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Blockchain is a technology, DAO is a system, and Web3 is a culture. DAO is a form of decentralized organization, which can be understood as a "decentralized company." It is an economic system built on blockchain, where people with the same ideas and consensus can form a DAO. Decentralization is the essence of Web3 and the core of the internet, reflected in two layers: one is the social scope, and the second is Web3 itself, whose core idea is to advocate for decentralization.

The arrival of the Web 3.0 era has disrupted various platform-centric business models and formats of the Web 2.0 era, giving rise to new decentralized business models. This not only provides new opportunities for entrepreneurs but also brings more benefits and convenience to users. Currently, Web 3.0 is still in its early development stage, and many business opportunities it presents may not yet be mature and may even carry significant risks. Therefore, for entrepreneurs and investors, a cautious attitude is necessary when facing opportunities in Web 3.0.

In the Web 3.0 era, user data will belong to the users themselves, rather than to any internet company or platform. Users will have autonomy over their own data, and when their data generates value, they will also receive corresponding value returns. Yao Qian, director of the Technology Supervision Bureau of the China Securities Regulatory Commission, described Web 3.0 as follows:

After 30 years of development, the internet is now at a crucial point of evolution from Web 2.0 to Web 3.0, strengthening forward-looking research and strategic forecasting on Web 3.0.

Web 3.0 is user-centered, emphasizing user ownership and autonomy:

• First, users manage their identities autonomously (Self-Sovereign Identity, SSI).
• Second, it grants users true autonomy over their data.
• Third, it enhances users' autonomy in the face of algorithms.
• Fourth, it establishes a new trust and collaboration relationship. Clearly, "user autonomy" will become a key term in the Web 3.0 era. At the same time, data is endowed with economic value, becoming a new type of production factor that can be rights-assigned, priced, and even quantified.

In the Web 3.0 era, users own data, and data has value. This is fundamentally different from the Web 2.0 era, where users were treated as products. From being products of the internet era to becoming owners of internet value, users can create and transfer value on the internet through mutual assistance without relying on platforms. This is the significance of Web 3.0 as a value internet.

TLDR; Conclusion:

• (1) Total Revenue: The Web3 business model has developed significantly, with the most powerful still being "selling block space," followed by NFT trading platforms, DeFi, GameFi, and infrastructure.
• (2) Protocol Revenue: Most revenue still comes from Supply-side Revenue created by roles such as Liquidity Providers and Lenders, while the profitability of the protocol itself (Protocol Revenue) remains relatively low, with even less flowing to Token Holders. Although users enjoy staking rewards and governance rights, the core economic benefits are still not guaranteed.
• (3) Protocol Revenue has audit loopholes, posing risks to Token Holders: The risk provisions in Protocol Revenue are not reflected, and protocol revenue data is often confused with token sale data, with some protocol revenues even hiding Rug Pull risks.

2.1 The Value of the Protocol Itself: Generally, the revenue of Web3 protocols consists of Supply-side Revenue and Protocol Revenue, with the direction of Protocol Revenue divided into Treasury and Token holders (as shown below).

Explanation of this chart:

Total Revenue = Supply-side Revenue + Protocol Revenue

● Supply-side Revenue: Refers to the revenue generated by Suppliers (the providers of funds), such as all liquidity providers in DeFi, all borrowers in lending, and all contributors in Staking, who earn income after deducting the principal. This part of the value is created by suppliers, and the income naturally belongs to them.

● Protocol Revenue: Refers to the income that the protocol collects for itself after providing services, which is generally allocated to the Treasury, with the remainder distributed to Token Holders. According to our statistics, among the 17 companies/products/protocols with the highest total revenue, the proportion of Protocol Revenue is extremely low.

● The supply-side revenue of DeFi projects often accounts for over 90% of Total Revenue. Even more so, for example, Uniswap, despite having a total trading volume of $1 trillion and total revenue of $600 million (over six months), has no Protocol Revenue.

● Centralized projects like Opensea, Metamask, etc., do not have Tokenomics, so Protocol Revenue temporarily represents the value belonging to the company.

In 2022, Web3 companies already have business models and the ability to generate substantial revenue. Finding a more valuable distribution method for revenue for the community and even society is a challenging task. Some protocols take the revenue for themselves, some keep it in the treasury to wait and see, while others choose to return the revenue to the community. Of course, some projects choose to avoid disclosure, using various methods to obscure their profit acquisition.

Web3 Startups#

Starting a Web3 startup is no easy task, as there are many challenges and obstacles that will trouble you. Therefore, using tools related to Web3 business will be crucial in your entrepreneurial adventure. If they are useful, they will save you time and money.

I have also gone through many different entrepreneurial adventures, involving: ideation, development, marketing, operations, etc. In all these adventures, I have used hundreds of different tools. In this article, I will share with you the 100 best tools I have tested and identified for creating and developing Web3 startups.

Build Your Team and Hire Talent:#

Most successful Web3 startups rarely begin with discovering revolutionary ideas that others do not have, but rather with finding like-minded individuals who share the same ambition to build a company and complement each other. Building your team, finding co-founders, and hiring the first employees are crucial for the success of a startup. Fortunately, some tools can help you in this process.

● Ethlance: Ethlance is the first employment marketplace platform built entirely on the Ethereum blockchain, with a service fee of 0%.

● Web3Career: An employment marketplace platform that has matched jobs for over 23,000 blockchain developers, Web3 developers, and smart contract developers.

● MeritVerse: A professional network for Web3 talent.

● Freelancer: Find and hire the best freelancers, web developers, and designers at lower costs.

● Upwork: Upwork connects businesses with independent professionals and agencies around the globe.

● CryptoCurrencyJobs: A job board for blockchain and crypto jobs.

● Remote3: Discover remote workers globally who want to engage in blockchain, smart contracts, DeFi, and NFTs.

● Web3Meetups: This platform brings together the best online Web3 meetups worldwide.

● LinkedIn: Build your skill network and connect with like-minded individuals.

● Communities of Web3 enthusiasts such as Discord, Telegram, Facebook: A few community examples include Web3 Developers Community, Solidity Developers Community, The Arch, etc.

Manage Your Team:#

By creating a Web3 startup, in most cases, you will have the ability to promote products globally (as there are no real geographical barriers). On the other hand, your team may consist of talents from all over the world. In most cases, you will adopt a remote/hybrid work model. You will need to interact with your team, track progress, develop your company culture, and most importantly... have fun :)

Here are some tools that might help you:

● Gather: In the Gather platform, you can freely customize virtual meeting spaces.

● AltspaceVR: An industry-leading virtual event platform that enables creators, brands, and companies to quickly create memorable experiences and foster connections with communities.

● Travala: Organize a trip with your team anywhere, using cryptocurrency for payment.

● Trello: Task and team management made simple.

● Asana: Project management tool.

● Wonder: A virtual workspace where teams can collaborate side by side.

● Slite: Decision-making and project management for remote teams.

● Airtable: Workflow and team collaboration.

● Slack: Common chat channels, safer than email.

● Discord: The simplest tool for chatting via voice, video, and text.

Beautiful Graphic Design:#

Graphic design resources are very useful for turning your ideas into reality, visual publications, brochures... If you want to create digital graphic assets, there is a range of essential tools available for you:

● Fraam3: Fraam3 is a creative platform where you can design and create NFTs directly.

● Mirror: Mirror is a powerful publishing platform that breaks the boundaries of online writing—whether it's a white paper or weekly community updates.

● Pixabay: A free photo repository.

● GraphicRiver: A searchable repository of a large number of manually reviewed graphic resources.

● Canva: A free online graphic design tool. Use it to create your social media posts, presentations, etc.

● AllCryptoWhitePapers: The largest cryptocurrency white paper database!

● TinyWOW: A tool for solving file issues.

