancto raised this issue in #comp-committee yesterday. @kennyrowe estimates next week as the first time schedules permit a meeting about it. @AyAyRon-P re-iterated his position there. Kate (treasurer) joined the discussion.

[Ojimadu]

@allancto and everyone, There hasn't been any discussion about this in the compensation committee.

PS: Sorry for late reply. I've been at the "national service camp" with limited internet access for three weeks and was deployed to another city still trying to put things in order here. Am currently trying to catch up on what I have missed and reading all my notifications.

[allancto]

Thanks @Ojimadu, and welcome back!

As noted above, the comp-committee has said you'll meet this week to handle this issue, and Kate will process August invoices as soon as the rhoc rate is determined.

[dckc]

Payment of August invoices has not yet started? That's a little surprising, but I suppose it's understandable.

@allancto I get questions now and then about when invoices should be expected and I don't have any good answers nor really any place to direct people for good answers (except maybe the weekly RAM meeting, but that doesn't seem to be a reliable source of info on invoice ETAs). When I was working for bounty system rewards, this was the most mysterious and least transparent parts of the process. The mail message that @lapin7 would send on the 1st of the month helped a lot, but I gather that's not happening lately. How about opening an issue each month (or at least for 201808) to keep everyone posted?

[allancto]

@dckc that's a good suggestion. We now have an automated process for notifying all contributors immediately at the close of voting, as soon as the voted amounts are set.

Finance has expressed some happiness about the way invoices are presented in the new system, as a complete invoices_summary spreadsheet of all voted rewards (and including a status indicating whether has been e-signed). This may lead to the possibility of eliminating e-sign altogether, since the voting process already contains implicit agreement of contributors to voted reward. It would be ironic if the cool new e-sign system is so convincing that it ends up immediately obsoleting itself, but that would be a great improvement imo and also allow rhoc transfer almost immediately on close of voting (which is what we'll expect when we move to a rholang smart contract system anyway).

[allancto]

UPDATE: Kate will process August invoices today at the August rhoc rate, and once the Compensation Committee meets will issue adjustments as appropriate.

@Ojimadu I assigned you to this issue hoping you'll provide updates on the schedule and deliberations of the Compensation Committee.

Thanks! -@allancto

[ghost]

@allancto @Ojimadu Any update on the adjustments?

[AyAyRon-P]

@ICA3DaR5 @allancto @Ojimadu

I've had several conversations with with Kate, and the goal is to get through October and the annual meeting. Once that's done it was my understanding that there would be a comp-committee meeting to address the adjustments. These adjustments need to be made for July, August, and now September as the 30-day weighted avg was used and not the CMC day prior close.

I would guesstimate we will have an answer by November, but that's just a guess.

[motionfactory-digital]

Thanks AyAy....lets not take our finger of this pulse....start November lets pose the questions again to rectify and hopefully get this sorted asap Get Outlook for Android<https://aka.ms/ghei36>

…

________________________________ From: AyAyRon-P <[email protected]> Sent: Friday, October 19, 2018 5:19:55 PM To: rchain/bounties Cc: Cryptovideos; Comment Subject: Re: [rchain/bounties] AT_TIME_OF_CONTRIBUTION vs AT_TIME_OF_PAYMENT (#969) @ICA3DaR5<https://github.com/ICA3DaR5> @allancto<https://github.com/allancto> @Ojimadu<https://github.com/Ojimadu> I've had several conversations with with Kate, and the goal is to get through October and the annual meeting. Once that's done it was my understanding that there would be a comp-committee meeting to address the adjustments. These adjustments need to be made for July, August, and now September as the 30-day weighted avg was used and not the CMC day prior close. I would guesstimate we will have an answer by November, but that's just a guess. — You are receiving this because you commented. Reply to this email directly, view it on GitHub<#969 (comment)>, or mute the thread<https://github.com/notifications/unsubscribe-auth/AkHNY468BbDpdHCj5DupLmfieRNU3HZZks5ume2bgaJpZM4WrJI1>.