Introducing: Treasury Protected Tokens
Compensation floors with 100% equity upside
Every single DAO should incorporate Treasury Protected Tokens (TPTs) to provide superior incentives and outcomes for employees. The process is simple:
Employees are paid in entirely tokens of the DAO (i.e. equity upside)
Tokens may be redeemed against earmarked treasury assets (USDC)
Tokens may be sold on secondary markets far above their guaranteed pay
TPTs are 100% guaranteed to be redeemable at any time with no restrictions. A DAO cannot spend the underlying assets, even if they want to. If an employee is paid $100k worth of the DAOs tokens, there is guaranteed to be $100k of USDC assets in the treasury, which the token recipient has the first claims to.
If the secondary market value of the tokens is higher, the employee will sell the token on secondary markets instead of redeeming the token. The token’s redeemability is non-transferrable. The recipient just purchases a regular token– the right to redemption disappears. This “frees up” the earmarked money in the treasury and extends the DAO’s ability to issue more TPTs.
The DAO didn’t need to raise additional capital
Employees enjoyed the upside of tokens
Employees had no risky downside to the token
This methodology empowers risk-averse contributors, paves the way for more equitable outcomes, draws the best talent to web3, and provides incentives superior to things like RSUs.
READING UP NEXT: Treasury Protected Tokens are individually implementable, however they’re a part of a larger framework of Treasury-Centric DAOs that use treasury protected tokens and investor debt tokens as a part of a regenerative treasury. The formation will be permissionless, operations will be transparent, and liquidation will be instant. The mechanisms provide enormous benefits, interesting implications, and many possible variations.