● Veed: Create stunning video trailers and video ads without mastering iMovie or Adobe Premiere.

● Dribble: Product design inspiration.

● Spline: An online 3D design tool.

● InVideo: A video content library.

● Clideo: An integrated, easy-to-use online video creation tool.

● Abyssale: Automated ad banner creation.

● Remove: Automatically remove the background of images.

● Coolors: Generate eye-catching color schemes for your website and applications.

● Lordicon: An animated icon library.

● icons8: A plethora of icons and illustrations.

● GetAds: An online ad creation platform; don't let poor ads lower your conversion rates.

● Mmhmm: Create slides with stunning effects.

● Mockuuups Studio: The fastest way for designers and marketers to drag and drop visuals onto over 1,800 device mockups.

● Artgrid: A high-quality video library.

● StickPNG: A repository of .png images.

● SmartMockups: Create stunning mockups online.

● NFT-Generator: The most powerful no-code NFT creation tool.

Build Community and Engage:#

I recommend that you create a community as soon as possible to establish a sense of belonging and co-creation among community members, as this sense of co-creation will strengthen your confidence in the project. However, growing the community by attracting new members and increasing community engagement can be painful. Fortunately for you, many tools can help you easily grow your community while increasing member engagement:

● Crew3: Users can earn corresponding tokens and NFT rewards for contributing to the community.

● Tweetdeck: Tweetdeck is a community management platform built specifically for Twitter. It allows you to follow specific feeds, hashtags, lists, scheduled tweets, messages, etc.

● Tweetpic: Create beautiful Twitter screenshots using TweetPic. There are over 10 themes, 15 text styles, and various customization options available for creating aesthetically pleasing Twitter screenshots.

● SweepWidget: Create contests and giveaways.

● Buffer: Community automation management tool.

● MEE6: The easiest dashboard configuration for moderation, leveling, Twitch alerts, etc.

● JuiceBox: A programmable financing protocol for raising funds for projects and planning expenditures, which can also build communities on top of it.

● Fiverr: Fiverr is an online marketplace for freelancers. You can find Discord moderators and developers to create communities, etc.

Build Your Web3 Offering/Product:#

One of the most important parts of the entrepreneurial adventure is certainly the stage of building your offering/product. This step takes time, as your offering will never truly be finished and must be continuously improved and modernized. Whether you are building an agency or SaaS, your product building phase must make it easily accessible.

● Whimsical: Create wireframes, flowcharts, and user flow diagrams.

● Milanote: Visual design.

● Figma: Collaborative design for products and interfaces.

● Thirdweb: Another emerging platform is Thirdweb, which allows you to easily connect DApps, create NFTs, and has a simple, no-code, user-friendly interface.

● Buildspace: A great place for Web3 beginners or developers looking to learn new skills. The platform offers a wealth of easy-to-learn materials and a supportive developer community.

● Moralis: One of the best Web3 infrastructure providers, allowing developers to easily interact with many Web3 services such as authentication, NFTs, on-chain data, and smart contracts.

● Alchemy: Alchemy is one of the largest unicorns in blockchain infrastructure and Web3. With a massive valuation of $10 billion in 2022, Alchemy provides a simple backend for Ethereum blockchain development for Web3 developers and companies.

● Infura: Infura provides Web3 infrastructure, similar to Alchemy. They offer high-quality Ethereum APIs and IPFS APIs, which are the pillars of Ethereum DApps.

● Torus: Torus is a user-friendly, secure, and non-custodial DApp key management system. The wallet allows you to log in using Facebook, Google, and other OAuth providers.

● Webflow: Create, collaborate, and scale beautiful websites in a fully visual canvas.

● Undraw.co: An open-source collection of illustrations for websites and applications that can make your site attractive and aesthetically pleasing.

● Zapier: This is a favorite among most developers, SaaS founders, and entrepreneurs. It is an automation tool. Once you use it, you will definitely fall in love with it.

● Hotjar: Heatmaps and analytics tools.

● PanelBear: Track user activity to optimize your website for high conversion rates. This tool can monitor your web requests, backend, loading times, and everything.

● Splitbee: This is an alternative to Google Analytics. It is easy to use and provides advanced features for analytics.

Protect Your Web3 Product:#

If you decide to build Web3 products using blockchain components, you may be susceptible to cyber attacks and code vulnerabilities, which can be very serious if funds are involved. To address this issue, any Web3 project must ensure the security of its code and technology before launch. Many tools are available to ensure there are no issues in the code, and I strongly recommend using them:

● MythX: Verify the correctness of smart contracts.

● Infura: Set up and run Ethereum nodes.

● Waffle: Smart contract testing.

● Remix: Remix IDE allows for the development, deployment, and management of smart contracts for Ethereum-like blockchains.

● StaySAFU: The SAFU scanner allows you to quickly assess a project's security in seconds by examining its liquidity, smart contract code, holders, and many other factors; token owners cannot deceive you.

● Embark: Build and deploy smart contracts.

● UseDapp: Dapp development framework library.

● NFT Storage: Free, decentralized storage and bandwidth for NFTs on IPFS and Filecoin. This is a long-term storage service designed for off-chain NFT data (such as metadata, images, and other assets) with a maximum upload size of 31GiB per upload.

● Web3 Storage: The simplest way to store data on a decentralized network. This platform provides a simple way to quickly store your data via API. (Fast and free)

● Spheron: Decentralized virtual hosting that supports storage on Arweave, Skynet, IPFS, and Filecoin.

Promote Your Web3 Startup:#

This is another important milestone in developing a Web3 startup, namely the marketing phase of the product. I recommend promoting your product while building it to see if your offering truly satisfies customers.

● Mobula.fi: A decentralized data aggregator (token, NFT).

● WaitlistPanda: The easiest way to collect potential customers and build an audience, allowing you to create "viral" waitlists, social referrals, etc.

● Buffer: Community management automation.

● Emelia: Simplified processing with detailed and accurate statistics.

● Lemlist: Personalized emails, automated follow-ups, and interactions with potential customers across all channels. Lemlist combines your sales automation and email software into one.

● Viral Loops: Create marketing schemes.

● Collect.chat: Leading intelligent chatbot.

● Pipefy: Marketing and business workflow automation.

● Make: Create no-code automated marketing.

Meet Other Web3 Project Founders:#

One major way to rapidly grow a Web3 startup is to establish partnerships with other Web3 project founders. From a technical perspective, the interoperability of blockchain makes collaboration and cooperation essential. Most importantly, collaboration is one of the simplest, cheapest, and most powerful strategies for promoting products. There are several tools that can help you build partnerships in Web3. I will share them with you today:

● UpStreamApp: Participate in global online events focused on cryptocurrency and Web3, join DAOs, and meet new friends.

● Crypto Events [by Crypto Nomads Club]: Crypto Nomads Club is an alpha community for digital nomads and frequent travelers who meet at various crypto events around the world.

● TheHiveIndex: Discover the best online Web3 communities.

● Eventbrite: Eventbrite can match you with Web3 events, or you can create your own events.

What is Entrepreneurship?#

You might think that only pedantic professors would ask such a redundant question. But in reality, like terms such as "strategy" and "business model," the meaning of "entrepreneurship" is not fixed. When it comes to entrepreneurship, some people think of venture-backed startups, while others use it to refer to general small businesses. "Entrepreneurial enterprises" can be an inspiring slogan for some, while others find the phrase itself contradictory.

Howard Stevenson, a father of entrepreneurship research at Harvard Business School, defines "entrepreneurial spirit" as the pursuit of opportunities beyond the resources currently controlled.

"Pursuit" refers to an attitude of absolute focus. Entrepreneurs can perceive fleeting opportunities, demonstrate strength within a limited timeframe, and attract external resources. Time passes second by second, and real money continuously flows away, creating a sense of urgency for entrepreneurs. In contrast, mature companies have stable resources and more options when facing opportunities, often lacking a sense of urgency.

