✅ [RFC] mStableDAO x WorkDAO Partnership

This RFC has been drafted collaboratively by WorkDAO and mStable team members.

Summary

This RFC would like to gather feedback regarding a proposal to engage WorkDAO as a service provider to mStable for the purposes of:

  • enabling current and future contributors to mStableDAO and all its subDAOs to work and get paid in fiat and tokens in compliance with local labor and tax laws, and to receive access to statutory benefits in their jurisdictions;
  • supporting mStableDAO restructuring (as outlined in TDP 47) by enabling mStableDAO and its subDAOs to continue operating as a entity-less DAO while still retaining the flexibility to hire and compensate contributors anywhere in the world without compliance and regulatory risk;
  • allowing contributors the flexibility of choosing the optimal mode of contributing to the DAO, including documented, locally compliant full-time employment with potential visa support.

Additionally, this RFC proposes to confer the authority on Implementation Facilitator(s) to execute on the provisions of the engagement between WorkDAO and mStableDAO as per guidelines outlined in this document.

Abstract

As part of the restructuring process outlined in TDP 47: mStable Restructure - Compensation Model & subDAO Funding Request Framework, and with the completion of signer elections for the TreasuryDAO and Protocol DAO, mStable looks to find ways for current and future contributors to work and be compensated by the DAO directly or via a subDAO entity in a way that is compliant with their local regulations.

It is suggested that mStable engage a third-party service provider to ensure compliance and limit liability for the DAO, streamline all people operations into a full stack solution, as well as provide documented employment and tax-compliant compensation for mStable contributors in their local jurisdictions.

After reviewing existing solutions, it is proposed for mStableDAO and for any subDAOs within mStableDAO to form an agreement with WorkDAO for the provision of web3-native employment, payroll, benefits and tax solutions for the DAO and its contributors.

This proposal seeks to gain consensus around forming an agreement between WorkDAO and mStableDAO. This agreement would allow mStableDAO to hire contributors directly through WorkDAO, or for any subDAOs within mStableDAO to form relationships with contributors under the same agreement.

About WorkDAO

WorkDAO is a web3-native employment, payroll, benefits and tax provider. WorkDAO’s primary features are:

  • global tax and labor law compliance;
  • tax-efficient token and fiat payroll;
  • full support for any and all employment/contracting structures, including entity-less DAOs, stand-alone contractors, grant/bounty-based work, etc.;
  • best-in-class contributor experience, including access to benefits, immigration & visa support, employment verification, overseen by designated Contributor Experience Lead.

More information on WorkDAO can be found in WorkDAO’s Whitepaper.

Motivation

mStableDAO is an entity-less DAO with no wrapping legal entity and many mStable contributors are currently being compensated directly from the DAO in cryptocurrency. As part of the restructuring process outlined in TDP 47: mStable Restructure - Compensation Model & subDAO Funding Request Framework, mStable looks to find alternate ways for current and future contributors to work and be compensated by the DAO directly or via a subDAO entity in a way that is compliant with their local regulations

To form legal agreements with contributors while staying entity-less, mStableDAO needs to rely on a third-party service provider that acts as a blockchain-to-real-world bridge between mStable to every country/state/jurisdiction on the planet, allowing for all types of work arrangements with contributors while keeping the DAO entity-less.

Historically, this has been achieved through creating agreements with various software development or operational service companies, which hire contributors and provide their services to mStableDAO. While this has been a workable solution in the past, it has limitations when it comes to attracting and maintaining high-quality contributors as mStableDAO grows. The complexity of interfacing with multiple service providers, and the need of ensuring that contributors in any jurisdiction get to be compensated in a compliant way, have access to statutory benefits and health insurance, get visas and income verification, etc. has led the mStable team to look into a full-service employment, compensation and tax solutions provided by WorkDAO.

Proposal

The following sections outline the case and scope for WorkDAO to provide ongoing compliance with employment laws, regulatory and classification guidelines, tax regulations, and HR practices in each relevant jurisdiction where mStableDAO has contributors. It also outlines the implementation framework.

mStableDAO Contributors’ Work Arrangements and Compensation Audit

In the preparatory phase of the engagement, WorkDAO performs an audit of contracts, policies, practices, and systems related to the hiring and compensation of mStableDAO employees and contributors. The audit will allow the mStableDAO team to understand the critical weaknesses and liabilities associated with mStableDAO’s current level of compliance with employment laws, regulatory and classification guidelines, tax regulations, and HR practices (including recordkeeping and data protection) in each relevant jurisdiction.

The audit also serves as an Employment Know Your Customer (“EKYC”) check-in for WorkDAO to better understand and assess the current contributor pool of mStableDAO, and the individual needs each contributor might have.

