The Comprehensive Guide to Token Compensation

Designing token-based compensation is a hard problem, especially given token liquidity and the volatility in crypto markets. To date, the topic has been fraught with murky tax/legal implications, fragmented data, and no well-defined playbook. Moreover, many founders and hiring managers navigate this process using cumbersome spreadsheets and half-baked software that don’t fully tackle the thorny issues. Our first article in this series covered frameworks for creating an effective hiring and token compensation plan, particularly for companies going through pre-token-launch planning. This article will explain how to benchmark, calculate, and operationalize individual token-based offers for employees once a company’s token goes live. Benefits of Token Compensation Tokens are generally offered as one part of an employee’s total compensation. Holistically, a job offer may include salary, tokens for the product/protocol, equity in the company, and/or some type of bonus. We’ve already outlined why it may only make sense for a company to offer some of these offer elements. This can be highly dependent on the relationship between equity and tokens, as well as the risk profile in their offer. Tokens as compensation come with many unique benefits. As a quick recap, they: Align the incentives of the company, community, users of the product, and employees Allow employees to participate as a user in the network or the protocol Allow employees to leverage other DeFi protocols and pri