"Opportunities" refer to making a difference in one or more of the following areas:

1. Launching innovative products;
2. Designing new business models;
3. Improving existing products to enhance quality and reduce costs;
4. Exploring new customer segments.

Entrepreneurs can indeed balance these aspects, such as launching an innovative product with a new business model. The above examples do not exhaust the opportunities that enterprises can seize. Companies can still increase profits by raising prices or flexibly hiring more sales representatives, but these methods are unoriginal and unrelated to the entrepreneurial spirit.

"Beyond existing resources" refers to breaking through resource constraints. When startups begin, founders can only control the existing human, social, and financial resources. Many entrepreneurs advocate for self-reliance, frugality, and not relying on others. While some new ventures can survive solely on their own, for long-term development, founders must find ways to introduce external resources such as production equipment, distribution channels, and working capital.

Entrepreneurs continuously pursue new opportunities but face four categories of risks due to a lack of necessary resources:

Demand risk: Consumers may not accept innovative products or services;
Technical risk: Whether the innovative solution can receive technical support;
Execution risk: Whether entrepreneurs can gather a team with strong execution capabilities;
Financial risk: Whether external funding can be reasonably introduced.

Entrepreneurs should acknowledge the objectivity of risk while striving to navigate various uncertainties.

Entrepreneurial actions can easily fall into a vicious cycle: controlling risks requires resources, but resources tend to gravitate toward low-risk areas. For example, to develop and promote a product, one must prove to investors that technical and market risks are controllable, but reducing risk itself requires external funding. To avoid this vicious cycle, entrepreneurs have four countermeasures:

1. Lean testing, taking minimal actions to quickly assess risks and test the feasibility of business models at the lowest cost.

2. Phased investment, breaking down difficulties, and not occupying unplanned resources before achieving stage goals.

3. Establishing partnerships, borrowing resources from other companies, and transferring risks to allies with higher risk tolerance or willingness. Similarly, new ventures can forgo purchasing assets and instead flexibly lease assets, converting high fixed costs into variable costs.

4. Mastering the art of storytelling, demonstrating to investors that their business can make the world a better place. If investors are moved by your story, they will be willing to take risks and support your venture. Steve Jobs is the most famous example: his unique "reality distortion field" captivated many employees, partners, and investors, compelling them to follow him in pursuit of dreams.

You might ask: Is Stevenson's definition of entrepreneurship practically significant? In my view, the answer is affirmative. There are two reasons.

First, he understands entrepreneurship as a unique holistic management concept, rather than limiting it to a specific stage of business development (such as startups), a particular personal role (such as founders), or a certain temperament (such as radicalism or independence). According to this definition, all types of enterprises, including large corporations, can cultivate an entrepreneurial spirit. If you believe that entrepreneurship is the engine of global economic growth and the driving force for social reform, this is undoubtedly good news.

Second, this definition provides direction for entrepreneurial actions, allowing entrepreneurs to control risks and mobilize and utilize resources. A student of mine was once asked to provide advice for proactive entrepreneurs, and his response was brilliant: "Because resources are extremely limited, you must have an entrepreneurial spirit, be good at seizing opportunities, and master the art of persuasion. 'Pursuing opportunities beyond existing resources' summarizes every aspect of my daily work and drives me forward."

Manage Funds:#

The characteristics of Web3 are decentralization and freedom, but do not forget to manage cash flow. You will have to pay attention to the inflow and outflow of funds.

For Web3 startups, you may manage your cash flow using cryptocurrencies. Fortunately for you, there are some tools available to help you track your crypto accounts/wallets:

● Koinly: Generate your cryptocurrency tax return in minutes.

● Cryptio: Enterprise-level accounting, auditing, and tax software for cryptocurrencies.

● Coinpanda: Track your cryptocurrency assets and calculate your crypto taxes.

● Crypto Weekly: A public fundraising activity list for the crypto industry.

Mastering Web3#

Essentially, it integrates all the tools that can be used:

Comprehensive data
Blockchain explorers
DeFi
NFT
DAO
GameFi
DApp
Mining
Derivatives
Ecosystem summary
Airdrops
Others

Project Management#

To become an excellent leader, first, learn to lead; second, study the expectations of subordinates;

Third, show care for subordinates;

Fourth, sincerely respect subordinates; finally, do not restrict the personal development of subordinates. These are the five elements of successful leadership: the LEARN model.

• Learn to lead

As a leader, to be ahead of others, you must set an example. The more difficult the conditions, the more leaders should take the lead. Leading by example is the first principle of leadership. Leading by example has a strong demonstration effect. When leaders take the lead, subordinates will not hesitate. Of course, leaders taking the lead does not mean acting recklessly, but rather doing things skillfully, or even cleverly. The progress of subordinates largely depends on the guidance and direction provided by their superiors, helping them with work methods and skills.

• Examine the Expectation

Leaders must understand the real needs of their subordinates to manage effectively. Generally speaking, needs that have already been met no longer have motivational significance. It is important to note that each person's needs may be different. Every leader must accurately grasp the needs of their subordinates and study their expectations. Take stock of the resources you control; only when you have what subordinates need will they work according to your requirements. At the same time, manage subordinates' expectations reasonably; do not make promises lightly, as unexpected situations may arise that prevent fulfillment.

• Act as though you care

Leaders should closely monitor the status of each subordinate, which includes not only work status but also emotional state. Leaders should not only observe subordinates' joys and sorrows but also keep them in mind. Helping subordinates solve difficulties discreetly is the highest form of caring for them. Conversely, to ensure subordinates are fully engaged in their work, you must alleviate their concerns.

• Respect your employees as professionals

Leaders must demonstrate respect for their subordinates at all times. Respecting subordinates is not just about being polite or having a good attitude; it is about genuinely recognizing their professionalism, the value they create for the team, and their contributions to the organization. Make subordinates feel important; not only affirm their importance verbally but also allow them to engage in significant tasks.

• Never stifle personal growth

As a leader, always understand that no one wants to do the same job for a lifetime. Caring about subordinates' career development and providing necessary assistance is the responsibility and duty of a leader. Why are subordinates willing to follow you? There are two main reasons: they accept you, and they see hope in following you.

Applying the LEARN model in practice will enhance leadership increasingly!

The above statement comes from the world-renowned management master Ken Blanchard.

The responsibilities of a leader consist of three key points: 1) Creating a safe environment; 2) Stimulating subordinates' potential; 3) Controlling the fate of others.

Creating a safe environment

Subordinates' sense of security comes from two aspects: first, their position is secure and will not be dismissed; second, the team they belong to is secure and will not be disbanded or merged into another team.

To feel secure, one must be competent in their work; ideally, they should be indispensable to the team. This requires leaders to cultivate subordinates and enhance their competence. On the other hand, subordinates must have the right work attitude, work hard, and interact effectively with leaders.

To ensure the team is secure, leaders must lead the team to achieve goals and create better performance. If a team consistently fails to complete tasks, it will become insignificant in the organization, and such a team will either be disbanded or completely eliminated.

Stimulating subordinates' potential

As mentioned at the beginning, everyone wants to stand out, and guiding others to unleash their maximum potential is an extremely honorable task for leaders, which should not be taken lightly. So, how can leaders stimulate subordinates' potential? There are three key points to grasp.

First, leaders must recognize that motivation is predicated on competence. If subordinates cannot perform their jobs, no amount of enthusiasm will help. Therefore, leaders should cultivate subordinates regularly, guiding them to gain experience and learn lessons.

Second, affirm the importance of subordinates to stimulate their sense of identity. As a leader, recognize that everyone's pursuit of their importance is a permanent driving force. On the other hand, people are only willing to work hard for things they highly identify with.

Third, leaders should study subordinates' expectations to find their motivation for work. Everyone has inner desires; leaders must find these desires in subordinates and connect them to their work.

Leaders control the fate of others

Leaders hold the fate of others in their hands, and these hands should operate gently, offer care, and be ready to provide support at any time. This statement carries significant weight!

Especially in personnel decisions, a leader's thought or idea can impact a person's entire life, so decisions about whether to stay or go, whether to promote or demote, must be made with caution and careful consideration.

In daily work, leaders should facilitate and assist subordinates in completing their tasks, minimizing the difficulty they face in accomplishing their work. When subordinates encounter setbacks, leaders should encourage and care for them.

Creating a safe environment, stimulating subordinates' potential, and providing support for subordinates are the responsibilities of leaders and the foundation for achieving better team performance!

The above image shows that the evaluation content includes three aspects: performance, capability, and potential. Unfortunately, in performance management, managers often confuse capability with performance assessment items, falling into the trap of performance management.

Performance evaluation typically includes three aspects: key performance indicators, key tasks, and behavioral requirements. Behavioral levels determine the quality of completing key tasks, and the quality of key tasks affects the achievement of key performance indicators. Capability evaluation mainly includes basic qualities, professional abilities, and management capabilities. Potential evaluation mainly includes intrinsic motivation, thinking ability, and interpersonal influence.

The purposes of evaluation are threefold: rewards and punishments, competence, and development. Rewards and punishments aim to achieve the goal of rewarding the excellent and punishing the inferior through evaluating subordinates' performance; competence aims to assess whether subordinates are qualified through evaluating their capabilities; development aims to take motivational measures through evaluating subordinates' potential to generate high performance and promote their career development.

Performance evaluation assesses the past (behavior and results), capability evaluation measures the current state (whether competent), and potential evaluation prepares for future development (career). To conduct effective subordinate evaluations, managers should reflect on the following questions:

1. In daily management, have I conducted a comprehensive evaluation of subordinates?
2. When performing performance evaluations, have I confused capability with assessment items?
3. If I find a subordinate incompetent, what is the best way to handle it?
4. What measures have I taken to stimulate subordinates' potential?

The foundation of leadership is personal power: care power, information power, expertise power, wisdom power, and charisma. Care power means paying attention to subordinates' needs and emotional changes, getting close to them, and finding the best time to communicate.

Information power means having a wealth of information that is helpful for work; expertise power means having professional expertise that is particularly helpful for subordinates to complete tasks.

Wisdom power means influencing subordinates by answering their questions and pointing them in the right direction. Charisma refers to the attractive power a person has in terms of personality, temperament, ability, and moral character.

To enhance leadership, it is necessary to continuously strengthen leadership logic: leadership originates from recognition, and recognition stems from assistance. In daily work, superiors and subordinates should engage in positive interactions, hold regular in-depth discussions, and proactively provide support and assistance to subordinates.

When assigning work, provide clear and specific requirements.

Generally speaking, the clearer the superior's requirements, the more effectively subordinates will execute them. Effective execution means completing tasks with high quality, allowing subordinates to gain satisfaction and recognition from their work. When assigning work, also consider potential difficulties and problems that subordinates may encounter and provide them with assistance within their capabilities.

When checking work, identify existing problems from five aspects: quality, progress, balance, collaboration, and improvement. Regardless of the results of the checks, superiors should provide feedback to subordinates.

Praise subordinates publicly for their good performance, and when pointing out their problems, do so without embarrassing them. As a superior, it is essential to clearly indicate what is encouraged and what is opposed.

When improving work, superiors should review with subordinates, identify reasons, and discuss countermeasures.

Superiors should demonstrate through actions that they are very concerned about the progress of subordinates' work. The time for improving work is also the time for cultivating employees. Provide necessary training for those with poor performance or insufficient capabilities.

It is especially important to note that superiors must pay attention to the thoughts and emotional changes of subordinates, helping them relieve stress.

SBT to Address Talent Management#

Without talent, an organization is nothing. Without talent, an organization cannot set a vision, formulate strategies, draft tactics, track goals, maintain learning, grow, innovate, or adapt. If there is no timely recruitment of talent, deployment of talent, training of talent to be competent, and rewarding of suitable talent, the organization will die. Talent recruitment, planning, deployment, training, motivation, and rewards constitute the strategic talent management functions that many of us are familiar with. While most of us may understand at least theoretically that performing these functions well will contribute to the success of the organization, very few of us ever wonder, "What is talent?"

System Design Must Consider the Following Three Points:#

1. Fully Understand Human Nature
   The two examples at the beginning illustrate that understanding human nature is the premise of system design, which is based on values. A good system can constrain people and guide them.

2. Efficiency and Effectiveness Unified
   The well-known porridge-sharing story shows that although the three-person porridge-sharing committee and the four-person supervision committee ensure fairness, they sacrifice efficiency (the porridge is evenly distributed, but it has also cooled down). The system design that guarantees both effectiveness and efficiency is to allow the first to share before taking.

3. Correct Logical Design of the System
   Rather than educating the cat, it is better to watch the fish. In system design, the logic cannot be reversed. However, system designers must be clear that cats eating fish is their nature; if they cannot eat fish, they will not be satisfied. Therefore, there must be an incentive mechanism that allows cats to eat fish through work, so they will not seek loopholes in the system or collude with mice.

In summary, system design is a long-term process; systems need to be stable but not rigid, and they also need to be optimized and adjusted according to real situations.

Understanding human nature is the premise of system design. System design first constrains people and then guides them; this is the basic principle.

What is talent? What makes it a highly challenging management resource?

In short, talent is the sum of an individual's abilities used to achieve organizational goals.

1. Ability refers to the knowledge, skills, talents, values, interests, personality traits, and relevant skills required to perform tasks that humans possess. These abilities are not only an important source of competitive advantage and collective strength for an organization but are also notoriously difficult to measure, retain, and change. Organizational scientists describe talent as a unique competitive resource characterized by difficulty in assessment (i.e., measurement difficulty), mobility (i.e., the likelihood of leaving the organization), and plasticity (i.e., changing nature). However, if an organization can adopt better capability assessment methods to implement talent, consciously guide talent to flow in the right direction, and proactively shape talent to facilitate goal achievement, it will greatly increase the chances of organizational survival and development.

First Transformation: From Ordinary Employee to Key Employee

In an organization, those who dare to face challenges, take on heavy responsibilities, and possess strong work abilities will become the focus of cultivation. Those who avoid responsibilities and do not strive for progress will become the targets of elimination. Even if they cannot be dismissed due to systemic reasons, these individuals will be marginalized.

The more excellent a person is, the better they can complete tasks under adverse conditions; the more mediocre a person is, the more they will be picky about the conditions for doing things. In short, if resources are insufficient, they can comfortably avoid work.

To become a key employee, one must strictly demand oneself in terms of work attitude and work ability. Work attitude has three levels: effort, heart, and emotion. It is best to work with heart as early as possible, ideally reaching a state of emotional investment. Work ability includes three aspects: professional ability, interpersonal ability, and execution ability; these three abilities should be developed comprehensively, while also paying attention to improving thinking skills to make one's thinking and expression more logical.

Notes on the First Transformation

The first transformation is the most critical; only by completing this transformation can we have the choice of whether to pursue a professional or management path. To complete this crucial transformation, we must take workplace logic as a premise, elevate our mindset, develop our abilities, and cultivate our behaviors.

Workplace logic includes four aspects: value logic (values, not drifting), emotional logic (emphasizing rationality, controlling emotions), work logic (work first, life later), and management logic (rules first, emotions later).

There are three types of professional behavior: norms, responsibility, and cooperation. The highest realm of norms is self-awareness, the highest realm of responsibility is prevention, and the highest realm of cooperation is familiarity with each other's work and proactively providing support. The highest realm is the direction of behavioral adjustment.

Second Transformation: From Key Employee to Manager

To transition from a key employee to a manager, one must recognize the changes in one's role and capability requirements.

First, one must play the roles of team leader, human resources manager, firefighter, caretaker, career mentor, pastor, and coach. The focus of the second transformation is on the team leader, human resources manager, and firefighter.

Second, one must enhance management communication skills, ensuring effective communication with superiors, subordinates, peers, and across departments. Communication with superiors should be proactive; communication with subordinates should involve follow-ups; peer communication should pursue win-win outcomes. Cross-departmental communication should start from the needs of the other party and reshape process awareness.

Third, one must master three critical abilities: team management, performance management, and problem-solving. Understanding human nature and clarifying matters is the starting point for cultivating these three key abilities. Team management focuses on managing people, performance management emphasizes managing tasks, and problem-solving refers to responding to emergencies.

Notes on the Second Transformation

The second transformation is the most challenging, primarily due to establishing the concept of management, changing one's stance, and shifting one's mindset. Transitioning from a key employee to a manager requires particular emphasis on the change in our stance and mindset—from being managed to becoming a manager; from representing only oneself to representing both labor and management, serving as a bridge. Grasping the key points, discerning the rules, sorting out execution paths, and forming systematic methods are the main tasks of the manager's identity.

Perhaps after transitioning from a key employee to a manager, there will be a considerable period during which the position will not be promoted, or even cannot be promoted, encountering a career ceiling. At this point, we must realize that career development is not solely about job promotion; it also involves value creation; there are both vertical paths (job changes) and horizontal paths (elevation of perspective).

Third Transformation: From Manager to Leader

Managers often operate based on bottom lines (systems, standards), while leaders often rely on upper lines (visions, goals) to guide. The identities of managers and leaders are two important roles for executives (cadres). The identity of a manager has relatively low demands on themselves and their teams, while the identity of a leader has high demands on both themselves and their teams. This is the difference in the realm of the dual identity of managers and leaders. The third transformation is more about the elevation of the realm for managers (cadres).

Transitioning from a manager to a leader first involves a change in roles (pathfinder, integrator, enabler, role model), and second involves a change in capabilities (motivation, innovation, transformation). Understanding the motivations behind people's actions and applying appropriate motivational methods to mobilize subordinates' enthusiasm is an important manifestation of leadership art. Innovation and transformation are the main tasks of the leader's identity. Innovation is often achieved through transformation. Throughout the transformation process, "innovation" runs through the entire process.

Notes on the Third Transformation

The third transformation is the most difficult to understand and can easily be mistaken for job promotion. Here, we must emphasize that the four transformations differ from Ram Charan's "Leadership Pipeline," as the concept of the leadership pipeline only refers to vertical promotion, while the four transformations argue that to avoid hitting a career ceiling, one must continuously elevate their realm.

The basic task of a manager is order and balance, while the basic task of a leader is innovation and transformation. Management ability is the foundation of leadership ability. Managers often exert influence through processes, while leaders primarily drive others through the power of their roles. Leaders are adept at aligning with subordinates on goals and sharing visions. Leaders initiate transformations to guide the team toward higher goals.

Fourth Transformation: From Leader to Coach

If the leap from key employee to manager enables executives (cadres) to lead teams to achieve goals, and the leap from manager to leader enables executives (cadres) to lead teams to create better performance, then the leap from leader to coach enables executives (cadres) to actively cultivate talent for the enterprise while achieving better performance: transforming more ordinary employees into key employees, nurturing key employees into managers, and promoting managers to become leaders.

Jack Welch, former CEO of General Electric, once said that the greatest leaders, the best, are coaches! Transitioning from leader to coach requires executives (cadres) to change in three aspects: the role of a coach (mirror, compass, catalyst, guide), coaching skills (listening, questioning, distinguishing, responding), and coaching processes (goal setting, current state checking, solution selection, encouraging action). Executives (cadres) must strive to make coaching skills instinctive and skillfully apply these four skills in the coaching process.

Notes on the Fourth Transformation

Once the third transformation is completed, the fourth transformation will come naturally and will be the easiest transformation. The main goal of a coach is to enhance subordinates' awareness, cultivate their sense of responsibility, and boost their confidence.

To become a coach, one must deeply understand the coaching mindset: starting with the end in mind. Coaches can help subordinates identify blind spots in their thinking, restore the truth of facts, and persuade others to accept it. On this basis, using coaching skills and following the coaching process, the goal of coaching the other party can be achieved.

A coach is never the one providing answers; the core value of a coach lies in helping subordinates catalyze energy through addition and eliminate distractions through subtraction.

Transforming key employees into managers and promoting managers to become leaders.

DAO's talent management must further reconcile these challenges.

Decentralized Autonomous Organizations (DAOs) are a new type of human collaborative structure that stimulates the uniqueness of talent as a competitive resource. The pseudonymous nature of contributors maximizes the difficulty of talent assessment, while lower entry and exit barriers maximize the likelihood of talent mobility, making decentralized governance more challenging to influence talent. If these unique resource characteristics can be effectively utilized, DAOs may ultimately benefit from them. Nevertheless, this also places additional pressure on teams and individuals, as they need to establish trust, low-friction collaborative networks, and improve information sharing to form healthy and productive working relationships.

Many organizations are seeking innovation, but few know how to innovate. The author of this article found that four types of innovative talent relate to the overall innovative capability of the organization, including: discoverers, definers, optimizers, and practitioners. While each innovative style is critical, it is most important for leaders to recognize, protect, encourage, and reward employees who act as discoverers.

They enjoy what they do, excel at problem-solving (as well as what they dislike or do poorly). These answers reveal individual preferences for the four unique innovative styles, each reflecting a unique stage in the innovation process. Each style plays a role in your organization, including discovering new problems (discoverers), comprehensively defining problems (definers), evaluating ideas and selecting solutions (optimizers), and practicing selected solutions (practitioners).

All four styles are essential for innovation. Understanding which employees belong to which type can enable organizations to manage their innovation efforts more effectively. However, based on our experience, most organizations lack certain innovative styles—especially discoverers—and we will provide some specific practices to help organizations overcome this deficiency.

Design a Compensation Incentive System#

From the company's perspective, analyzing how the early token compensation design system operates.

First, clarify the purpose of issuing tokens.

Tokens are not equity unless the company decides to issue security tokens. Tokens must provide real benefits to products and communities; otherwise, it is unfair to employees and stakeholders. Additionally, issuing tokens solely for compensation purposes can bring significant reputational, financial, and potential legal risks.

If the company indeed needs to issue tokens, it should initially provide equity to employees and offer options to reclaim tokens that have not yet been launched in the future. Considering the uncertainty and complexity behind tokens and their markets, some companies have succeeded even without issuing tokens, and to adjust for risk and incentivize employees, they may issue both equity and tokens. The feasibility of this situation largely depends on the company's business model and token economics, as well as how equity and tokens are valued.

After perfecting the compensation structure and token mechanism, the company can have a clearer understanding of the token distribution mechanism for employees, similar to the employee equity reward plans of early Web2 startups.

There are various possibilities for compensation design systems, but they should include the following points:

Total compensation benchmarks and industry trends.

Token systems typically reach liquidity event nodes earlier than traditional equity mechanisms like IPOs and acquisitions, and they have smaller team sizes. The average size of companies reaching liquidity events (e.g., TGE) is between 20 and 40 people (based on public data sources like Crunchbase, LinkedIn, etc.). Interestingly, the average time for token releases is usually less than 1-3 years. Traditional IPOs typically occur 11 years after a company is founded, and these companies usually have hundreds or even thousands of employees.

Budget for achieving key business milestones.

Like an options pool, token rewards also have a budget pool, reserving only the number of tokens planned for use (tokens usually have a fixed supply and can be allocated for other strategic purposes).

According to Carta and Holloway, the traditional equity employee options pool for seed companies is 10-15%, while for D-series companies, it is 15-20%. Founders typically retain 15-25% of the company's equity before an IPO.

As the number of employees increases, the options pool also expands. At the same time, as the company's valuation increases, the number of options added in each round and the amount of equity given up will decrease.

For Web3 projects, research by Lauren Stephanian and Cooper Turley (also known as Coopah) indicates that the typical allocation ratio for a team of 20-40 people (i.e., founders and employees) is 17.5%.

Setting up a team and budget for achieving key business milestones.

Based on the average values mentioned above, you may need to set a token budget of about 15-20% for approximately 30 employees and founders. However, not all teams and companies are the same, so these values are for reference only. Teams can adjust according to their goals, business model/strategy, and token economics.

Starting from project needs, estimate the team size required to achieve liquidity events and plan the overall roadmap.

While the total token supply is fixed, the allocation ratios (percentages for employees, investors, and the community) can be adjusted before the token release. It is advisable to conservatively predict the employee token allocation ratio; if the project team believes that the time required to reach TGE is longer than expected and more people are needed than anticipated, it is possible to issue additional tokens when necessary to maintain key employee and investor partnerships.

Develop a recruitment plan for the token compensation system.

To improve the token compensation system, the company needs to develop a complete recruitment plan to predict the amount of equity and tokens to be allocated to each employee.

Here is an example of token ratios. The data is purely fictional; please do not use it for your own business. You can work with legal advisors or portfolio support departments of venture capital firms to derive reasonable numbers based on your overall token/equity compensation strategy and goals.

Since the total token supply is usually fixed, it is essential to avoid under-allocating tokens to employees. Therefore, it is best to set a buffer zone and develop a relatively conservative plan. Assume you will need more employees and more tokens to replace competitive candidates. LiquiFi can help with token cap table forecasting and employee token allocation predictions. Additionally, you need to regularly review your recruitment plan and token budget based on business progress.

Given the volatility of the market and valuations, you may also consider having extra reserves so that if the token value drops significantly and there is a need to retain quantitative tokens, you can "adjust" the employee structure. (This operation is highly risky; please consult your advisors in advance. To mitigate demand/risk, you should intentionally hire employees who understand the inherent market cycles and regularly remind your team to be aware of market cycles.)

Another (less common) way to protect/build a token allocation system is to establish performance-based token bonuses. However, if this completely replaces guaranteed, regularly vested tokens, it may reduce the willingness of employees to work.

As DAOs emerge in large numbers, we can foresee that performance-based token compensation will be more closely associated with on-chain reputation or credibility, verifying the completion of employees' work (for example, in a specific program's sales, you earned N tokens for generating the first X $, which can be verified by checking the smart contract that pays the rewards).

The depletion of the employee token pool.

A well-planned token distribution plan can likely avoid running out of tokens allocated to employees before reaching the next milestone (e.g., TGE). However, if there is a need to hire more employees than planned or if the employee pool runs low on tokens, there are ways to address this.

It is highly unlikely that all initial grants of tokens to employees will be fully returned. However, the company can retain the tokens that employees have not returned as a recruitment reserve. If necessary, you may need to dilute another source of token allocation as a last resort, such as tokens reserved for founders, the community, the treasury, ecosystem incentives, or investors. If there is a trading token, it will be easier to repurchase tokens from the open market or employees.

Long-term ownership of token vesting.

Token rewards almost always come with a vesting schedule. While we have seen vesting periods as short as 6-12 months with no cliff, the standard vesting period is typically four years, with an additional one-year cliff. Vesting schedules with shorter cliffs and longer vesting periods tend to better incentivize long-term employee support and gain community trust, promoting sustainable growth and profitability through short-term speculation.

While shorter vesting periods can become a competitive advantage for attracting employees, we do not recommend pulling this lever lightly, as it can send negative "risk" signals that deter community members and investors from participating in your project and may lead to employee turnover.

We recommend maintaining transparency regarding token ownership with the community. It is not advisable for founders or core team members to set very short vesting periods for themselves to enable immediate sale of their tokens.

Variable factors in the vesting schedule.

Vesting schedules typically relate to the duration of employment for employees or consultants, and in rare cases, to certain performance metrics or milestones achieved. Unlike employees, investors do not have vesting schedules, as they directly own all tokens and do not need to meet any further conditions after the initial investment. However, investors typically do have lock-up periods (more details below).

Most vesting schedules unfold over four years, although some teams are experimenting with other timeframes (e.g., three or five years).

Here are different types of vesting schedules:

Linear (most common): Employees receive 25% each year over four years.

☝ Back-weighted: Employees receive a larger proportion of their vesting each year. From a recruitment perspective, this is less competitive (as it gives employees less initial ownership), but it also increases long-term retention.

☝ Forward-weighted (least common): Providing larger annual grants upfront may entice employees to join but reduces the financial incentive for long-term retention.

Google: 1st to 4th year: 33%, 33%, 22%, 12%.

Regarding the frequency of vesting after the cliff, the most common is monthly, followed by daily and quarterly. Real-time streaming of token payments is also feasible and unique to cryptocurrencies.

Token Lock-up Period#

Lock-up (which means restrictions on the rights or ability to sell or transfer tokens) may be implemented by the company before TGE. They typically start from the token generation event and are set for one year.

For example, suppose an employee has a four-year vesting schedule with a one-year cliff starting on January 1, 2022. We also assume your tokens are released on January 1, 2023. Under a common one-year lock-up, these tokens cannot be sold until January 1, 2024. If the employee leaves the company at some point in 2023, they still own the vested tokens but must wait until the lock-up period ends to sell them.

Lock-up periods apply to investors and core team members and are used to manage token supply and market dynamics. Lock-up periods ensure that token holders have consistent unlock dates, as you do not want any stakeholders to sell immediately upon release or before others.

To avoid simultaneous large sell-offs, you may want to strategically stagger the lock-up schedules for teams, seed investors, seed investors, advisors, etc. For instance, seed investors might have a six-month lock-up after TGE, while teams and advisors might have a 12-month lock-up, and later investors might have an 18-month lock-up after TGE, and so on.

Be cautious; if a large number of tokens unlock simultaneously and many decide to sell, it can impact the market. Again, we encourage you to consult your legal advisors and/or venture capital portfolio support team when designing token plans.

Tax and Compliance Considerations#

The regulations surrounding token-based rewards are not as solid as those for traditional equity-based rewards. Using equity-based rewards as a reference, companies should consider whether and when tax laws apply to token compensation.

The authors of this article, Robin and Zack, are not lawyers, and this is not legal advice. You need to consult your legal advisors, but here are some potential discussion points:

Structure of token rewards: Should rewards be granted in the form of restricted tokens, token options, or restricted token units (RTUs)? What is the best way to convert equity into tokens?

Tax strategies and optimization: What is the correct approach to submitting an 83(b) election, if applicable, and when?

Calculating the tax burden of token rewards: How should we consider the cost basis? What is the correct way to calculate the amount of tax owed? What events trigger taxable events?

When does token compensation qualify as taxable income? Upon grant? Upon vesting?

What happens if tokens vest before the token generation event?

How to value tokens if there is no reliable market price or sufficient trading liquidity?

What are the tax considerations for full-time employees and independent contractors in the U.S.? Who bears what responsibilities?

What are the tax considerations and responsibilities for non-U.S. employees and contractors?

Should we implement a lock-up period for selling tokens and/or establish trading policies based on non-public information (similar to traditional equity rules)?

Conclusion#

It is crucial to use existing data, benchmarks, and best practices to build the company's recruitment plan, especially before the token launch.

