Talking Crypto #73 - Zemm & Zach from Coordinape
Primer: In this episode of Talking Crypto, the host Gabriel Haines interviewed Zemm and Zach from Coordinape, which is a decentralized payroll management tool for DAO. Find out more about what Coordinape can help DAOs in this aspect and learn more about the newest updates and features that are up and coming for Coordinape v2.
Introduction
Zemm
Started as an Artist
Contributed to Yearn DAO - did creative work for them
Had a long term interest in collaboration, especially how creative groups can collaborate in a conversational manner
One of the founders who started to explore ideas that eventually became Coordinape
Was a technologist and manager of developers from various industries
Started crypto in 2017, rode up and down the market
Became more of a builder and part of the community in the summer of 2020
Zach
His background is the intersection of business and sustainability and in collaboration
Worked with corporate teams around different sustainability strategies and sustainability programmes around social and environmental standards
Saw the need for collaboration across supply chains and how bad people are at it
In the last 8 years, he co-founded a company called Converge to use the power of networks to create impact, which is like a proto-DAO
When he discovered DAO last year, he realised that helping people to collaborate better is his life calling
What is Coordinape?
It is decentralized payroll management for DAOs
In a DAO, there are no HR or middle management to decide how to allocate rewards
At the end of every epoch (usually 1 month), a project can use Coordinape to allocate points (called GIVES) to any members within the circle.
If a particular member contributes a lot during that epoch, you can give more GIVES so that the member will proportionally get a higher allocation of the tokens set aside for this project
Everything is done openly and transparently and thus it serves as a toolset for DAOs to manage payroll in a decentralised manner
Beginnings at Yearn
Zach
His entry point to Yearn was through tracheopteryx - they were friends from before
Had learnt some lessons at Converge and tried applying them to Yearn
At Converge, nobody had a fixed salary and they would just have a conversation to decide how best to allocate the client's invoice to different participants
Wanted to try out to see if he can replicate this in a decentralized way at Yearn
Yearn was very experimental and open to new things
Zemm
Also began with tracheopteryx - old friends with him and had done a lot of artistic collaborations together
Started DeFi at around the same time as him too
He introduced Zemm to Yearn community
Started thinking of ways to integrate blockchain into the collaborative process
What makes a successful collaboration?
A successful collaboration is almost like a subconscious process where individuals worked towards a common end they may not fully understand yet
Not so much about hitting any KPI of economic success, but more about the underlying framework of coming together to form an idea and see it through fruition in a fluid manner
"The simplest version of collaboration is what we can only do together that we couldn't do alone." - Zach
Successful collaboration in a DAO will take this and scale it up in a way that hasn't been seen before
The most essential part of collaboration is to be able to do things together that could not be done individually
Converge.net
Converge helps people to form networks to have an impact greater than just the individuals
Grew from 5 to 15 people and nobody was under a payroll
The team wanted to form a network in Converge too since this is what they are doing with their clients
All of them are consultants in different capacities and they wanted to avoid the situation where they will just take projects that are not even exciting for them just to hit the monthly payroll target
This led to an easier and freer system where people can just pursue the project if they wanted to
There is good team hygiene where authentic trust is built
Had times where other team members want to pay more to an individual because he had done a great job
There are also instances where the work is not good and there is an honest conversation about it
Converge is doing good and Zach is still involved in Converge, even though he spends 100% of his time on Coordinape
The beauty of a network is that you can step in and serve as and when you want to
Gabriel mentioned that it reminds him of Valve, which famously has a flat management structure. People can choose which projects they want to do as well
They mentioned that hiring well is the most important thing to do
Zach agrees - the key insight of Valve is that they are good at hiring the right person that can lead the company because eventually, everyone will be doing so in a manner that seeks opportunities and reduces risks
Coordinape
The origin story of Coordinape
A lot of people started contributing to Yearn and they are doing cool stuff
"Was something like a meme worth $500? Was a great app that you know reveals vault stats worth like five grand? Nobody really knew it and it was not easy to make those decisions." - Zemm
Yearn wanted to compensate these people for their work but there was no easy way to identify the value of the work done
So they set up a committee and they will do their best to give GIVES to people
People appreciated them, but there are some problems
Who gets to be on that committee? It is contrary to the ideals of a DAO to have a closed committee
What happens if the committee misses something that only a few people knew about?