The scope of WorkDAO’s audit involves:

  • Legal analysis of current employment documentation and contributor engagement processes;
  • Tax and compliance analysis of current employees and contractors, and associated compensation structures and processes, including token vesting smart contract audit (if applicable);
  • Regulatory and classification risk analysis;
  • HR practices and systems analysis, including recordkeeping and data privacy;
  • Immigration and contributor legal status verification.

During the audit, WorkDAO’s legal, HR, and tax experts gather information on the infrastructure, contracts, systems, policies, and practices related to hiring and engaging mStableDAO contributors. WorkDAO speaks with contributors to help them understand WorkDAO’s role as an employer and helps address individual concerns, prior to formal onboarding.

Ongoing Employment, Compensation and Tax Compliance

In the second phase, WorkDAO onboards contributors and rolls out the full scope of its bundled service that solves the problems associated with all issues related to employment for mStableDAO.

The following highlights the high-level responsibilities of WorkDAO:

  • Employer-of-record services;
  • Associated HR-of-record services;
  • Payroll (token and/or fiat);
  • Compliant payment of statutory taxes (on token and/or fiat payroll);
  • Custodianship and transfer of intellectual property created by contributors to mStableDAO; and
  • Indemnification from any liability related to employee or contractor misclassification and other statutory violations.

Implementation Framework

For the mStableDAO, the Implementation Facilitators will be the mStable TreasuryDAO Operational Signers. They will help to facilitate creation of contributor agreements only as approved through Meta Governance. The current Operational signers are Cam Soulsby and Théo Clochard (cam@mstable.org and theo@mstable.org).

For the mStable Builder subDAO, Implementation Facilitators will be James Simpson and Cam Soulsby (james.simpson@mstable.org and cam@mstable.org).

These Implementation Facilitators at the subDAO level will have discretion to facilitate creation of contributor agreements with WorkDAO. Additional governance would only be required if the costs exceeded budgeted subDAO funding.

If other subDAOs wish to create agreements with WorkDAO, Implementation Facilitators will be nominated and communicated with WorkDAO.

Any changes to Implementation Facilitators will also be communicated to WorkDAO.

All communications during onboarding and post-onboarding will happen via email.

Payments to WorkDAO due from the mStableDAO will be paid from the mStableDAO TreasuryDAO multisig (eth:0x3dd46846eed8D147841AE162C8425c08BD8E1b41)

Payments from the Builder subDAO will be paid from the mStable Builder subDAO multisig (eth:0x5F526A59BC92b4547aB0b044538412958347227b)

Since any agreement created directly between the mStableDAO and WorkDAO will require explicit governance approval as per the above guidelines, it is also proposed as part of this RFC that Meta Governors approve that the mStableDAO Cat Herder have the option to be compensated through WorkDAO. This would involve a change to denominating compensation in Euro. The mStableDAO would need to absorb the employer costs and WorkDAO fees as detailed in the Appendix below.

Pros

  • Provides a simple and elegant solution for compensating contributors in a large number of jurisdictions all through a single, full stack solution;
  • Allows the mStableDAO to offer a choice to current and future contributors around their preferred compensation method;
  • Allows contributors to have the choice of being a full time employee with locally documented employment and compensation, statutory benefits and tax support;
  • Gives optionality to provide immigration & visa support, ensure employment verification for mortgages, loans, leases, etc. for contributors that might need it;
  • Helps with contributor retention and makes mStableDAO more attractive to potential future contributors;
  • Helps streamline currently scattered and partial solutions, and relationships with multiple services providers that do not always understand the nuances of web3 or that cannot work with entity-less organizations;
  • Reduces the cost of engaging legal advisors, plus reduces the admin burden on mStableDAO to build the required, in-depth knowledge around labor laws, compensation and tax regulations in every country where it hires contributors in-house.

Cons

  • Not feasible for anons as verification is necessary for contributors looking to enter a full time employment agreement;
  • Additional cost compared to compensating directly from the DAO, but in many cases this would be offset by reductions in current costs paid to service provider companies.

Next Steps

It is suggested that the community comment on this RFC over the coming days, and bearing no significant opposition or change in specification, it would be moved ahead through the creation of a formal draft proposal on Github to be used for review. Meta Governors are encouraged to provide as much feedback as possible until then so we can create the best possible outcome for all stakeholders.

Appendix: Specifications

1. Services

WorkDAO will engage contributors designated by the mStableDAO or any subDAOs within the mStableDAO. The employment of each contributor will become part of the agreement described in this governance proposal and will be implemented at the discretion of the Implementation Facilitators within the mStableDAO or respective subDAOs. Subject to WorkDAO’s audit and approval, WorkDAO will also help facilitate token, stablecoin and/or fiat payroll for independent contractors designated by the mStableDAO or any subDAOs within mStableDAO.

WorkDAO’s engagement of designated contributors is subject to customary compliance provisions and applicable local laws.

The mStableDAO or a relevant subDAOs within the mStableDAO may request WorkDAO to remove a contributor from providing service with at least two (2) weeks’ advance written notice, subject to customary processes and pre-agreed fees.

WorkDAO will act as the employer of contributors engaged as employees and satisfy all requirements under the applicable local law, including but not limited to being responsible for any and all employment-related requirements for contributors, including in respect of wages and hours, payroll administration, documentation and recordkeeping, labor relations and collective bargaining, insurance coverage, and making appropriate tax withholdings, and other customary services and functions.

2. Fees & Payment Terms

The mStableDAO or the subDAO within the mStableDAO shall pay WorkDAO the fees specified in the individual contributor engagement form that covers individual contributor compensation as agreed between the mStableDAO or the subDAOs within the mStableDAO and WorkDAO, local employer contributions for contributors engaged as employees and WorkDAO fees.

Subject to customary provisions, an engagement of an individual contributor is subject to the mStableDAO or the subDAO within the mStableDAO paying WorkDAO an initial deposit equivalent to three months’ payroll.

For contributors engaged as employees, WorkDAO charges a fee for its ongoing employment, compensation, and tax support to mStableDAO equal to 14% of individual contributor fiat and/or stablecoin compensation and local employer contributor contribution, and 8% token administration fee on individual contributor token compensation.

For services provided for contributors engaged as independent contractors, WorkDAO charges a fee equal to $200 per contract per month, and 8% token administration fee on individual contributor token compensation.

WorkDAO will invoice the mStableDAO or subDAOs within the mStableDAO monthly at the beginning of the month for services to be provided during that month’s period. mStable subDAO will pay invoices within seven (7) days from the invoice date.

3. Work Product and Intellectual Property

WorkDAO agrees that all work products of a contributor will be the sole and exclusive property of mStable to the extent permissible by applicable law and subject to invention assignment agreements between WorkDAO and a contributor.

4. Confidential Information

The agreement between WorkDAO and mStable, and WorkDAO and the contributor might include confidential and private and personal information, and therefore all parties agree to customary confidentiality protections.

In connection with the Services that WorkDAO provides to mStable, WorkDAO and the contributors may have access to sensitive, confidential business, financial, and other proprietary information. WorkDAO agrees (and will require each contributor to agree) to keep all such mStable information confidential unless mStable provides written consent.

5. Representations and Warranties

A successful vote on this governance proposal by mStable token holders is seen as an execution of the agreement between mStable and WorkDAO, and gives mStable subDAOs discretion over working with WorkDAO to engage contributors, and obligation to fulfill associated terms and conditions of this agreement, subject to customary warranties.

6. Term and Termination

The agreement between mStable DAO and WorkDAO becomes effective starting from the day of the resolution of the vote and shall continue for a period of 1 year with an option to renew via a governance proposal.

7. Credit Application

Pursuant to the WorkDAO Whitepaper future token swap clause, mStableDAO applies for a WorkDAO credit that mStable can use against up to 50% all its fees to WorkDAO during the validity of the agreement outlined in this proposal.

Note: The fee structure and credit approval is subject to confirmation of the number of contributors in scope and is part of ongoing discussions with WorkDAO. mStableDAO will not move forward with this proposal if credit approval is not granted and if the service implementation details fall outside of the discretion given to the Implementation Facilitator, the Implementation Facilitator will present these in a separate RFC.

1 Like

Thanks so much for posting this @soulsby and anyone who was involved from the side of WorkDAO!

Personally being a huge fan of the tooling that has come into existence via these amazing companies, and couldn’t be happier to see mStable being amongst the first (the first?!) DeFi-related DAO to onboard with WorkDAO.

I’d say given no strong objections, or other important discussions, that we should be ok with moving this towards an expedited resolution, so we can post the TDP by next Monday, what do you think? (given this is a somewhat urgent matter to resolve via Governance)

Looking forward to be pioneering yet again the way of the DAO with you all! :sunglasses:

Thanks @soulsby and others, and to Work DAO for putting this together. I am very much in favour of this collaboration. I think some detail still needs to be work out, but in principle I am in support and keen to work towards a fruitful partnership with the mStable DAO and Work DAO. I will revert with questions should they come.

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One question that came up within the team is around the WorkDAO governance token and what allocations the mStableDAO/subDAO or contributors might be eligible for.

It would be great if someone from the WorkDAO team could comment on this!

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I have taken the liberty and moved this towards a formal proposal. Please be so kind as to redirect further questions (and answers to existing questions) to the TDP here.

Many thanks and have a great start into the week everyone! :sunglasses: