✔️ TDP 50: mStableDAO x WorkDAO Partnership

Simple Summary

It is proposed 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, it is proposed 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, 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 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.

Specification

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.

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.

Next Steps

Pending no significant changes to its content, this proposal will be taken to a Snapshot vote on Monday, the 12th of September 2022.

Voting will be open for a 5 days window to give adequate time for a concurrent discussion. Governors can change their vote at any time should the discussion sway their decision. We look forward to hearing what MTA token holders have to say and seeing how they cast their votes.

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I didn’t get a chance to comment on the previous post.

Service-wise, I don’t have any particular issue with what’s being offered. It doesn’t appeal to me personally (I already have a CPA and know what to do with my mStable income to be compliant on my end) but I can see how it would provide some peace of mind to others.

That said, I find the fees charged to be pretty extraordinary. The ‘token management’ fee in particular is ridiculous. I would have noped right out of the discussion at that point. I see this thing here at the end about a ‘credit’ application, the word of which is unclear to me. I guess it’s some sort of “reimbursement” of paid fees in some future token from WorkDAO?

I don’t think I’ll be voting for this, based on the fees alone. Taxes aside, contributors will pay less to a decent accountant and be responsible for their own compliance. Shifting that burden to the whole DAO in exchange for such a large premium doesn’t seem like a good call in my book.

@trustindistrust someone from the WorkDAO team might like to comment on this as well, but to add a couple of thoughts from my point of view:

While the fees definitely add a significant cost on top of salaries paid out to team members, the reality for a number of current core contributors is that they are not able to be paid directly by the DAO due to advice that they have received based on their own jurisdiction. Therefore the alternative here is not to just have people paid by the DAO directly, but rather that the DAO needs to find another way to hire contributors indirectly through other service provider companies that also come with significant operational costs and added risks.

On the topic of the credit, this essentially offers 50% off fees on the fiat/stablecoin component of compensation for the first 12 months and as I understand it is a direct discount rather than a reimbursement in tokens.

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Also reposting my question from the RFC here for visibility:

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I don’t have any additional comments. I think this partnership makes sense, but I do want to ensure that contributors are able to move across with the least amount of disruption to their work and that the cost isn’t destructive to runway. Overall, very supportive though! I think it is an elegant solution to an industry wide problem

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The fees look high, but they are solving a real issue.

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Do we have clarity on what they will do with these tokens?

I think it’s important to note here that this is an optional route that contributors are allowed to take, and by no means does the entire mStableDAO need to shoulder this.

Also, depending on the jurisdiction, an employment offers several benefits over being a contractor, and is a definitive requirement for some talent to consider becoming part of a DAO, so something to keep in mind :wink:

For full disclosure, I should highlight that I would indeed like to take advantage of this offer, and therefore my employment will switch to a Euro based denomination and an “actual” employment with a legal entity after the onboarding process completes (and subject to a successful voting resolution), and therefore it is decided to absorb some of the WorkDAO fees with my current salary described in TDP 47.

It is imperative to know that the mStableDAO will continue to decide on the role and compensation of the Cat Herder overall moving forward.

Exact numbers and effects this will have on future compensation will be described in detail during the next Cat Herder elections and review process next year to save on overhead here (as we’re almost at the end of the year, and another full cycle seems redundant at this stage).

If someone has strong feelings about this, they should voice them now, as otherwise I see no reason not to move forward to a Snapshot next week!

I’ve been informed a WorkDAO representative will tackle the above questions by the end of the week! :sunglasses: :v:

I’m fully aligned with the content of this proposal.

This partnership fits perfectly inside mStable journey towards full decentralization without a single point of failure while still giving options and financial ease to core-contributors
I met with the WorkDAO team who showed strong professionalism & expertise. I trust them in smoothly manage and execute on this transition

Congrats for the hard work on this complex topic @soulsby

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Hi all, I received an email response from WorkDAO with some comments on the open questions in this post.

On how MTA tokens received as fees would be handled:

“We view tokens received by WorkDAO as part of the fee structure outlined in the proposal, together with a potential future token swap, as a path to establishing long term partnership between WorkDAO and mStable and ensuring alignment. We have very strict policies in place internally and always want to make sure that lock up periods and token handling framework is pre-authorised and in line with our clients’ internal guidelines and best market practices.”

I take this to mean that we wouldn’t expect tokens received as fees to be sold immediately and that we can come to some mutual agreement on how tokens should be handled.

There was no specific comment on how WORK tokens might be distributed so I assume that this is still to be determined.

They also indicated that the 8% fee on token compensation is eligible for the 50% fee discount over the first 12 months.

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The Snapshot Vote for TDP 50 is now live, and Meta Governors have until Friday, 10AM UTC to cast their ballot! :sunglasses: :v:

Happy Friday everyone! :innocent:

This vote has resolved almost unanimously in favour, and the mStable Operations Team will now consult with WorkDAO to pave the way for the interested contributors to become onboarded via this channel.

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