The next article in this series will provide a broader, higher-level overview of tokens, focusing on those that have already "gone live" (i.e., launched, minted, or traded). We will also explore strategies for calculating the correct number of tokens to grant team members.

DAOs are open and always welcome newcomers.

For those looking to enter the crypto world, working for a DAO is an excellent entry opportunity. Joining a DAO often requires almost no barriers.

There are two ways to join:

The first is a zero-based entry model. Start as a visitor, invest time to complete tasks, and gradually gain a voice within the DAO.

The most renowned media DAOs like BanklessDAO, the most influential DAO in the Chinese world, SeeDao, or the governance DAO of Uniswap, will publicly share their Discord community joining methods on their official websites. By clicking the Discord icon on their official site, you can join a DAO.

DAO teams commonly use Discord for communication, Notion for document organization and basic collaboration, and some DAOs may require you to link your wallet to record labor and distribute rewards.

In this model, you typically need to start with some basic tasks, such as gathering project information and organizing daily reports. Once you accumulate enough work proof/tokens, you can enter the next phase, the governance phase.

The other entry method is to hold tokens and directly become a governor.

Participants in a DAO have different permissions. For a DAO, having enough governance tokens means having sufficient work or financial investment in the project, which will earn the trust of the DAO and grant more influence over it.

With enough tokens, you can unlock more areas of the DAO, invite friends to initiate your projects, and participate in development decisions related to the DAO.

Some DAOs can only be entered by holding tokens, such as FWB, which is considered the most creative social DAO. By gathering the most active individuals in the Web3 world, these projects can provide you with social capital in the Web3 world.

DAOs have various guilds, with common guilds including coding, research, product, operations, finance, etc., corresponding to different roles within the DAO. DAOs will allocate funds to different guilds quarterly to support guild members in initiating projects and paying members' salaries.

In addition to these common Web2 roles, there are also high-demand roles such as:

Project Manager: Hosts project meetings and is responsible for cohesion among project members.

Scribe: Records and summarizes events, meetings, and discussions within the DAO.

Artist: Creates NFTs and POAPs (as project compensation).

So, what if you have no experience in these roles?

In fact, to become a worker in a DAO, you do not need extensive work experience.

More mature DAOs will set entry tasks to ensure that even as a novice, you can observe meetings and gradually familiarize yourself with the DAO, thus contributing to project work. If you are interested in unfamiliar work areas (such as coding), joining a suitable DAO and working for it is also a great learning opportunity. After a period of work, the DAO will classify contributors based on their levels and willingness, providing different compensation structures.

The reason is that DAOs prioritize contributions over rewards. DAOs believe that initial investments can demonstrate participants' recognition of the DAO, skills, and commitment.

These initial tasks may include:

Understanding sufficient project workflows and writing reports.

Participating in guild meetings, project meetings, and taking meeting minutes.

Doing miscellaneous tasks to prove abilities in relevant roles within the DAO.

In this process, you will earn enough points or POAPs (on-chain work proof) to help you build your on-chain resume and gain recognition within the DAO.

Once your work capabilities are recognized, you can deeply participate in projects within the DAO, such as designing DAO-related products, completing product UI/UX design, writing project code, and managing project communities...

At this stage, you can receive compensation based on your working hours or deliverables. NFTs, project native tokens, and USDT are commonly used payment methods in DAOs. Many mature DAOs offer USDT payments to meet contributors' short-term financial needs while reducing price pressure from project token sell-offs. In some DAOs, locking salaries issued in native tokens can also yield bonuses.

For example, in SeeDAO, one of the daily tasks of the product guild is to write research reports, earning 100 points for each report!

If you write exceptionally well and your report is selected for publication on the official account, you can earn 1,000 points; if you have become a recognized mature PM within the DAO, you can participate in project design, earning between 500-2,000 points; after reaching 5,000 points, you can gain a whitelist for NFT airdrops.

Workers in DAOs are a mixed bag; who ensures that the work delivered by workers has sufficient value?

Currently, to ensure fair compensation distribution and reduce management costs, some DAOs allow senior participants with sufficient project tokens to take on evaluation tasks and distribute points and compensation based on work ratings.

Decentralized tools like Coordinape and SourceCred are also used to track participants' interactions in projects. They can count the number of contributions made by contributors, the number of likes received, etc. Other participants in the project can also use these tools to allocate project contribution tokens to you, allowing those who receive more tokens to earn higher rewards.

In addition to participating in ongoing projects, you may also discover bounty tasks within the DAO or even be hired full-time by the DAO.

On the bounty task board of Bankless, there are many such tasks. In this task, writers can report to PageDAO and publish one of their historical articles, with a bounty of 250 $BANK, and one $BANK is approximately $2.25, which translates to about 3,500 RMB.

A DAO, or Decentralized Autonomous Organization, is a form of organizational structure that has emerged based on technologies like blockchain.

Wikipedia defines a DAO as "an organization represented by rules encoded as a transparent computer program, controlled and decision-making by its members, without the influence of a single central authority."

Binance Research defines a DAO as an organizational form that mobilizes the actions and resources of its members through binding and formally transparent principles agreed upon by multiple parties.

Some also view a DAO as a commitment to share value among communities, as DAOs often start from a chat group and gradually transform into a self-driven community.

The Wikipedia definition emphasizes code more, while the latter definitions lean more towards rules and models. Through the common points in the definitions, we temporarily define a DAO as a decentralized autonomous organization based on blockchain.

In the 1990s, DAOs were primarily used to describe multi-agent systems in the IoT environment at the time, seen as a primitive product of the information age, during which a new generation of digital nomads emerged, growing up with the internet.

In 2016, what was then a startup, slock.it, launched a project called "The DAO," aimed at supporting their decentralized version of Airbnb while innovatively proposing a governance model for DAOs, which helped the company raise approximately $150 million worth of Ethereum, accounting for 14% of the total Ethereum supply at the time, a significant amount.

Because of this, many people regarded "The DAO" as synonymous with DAOs, and later, there were frequent reports of "The DAO" being hacked and losing funds, leading to greater misunderstandings, with many adopting a critical attitude towards DAOs. Nevertheless, the governance model of DAOs has been preserved.

One of the significant benefits of joining Web3 startups is that, in many cases, your salary will include a considerable proportion of tokens, sometimes also including a portion of traditional equity incentives. It is essential to understand that tokens are not essentially a substitute for traditional equity, but there are some similarities between the two. Like equity, tokens can appreciate significantly, but tokens are often easier to "liquidate," as they generally receive liquidity support earlier than traditional equity. Token rights may also allow employees to participate directly in and contribute to the protocols they are building, which is an implicit incentive for employee engagement.

Like equity incentive grants, token incentive grants also come at a cost—they aim to align the incentives of recipients with network growth, and their value is uncertain. You must work hard to make them more valuable. Most companies allocate tokens to employees from a reserved token pool based on the relative amount of equity each person holds, so token grants are typically directly tied to equity grants.

Of course, companies should handle token issuance mechanisms more appropriately to minimize tax impacts. In other words, employees should not report income for tokens or token rights that have not yet circulated, as this would require them to pay taxes out of pocket.

A very important point: the "timing" of token incentive issuance.

Regarding token incentives, one crucial aspect is to clarify whether the issuance of tokens occurs before or after the public offering of tokens.

Issuance of tokens before the public offering is essentially similar to the issuance of stock options in a startup; the unissued tokens have low value at the time of minting, and their value mainly depends on uncertain future expectations. Like stock options, receiving token grants before the public offering does not incur tax burdens; of course, taxes may arise in the future when exercising, just like when exercising NSOs (non-qualified stock options).

In contrast, token incentives that have already been publicly issued are entirely different; in this case, the attributes of tokens are similar to RSUs (restricted stock units), as these tokens exist in a liquid market (although they may be subject to lock-up restrictions), and recipients will be taxed immediately upon receipt. If you receive tokens that are still under a lock-up period, you should consider submitting an 83(b) Election to minimize the tax impact on the unrealized income portion; otherwise, you will be taxed based on the fair market value of the tokens at the time of receipt.

Release cycles and unlock rules.

Most token incentives gradually release from the time you join, similar to the staggered unlocking design in traditional equity incentives. This means that if you leave the team early, it is equivalent to forfeiting a portion of the agreed-upon token incentives.

The token incentives for the team often set a lock-up period to prevent you from selling a large number of tokens in a short time. For example, you may receive corresponding rewards after the token issuance, but this portion of tokens will be locked and cannot be sold for one year after the network launch. Of course, generally speaking, the lock-up period will also have corresponding exemption clauses and will not affect your ability to stake this portion of tokens for additional earnings or participate in governance voting during the lock-up period.

Although related, release and lock-up are not the same, as gradual release means that unissued tokens do not belong to you, while lock-up only temporarily restricts the buying and selling of tokens that already belong to you, primarily to alleviate market sell pressure.

Taxes.

Finally, like all components of compensation, you can consult lawyers or tax advisors to understand the design of various mechanisms in token incentives, especially when the company's promised token incentive plan involves some uncommon mechanisms, such as "lock-up periods contingent on the company achieving certain milestones" or "equity conversion to token rights," etc. You should seek professional assistance.

Introducing Minimum Viable Compensation
Minimum viable compensation stems from the idea of providing contributors with ongoing basic compensation so they do not have to worry about paying bills. Ideally, these ongoing rewards should be combined with other mechanisms, so that the final combination can provide enough security to invest in high-risk ideas while maintaining our mental health and balancing flexibility with commitment.

In practice, minimum viable compensation can be implemented through conditional flow payments.

Flow payments are continuous transactions of tokens rather than monthly bulk transfers; we can pay contributors at a frequency of once per second.

This brings some additional advantages:

● Fairness: Everyone is paid by the second without having to use their cash reserves.

● Low management: A single arrangement can run indefinitely until it needs to be stopped, without needing to arrange monthly/weekly payments.

● Simple accounting: Flow payments make visualizing cash flow relatively easy, as we can see how much funds have increased/decreased and where they have flowed.

For scalability, we can set conditions for minimum viable compensation. For example, if data from variable compensation tools (such as Coordinape, Praise, SourceCred, Bounties, etc.) shows that a contributor has fallen below a certain threshold in the past three months, the flow will stop. Conversely, once new contributors exceed a certain threshold, the flow can automatically start.

Web3 is not trivial; flow payments have broad applications.

Essentially, the decentralized nature of DAO organizations and the dispersion of power align with the blockchain spirit of community voting governance. However, many people have misunderstandings regarding the use of DAO funds and personnel hiring, with the core issue being the payment of salaries.

For example, in early August, a governance proposal regarding the new CEO's salary from the well-known decentralized exchange Sushiswap attracted market attention. According to estimates from some community skeptics, the new CEO's salary could account for one-third of employee income distribution, leading many to vote against the proposal, indicating that income issues also exist among members in Web3. In response to this situation, adopting Zebec's flow payment protocol can transparently address employee salary issues within Web3 organizations while maximizing project benefits and reducing management costs.

Zebec flow payments maximize your funds.

Zebec's flow payment is a time-based payment method, allowing funds to flow continuously like a stream. In simple terms, it programmatically controls the continuous payment of funds to achieve reasonable salary distribution for Web3 DAO organizations.

Zebec enables employees of Web3 projects to receive corresponding salaries in real-time, which is safer and more efficient than monthly settlements in traditional companies. The primary reason flow payments are not used in modern financial systems is that the payment settlement system's pressure does not allow it; however, Zebec makes it easy to implement flow payments through smart contracts. Using flow payments for salary distribution allows organizational members to use their earned income promptly, maximizing the utilization of their cash flow.

The community chooses developers to create functions for the DAO through voting and uses the DAO to control the treasury to a third-party Zebec flow payment multi-signature protocol, meaning that developers' salaries are publicly transparent within the community, which encourages developers to work hard for the DAO project.

For example, implementing payment based on established goals by monitoring the amount of code submitted by developers and important delivery points after new features are completed can set the flow payment speed, thus motivating developers to complete tasks more quickly and efficiently without needing managers to assess performance like in Web2. In fact, flow payments have already achieved the purpose of assessment and performance to some extent.

Flow payments serve to supervise employee enthusiasm, preventing negative phenomena like "communal dining" from arising; on the other hand, flow payments also ensure that DAO organizations can pay salaries normally, preventing issues like wage arrears, as the entire flow payment strategy is verifiable on-chain.

The security of flow payment salaries.

Anyone familiar with blockchain DAOs and Web3 should understand the importance of project treasury to project parties and DAO organizations. If DAO funds are stolen, unless there are subsequent donations or financing from investors, it may be challenging for the DAO to sustain itself, as investors face losses in the price of DAO governance tokens, and the DAO cannot hire employees to maintain normal operations, especially in the current bear market.

At this point, a mechanism that ensures the organization can operate normally is essential; thus, the salary management mechanism of DAOs is crucial for their development and survival. Zebec's use of Multisig Safe ensures the normal operation of DAOs.

Multisig Safe stores employee salaries in a multi-signature co-managed address, typically managed by multiple leaders elected by community votes. For example, we can set a 3/5 wallet, meaning that five people jointly manage the salary treasury address, and only three need to agree to set the corresponding salary payment procedures.

On one hand, multi-signature ensures the security of funds, preventing hacker theft; in other words, managing and distributing salaries through Zebec's multi-signature method ensures that even if the DAO encounters unexpected situations, the salary treasury remains secure, thus ensuring that the DAO has a certain amount of operational funds, which maintains cohesion for the DAO.

For centralized companies, the boss or legal contracts serve as the bond for cohesion, while for DAOs, only the payment agreements stored in smart contracts motivate DAO employees to persist, and these payment agreements are determined by DAO governance votes.

Other application scenarios of Zebec flow payments.

In addition to the salary distribution solutions for Web3 and DAO organizations, Zebec is also applied in various payment scenarios, such as the following cases:

Locking airdrops: Setting unlocking rules for airdrop users through Zebec flow payments ensures that airdrops attract enough real users and market enthusiasm while preventing airdrop users from excessively dumping tokens, which would complicate project market value management.

Traditional enterprise business settlements: Zebec is not only applicable to salary distribution for decentralized projects and organizations like Web3 and DAOs but also suitable for Web2 and even traditional brick-and-mortar enterprises.

For traditional enterprises, cash flow is a critical factor for survival. We may have seen cases where a company with assets worth hundreds of billions went bankrupt because it had only a few tens of millions in its bank account, which is clearly unreasonable. Zebec resolves cash flow issues for enterprises, thus avoiding financial crises.

Maintaining personal business transaction rights: Zebec flow payments are also applied to maintain after-sales rights for personal goods. For example, in the case of unfinished buildings, blockchain smart contracts and Zebec flow payments can pause payments to developers until they complete construction, ensuring consumers' legal rights.

Zebec officially provides developers with corresponding development tools, Zebecprotocol-sdk, which is a JS-based toolkit that developers can use for secondary development to create various suitable payment scenario applications, thus meeting various complex payment conditions.

From this perspective, in fact, most on-chain or off-chain asset transfer behaviors are transactions; as long as it is a transaction, there is always a sequence issue, such as the commonly heard "money for goods" principle. By using flow payments to divide the payment assets into several parts, if the other party defaults or damages one's interests, flow payments can be paused to reduce losses, which is why it is not surprising that Zebec has received nearly $30 million in funding from top institutions.

Top institutions favor Zebec, and its value remains underestimated.

According to media reports, in February of this year, