Part VI, Chapter 16
Performance and Contribution Management

Performance and contribution management within a Decentralized Autonomous Organization (DAO) refers to the structures put in place to evaluate, acknowledge and encourage contributions from members geared towards the progress of the DAO. Members play a very important role in the success of the DAO. By participating actively in its decision-making processes/operations, members will contribute to the success of the DAO. A passive set of members will lead to an “inactive” DAO.

The process of contributing to a DAO can be expressed in different ways including:

Financial contributions Technical Contributions Partnerships and collaborations Community engagement Governance participation. Contrary to popular opinion, contribution to a DAO is not limited to developer roles.

A DAO needs to have all hands on deck in the process of its growth and non-developers such as writers & legal consultants to mention a few, can be part of the contributors to a DAO. However, fairness is important and thus, members, in line with the role they play and the contributions they make, must feel seen and properly compensated by the DAO.

Evaluation Metrics

The goals, structure and objectives of a DAO can greatly influence the evaluation metrics for performance and contribution management. This means that the measures set in place to assess effectiveness of these efforts from members cannot be presented in a way that one pattern fits every DAO. However, there are a few commonly used Key Performance Indicators and common metrics that will provide insight on ways to generally assess performance and contribution management within different areas of the DAO including but not limited to:

Financial Contributions

In a DAO, financial contributions are directed towards the growth and development of the organization. These resources are usually in the form of cryptocurrency or tokens and the metric for evaluation is usually in terms of quantity. The quantity of DAO tokens held, transferred or staked by a member will serve as proof of participation and show their financial commitment to the DAO. Financial contributions are not limited to tokens and thus, governance proposal fees (depending on the governance system run by the DAO) can also be a measure of evaluation when weighing commitment from members within a DAO. Members who choose to participate in a low-profile manner can still feature as speculators or investors, assured of the fact that they will receive good returns on their financial contribution through tokens, dividends or other forms of reward from the DAO.

Technical contributions

Technical contributions to a DAO involve active participation in the development, maintenance and improvement of the infrastructure, applications, smart contracts or protocols within the DAO. These are usually done by developers, general technical contributors and engineers. The process of evaluating technical contributions to a DAO would require metrics that can measure the quality, effectiveness and impact of the work done. Here are regular ways to evaluate technical contributions within a DAO:

i. Smart Contract development: Smart contracts are an important part of DAOs and members who contribute by developing them, working on upgrades, carrying out vulnerability assessments and fixing issues are showing commitment to the success of the DAO. Their efforts can be evaluated based on impact, number of smart contracts developed/deployed within the DAO, attention to detail with upgrades and excellence in the process of fixing problems/bugs that spring up from the smart contracts.

ii. Code Contributions: In layman terms, code contributions refer to the development work done by members to improve technical components (such as software infrastructure) within the DAO. These can present itself as a contribution of code or modules to the repository and much more. The process for evaluating the efforts from members in this category include an assessment of commitments submitted to the code repository of the DAO, an assessment of feedback on code repository commitments made by other contributors, a measurement of changes made to codes which will show the scope of contributions and generally, the effect it has on the DAO.

iii. Decentralized Application Development: Decentralized Apps (dApps) provide tools, services and user interfaces to help DAO members participate in the happenings within the DAO ecosystem - such as governance and token management - with ease. Members can contribute to the development of the DAO by building dApps to encourage interaction and participation. A metric to weigh the evaluation of these developments from members would be in the form of a “call and response” by assessing how many dApps have been developed and deployed by them as well as the response gotten from the users.

Contributions to governance Within the DAO, contributions to governance are in line with participating in activities that encourage effectiveness within the DAO. These refer to activities such as decision-making, voting etc… Quantity stands as a way to evaluate performance and contribution to governance within the DAO. For instance, in terms of evaluating participation in voting, DAOs are keen on the percentage of acceptable votes cast by a member (s) or the number of proposals submitted. It is also normal to have a DAO take the reputation score of a member into consideration.

Community Engagement DAOs thrive on community engagement and in terms of contribution, community engagement refers to any activity done with the intention of promoting interaction and participation among members of the DAO in such a way that every contribution aligns with or moves the DAO towards its goals. The evaluation metrics for community engagement cut across social media activity, participation in community events and support for newbies. The influence that a member wields across the forum or social media, their readiness and attendance/organization of community events which promote the DAO and their willingness to spread the word about the DAO can be taken into consideration by a DAO.

Managing Contributions and Performance Within a DAO, one has to ensure that there are no loose ends in managing and evaluating contributions and performance as fairness is a watchword in the DAO ecosystem. In line with this, processes and tools must be enlisted to highlight, track and follow through with contributions and performance from members. This would ensure that there is a seamless flow of progress in many areas, members feel included consistently and the DAO can continue to move towards its goals with all hands on deck. Once again, the process of managing contributions and performance within the DAO cannot be generalized in all entirety as different systems and structure of governance play a big role in the choices made within a DAO but, it is possible to keep these few aspects in mind;

Performance metrics and key performance indicators such as governance participation ratings, quality of code, reputation score, etc. must be clearly set from the start to align with the goals of the DAO. Afterwards, the implementation of smart contracts to automate incentive structures based on these performance metrics and KPIs should be done. Design reward mechanisms such as token distributions, staking rewards, governance tokens, or reputation scores tied to measurable contributions within the DAO. There should be transparency systems put in place to record the contributions made by members as well as the processes involved. This way, recognition and reward will be as a result of effort and accountability and all decisions regarding contributions and performance management will be made using data. Regularly, performance reviews such as code reviews, assessments or feedback surveys must be conducted to know the intention or the thoughts of the stakeholders towards a certain activity or contribution. DAOs must be able to spot trends and build up areas for growth within the DAO. Early on, incentive mechanisms must be designed and made public knowledge in preparation to reward commitment within the DAO accordingly. Members should know what to expect for certain levels of participation and contribution. Set up peer recognition systems within the DAO to enable members to know themselves and be inspired to repeat working processes or learn from major contributors.

Putting these processes into practice will help DAOs manage performance and contributions within the DAO properly and push for innovation as well as improvement within the DAO community.