IIP: 165 Title: Contributor Ownership Plan Status: Proposed Author(s): @anthonyb.eth @edwardk @DevOnDeFi @afromac (On behalf of the Index Coop Council) Reviewed by: @ElliottWatts @Hammad1412 Created: 11 October, 2022

Summary

This proposal intends to increase INDEX token compensation for core contributors of Index Coop, in turn improving the community ownership of the DAO.

• The new ownership plan will deprecate the Dynamic Staking Model (DSM).
• It ring-fences 2,000,000 INDEX (20% of total supply) to a “Contributor Ownership Pool” which will be distributed to core contributors over the next several years.
• It creates a new mechanism for employee token compensation
  • The token grant is subject to a three year linear vesting schedule commencing 1st October 2022 and concluding 30th September 2025.
  • The token grant is subject to a 12-month cliff from the first day of the first month of paid contribution. That is, if a contributor began working at Index Coop before October 2021, there would be no cliff. If the contributor began working in April 2022, they would be eligible to claim their first rewards in April 2023.
  • The contributor will be able to vote with the entirety of their grant, including unvested tokens.
• This plan authorizes the Index Council to issue grant letters to full-time contributors of Index Coop to adjust their token compensation with 533,333 INDEX (5.33% of total supply) granted to current contributors in each of years 1,2, and 3.

Motivation

After sharing the plan below with a number of highly-involved and experienced INDEX investors and partners, we’ve reached an informal consensus that this proposal provides a strong long term incentive structure for contributors to continue to build a prosperous organization. The Index Council aimed to create a plan that would stand the test of time, although it might not be perfect, our partners broadly agree that the proposal in its current form addresses the issues of incentivizing and rewarding talent, whilst increasing community ownership of the DAO.

This proposal aligns the incentives of Index Coop with the incentives of its full-time contributors by compensating them partially in INDEX. Current core contributors deserve to receive upside from the success of Index Coop and voting rights of the governance tokens which decide the future of the DAO.

This proposal deprecates the DSM which rewards holding the INDEX token. Contributors should not be incentivized to hold a freely tradable governance token if they would prefer to sell it on the open market.

Finally, this proposal will help to align compensation for individuals in-line with their market value. It gives the Index Council V2, the power to appropriately decide and negotiate with individuals in order for the DAO to retain critical talent.

Specification

Deprecation of the DSM

As of September 2022, all contributors will stop accruing INDEX via the DSM. All rewards that have already been accrued will be distributed via LiquiFi and the Finance team according to the practices already in place.
As of October 1, 2022, all contributors will receive compensation based on their new “Core Contributor Compensation Agreement.”

Creation & Funding of Contributor Ownership Pool

The “Contributor Ownership Pool” will be a distinct multi-signature Safe which will hold INDEX specifically to be used for contributor compensation. It may not be used for any other purpose. Upon passing of the proposal, this Safe will be created with a 3 of 5 structure including at least three council members and two additional full-time contributors as signers.

Upon the passing of this proposal, 2,000,000 INDEX will be sent from the Index Coop Treasury (eth:0x9467cfADC9DE245010dF95Ec6a585A506A8ad5FC) to the newly formed Index Coop Contributor Ownership Pool.

Mechanism for Employee Token Compensation

Contributors will receive INDEX via a simple three year linear vesting structure with a 12 month backward-looking cliff from the month of their first payment from Index Coop. Since most contributors have been contributing at Index Coop for a significant amount of time, there will be no cliff for those individuals.

Upon accepting the “Core Contributor Grant” each contributor will receive the full governance rights for the tokens they will accrue over the following three year period, however, the INDEX will vest to them linearly over 3 years - they will only be able to sell their tokens as it vests if they so choose.

Authorization of Index Council to Determine Token Compensation

The current contributors will be offered 533,333 INDEX per year for the next three years. This will leave 400,000, at a minimum, for future hires. In addition, when a contributor leaves of their own accord or is off-boarded, all unvested INDEX will be returned to the Contributor Ownership Pool.

Grant letters will be sent out to each contributor on October 14, 2022 and are to be accepted or declined by October 21, 2022. If accepted, the new compensation will go into effect as of October 1, 2022.

Due to the complex nature of individual compensation, the Index Council will use a “semi-objective” criteria for the determination of each individual’s allotment of INDEX over the three year period. Leaders throughout Index Coop and individuals filling highly-competitive, technical roles will be offered higher token compensation.

The Index Council weighed factors including:

• Tenure: The length of time that an individual has been contributing at Index Coop
• Leverage: The ability of an individual to have an outsize impact for the DAO
• Compensation: The current compensation level of the individual
• Time Commitment: The amount of time that the individual dedicates to Index Coop

Each council member independently weighed these factors for each individual and decided on a specific allocation for each person. Then, the median allocation for each individual was taken from the four independent calculations and reweighted to 16%. Although it wasn’t materially different from the average allocation, the median prevented a single council member’s outlier allocation from affecting the outcome for an individual.

It will be the policy of this proposal, that individual score breakdowns will not be provided to individuals.

Implementation

1. Create a 3-of-5 Safe ("Index Coop Contributor Pool Admin Safe") consisting of Gaddon Leaze Ltd, Cormac, Defensible, LLC, Anthony, and WFM LTD as signers. Its responsibilities include implementing new token grants and claiming unvested tokens when a contributor leaves Index Coop.
2. Send 2,000,000 INDEX from eth:0x9467cfADC9DE245010dF95Ec6a585A506A8ad5FC (“Index Coop Treasury”) to the "Index Coop Contributor Pool Admin Safe".
3. Grant Letters sent out on October 14, 2022 and to be accepted or declined by October 21, 2022.
4. The DSM and Fixed Equity system will cease immediately with the last rewards earned in September 2022.
5. The Finance Team will use LiquiFi to distribute future compensation.

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Voting

FOR:

DO Implement the Contributor Ownership Plan

AGAINST

DO NOT Implement the Contributor Ownership Plan