To solicit thoughts regarding fair bounty/opportunity valuation considering crypto price volatility and NEAR ecosystem objectives.
Currently, Catalyst enables communities to post opportunities (bounties) that people can accept and complete. Example:
When posting, the proposer of the opportunity currently sets a base reward in NEAR. Once someone accepts the opportunity, that NEAR gets reserved in escrow ensuring that when the work is done and accepted there is NEAR available to pay it out. The only way to move it back to the community fund is a proposal to cancel the accepted opportunity (thus protecting people who do work).
The challenge is that given volatility of NEAR, the value of that opportunity may go up or down by the time it is accepted and completed.
There are two actors in this situation with competing interests:
The community (opportunity provider) - who is posting an opportunity and selecting a NEAR price to value it based on the price of NEAR at the time of proposing; and
The contributor (opportunity accepter) - who is accepting the opportunity based in part on the current value of the opportunity.
When NEAR increases and no way to adjust the valuation of the opportunity, it favors the contributor at the detriment of the provider who is now paying a higher value for the work getting done.
When NEAR decreases without any way to adjust the valuation of the opportunity, it favors the provider to the detriment of the contributor who is now completing work for some fraction of the original opportunity value.
How are communities dealing with this? I’ve noticed a couple variations that include:
- Adopting USD as a means of valuation/limits (e.g. OWS)
- Adjusting payouts using a price based on a 7 day moving average (e.g. Vital Point AI)
- Simply accepting the volatility and the associated risks that come with it
1. Adopting USD - while effective at stabilizing a valuation, it feels off to me and a little counterintuitive to the whole idea of the crypto space. Perhaps if NEAR had a stablecoin or projects valued things against something like DAI it would seem better. It also causes issues/complexity with automation without a trusted oracle providing the pricing information.
2. Adjusting payouts based on some average price - having done it, it requires manual work without implementing an oracle resulting in same issues as number 1. It’s a compromise where both provider and contributor bear a bit of the volatility risk, but potential is still there for it to be lopsided.
3. Accept it - Both parties enter the agreement knowing they could pay more/less or receive more/less. Bit of a speculator stance where contributors may accept lower valued work in anticipation of upward price movement and similarly opportunity providers may value it higher in hopes of getting more for less with a downward price movement.
When we talk about valuation there are also regional considerations to think about. |The inherent skill/competency required to do a specific piece of work remains constant but what one person living in one area might value it at compared to somewhere else can be drastically different. Where it might be normal to expect an hour of coding for $10 in one area, that would be below minimum wage in others. So, do we try and take that into account and localize community opportunity offerings?
In deciding how to adjust things for Catalyst communities - we’re setting some principles (which are currently just thoughts) to help us head in a direction that we think will help create the future we want to see. Namely:
- Solution must enable crypto adoption (NEAR)
- Solution must enable automation
- Solution must ensure equality (preference of eliminating regional disparities - adopting global perspective)
- Solution must be fair and transparent
In our case, we think it is important that we protect contributors from doing work that they may not get paid for which means putting the agreed on value of NEAR (or other token) into escrow. Because of that, we’re thinking that:
a. Opportunity provider sets a valuation based on what they feel is fair in terms of what they know (likely some kind of stablecoin/USD reference point). Over time, we think that the market will determine what is actual fair market value for those opportunities within their community.
b. Contributor decides to accept or not (this is what will ultimately determine valuation in that community eventually).
c. At time of acceptance, valuation is automatically converted to NEAR at current NEAR price and that becomes the settlement amount that goes into escrow regardless of any volatility that may occur afterwards.
May not be the ideal solution - but we think it mitigates some of the issues while still providing the means for people to earn NEAR, be part of the ecosystem and share in the upside potential.
Would be very interested in anyone else’s thoughts on this/how you are approaching the issue in your communities/guilds.