Challenges of Compensating Work in a decentralized Workspace
How future companies are challenged by the intricacies of securing employees’ social security
Whilst the modern work paradigm is experiencing a significant transition, new forms of coordinating workforce are emerging with the evolution of Web3 technologies. It will be no game-changer if a person earns their income in non-traditional ways like playing games or producing content for a decentralised collaborative rather than working for a company in the future.
No wonder, as Web3 companies and Blockchain businesses evolve, the transition from central points of power to decentralised collaboratives is on the rise. With this ongoing shift in our understanding of work, the question of fair and socially secure compensation moves to the centre of attention for DAO leaders and Web3 entrepreneurs alike.
Opportunities for Decentralising Work
As mentioned before, we are experiencing a plethora of new ways to earn income that can be in stark contrast to traditional methods of contributing to society. While a lot of these are likely to be unsustainable, the trend of working decentralised and from other places than offices is only perpetuated by the rise of Web3.
DAOs are finding their way into the legal system as first nations start to dabble their feet into Blockchains by actively exploring use cases for digital assets. In the future, it is very likely for DAOs to play a significant role in coordinating work in a more decentralised fashion.
One of the major advantages of decentralised organisations is automating core functions via smart contracts completely. This opens up the space for participants to contribute by doing the work that focuses more on building rather than managing the system. DAOs are by far more than a hopeful thought experiment. These organisations are managing billions of dollars in capital and providing services to millions of people even though this form of organisation only emerged in the last years.
The rewards of using a transparent and collective way of decision-making allow flat hierarchies while making it effortless to coordinate and distribute power throughout the network. Departments and teams will form when demand grows and scatter when the goal is accomplished.
This new way of structuring work will create enormous incentives for contributors to truly contribute because the results of each contributor’s efforts are directly linked to the outcome of the greater goal.
How Web3 technology can Benefit Compensation-Models
With new models for earning income comes a new understanding of compensation. For example, DAOs use different models for compensating members. One way is to reward the accomplishment of tasks or bounties on a gig-basis. In contrast, others are traditionally based on the time a contributor offers to work for a given organisation.
This opens up more freedom of choice for workers as it will become easier to work on a freelance basis and, by that work with different parties rather than committing to just one company or project.
But it will also pose a challenge to future employers as it will give workers a ledger in terms of negotiating compensation. One way of tackling challenges like this is by offering long-term benefits for contributors.
Building sustainable long-term benefits of decentralisation
As more DAOs and other new collaborative structures evolve, one primary sector emerges within the crypto space. DAO2DAO business is a crucial point of interest to sustain the growth of companies on a larger scale because they create the opportunity for a whole new type of long-term benefits.
As participants move towards hopping between stakeholders, organisations can incentivise longer commitment by providing long-term compensation in the form of tokens of decentralised funds. Or rewards for completing projects for an organisation can be paid either in tokens or in the form of receiving grants to DeFi protocols to earn passive yield income.
Contributors could have a part of their payment invested in specialised funds that provide treasury diversification for DAOs. This allows growth for an organisation’s financial assets on the one hand and provides a sustainable and safe income in case of sickness or even disability for contributors on the other hand.
At Pen-X, we are an example of a decentralised organisation specialising in building long-term investment strategies by using a diverse set of hedging strategies ranging from DeFi token baskets to real-world ETFs and commodities like gold and oil.
This provides DAO members with an equal opportunity for a secure retirement while maintaining the growth of invested assets is PenX’s key focus and is secured by using the benefits that come with decentralising the organisation’s workforce. Each asset class will be managed by specialists who act transparently, and stakeholders will make grand decisions via governance votes.
At Pen-X, we strive to answer questions that evolve in this new work paradigm and support further development for future DAO leaders and contributors.
Learn more about the vision behind Pen-X in the links below:
Whitepaper (Gitbook): https://docs.penxdao.com