There has to be a better and more decentralized way approach to offering compensation for contribution
Started experimenting and they ended up having a rudimentary version of what Coordinape looks like now. Thankful that Yearn was willing to run through this experiment with them
For their first Coordinape circle, they decided to distribute half of the grants through Coordinape and the other half through the traditional way
In the end, people were overwhelmingly in favour of Coordinape. The end result was about the same but the users' experiences in allocating and being allocated GIVES makes them feel more satisfied over the whole process
"If I was going to get $700 for a grant, and I go through a coordinate circle, and I end up getting 680, I'm still way happier. Because, you know, I had an insight into this process, it was transparent, it's coming from my peers, not from sort of this arbitrary kind of black box feeling. And I also got the experience of allocating and giving gratitude to all of my peers." - Zach
This process had a lot more engagement and was more transparent - a win-win for everyone
Use cases for Coordinape
Bankless DAO
Bankless DAO had been earlier adopters of this and they had a huge Coordingape circle
Zemm mentioned that it used to be one big community circle, but had now evolved into different smaller guilds or project-based circles, but all inter-related to each other
Song camp
A DAO making music NFT and have groups of creators collaborating openly on these creations
Hard to define what the value of the contribution is, especially for an artistic output like this
They will sell the NFT and put the fund back into the coordinape circle and let the group decide the dynamics of who gets what
The Krause House
Their ambitious goal is to purchase a major sports team, specifically an NBA team, but could also be a soccer team
Using Coordinape as sort of a retroactive distribution of tokens for all the people contributing up to this point in time, like a retroactive sweat equity
CRE8R DAO
Also very interesting - one of the first DAO to incorporate Coordinape as a core part of their infrastructure
CRE8R DAO is a crypto-native marketing firm for projects or protocols
It is a service type of DAO, which is quite rare. Had actual revenue from people paying for their service
Different creators come together, create content, and they will use Coordinape to distribute the client's budget based on the contribution done for their marketing effort
"You know, that's the whole idea behind decentralised payrolls. The people who know best what value is being added are the ones that are collaborating with others and not trying to rely on one person to sort of understand all that. And also to your point, it can't scale."- Zach
Gabriel mentioned this is the only way right now to scale the payroll issues transparently, rather than to have a centralised way to pay people
Developments for Coordinape
Coordinape updates
Been in closed beta since April
Started with Yearn and other folks had been asking to do up circles for them, but the team had to manually add them in
Had been refining the process and adjusting the UI until they feel they are ready for anybody to use it
Will be permissionless and they will no longer be in beta, and anybody can jump in to start up a circle
Ape vaults will be coming soon too
Currently, after the allocation, it is up to the admin to distribute the funds to people
Soon, there will be a way for people to deposit tokens and put them in an escrow account where people can claim their allocated distribution themselves
If the tokens are yield-bearing, they can also earn extra from the tokens deposited
It can even be on a set-it-and-forget-it model, where the yield generated from the deposits get allocated to pay for the coordinate circle, like a self-paying payroll
Coordinape is free to use so far
They want to try out a new business model in the future, where Coordinape is like a member of each circle.
The business model is to let users allocate and give GIVES to Coordinape, just like any other members, if they find the tool helpful
The contribution to Coordinape will be used to support the projects
There are other possibilities to include other entities inside the circles too
Charity organisations can be included in each circle too for donations
To fund other circles that support the people working for various causes e.g. legal action for DeFi
Is Coordinape on-chain?
Completely off-chain right now because they are building fast and experimenting a lot
But they had been building out smart contracts since day 1 to eventually transit over
Owl of Moistness - co-founder of Yield Guild Games - is a friend and had been helping them out in this aspect
The first contract will be the Ape vaults mentioned earlier
The second one is Circle contracts, which are like NFT contracts
Currently, members inside each circle are manually added in
Soon, each contributor will have a layer 2 NFT to hold in their wallet that will be the badge for them to enter the circles
The NFT are very specialised with different roles and functionality. This will allow a lot of cool admin features to be integrated in
Each user will hold their keys to the circle
The other good thing is that the NFT acts like a sort of artefact to allow users to display which circles they are participating in in a cool way
The NFT can also grow and change depending on how many GIVES received
The plan is to shift all the processes right now on-chain so that it can be trustless and also become a DAO tooling Lego that other people can build on top and add plug-ins
More about Ape vaults
Essentially a vault contract that can hold funds and you can use it to put into yield farms
The distribution happens through a Merkel tree created by the Coordinape
The circle admins will signify that it is complete, so this will act like a multisig signing off the Merkel tree
Once the Merkel tree is synced with the vault contracts, the participants in the circle will be able to withdraw funds from the vault contract as though they had the right to withdraw funds from a yearn vault
Once each circle ends, the user interface will tell the user that it is over, and then he can go to the vaults to withdraw it. Alternatively, he can let it stay there to earn more yield then withdraw them all at once later
Challenges ahead
Post circle reflection
They are thinking of including a process for people to voice out and reflect after a Coordinape circle is over
It will be a place for people to say that they got too much or too little for their contribution
This will be an interesting design challenge for larger groups using Coordinape
Giving notes and GIVES
It is a human need to have good and encouraging feedback
Lots of users gave feedback that while they might not remember how many GIVES they had received, but they will remember the notes written to them and from who
It's not just a number when giving GIVES. People also want to know what they did right so that they can do more of it
Coordinape is just a tool. At the base level, it is still the social aspects of people interacting with each other, so it will still be messy and complicated
That being said, there is a certain learning curve before a DAO can use Coordinape properly. Will need proper education on how best to use it
Having circles fatigue
People don't give as much care as they should when giving GIVES in the circles
They are looking at some game mechanics
E.g. to delegate all your GIVES to another person whom you know will do the allocation fairly and with a lot of due care and let him do the allocation on your behalf
E.g. Giving on Discord interface
To give GIVES on the fly in Discord leading up to an epoch, so it creates like an IOU in the actual circle
When someone created content, you just send a few GIVES their way and it will be reflected in the circle when it opens
Will be more intuitive and less demanding mentally to give GIVES as it happens, rather than to remember who did what after it had happened
Any tokens coming?
No plans for it now, but they are having conversations about it
The main concern is whether a token can make Coordinape better
Understands that people love tokens and airdrops but there is nothing at this point
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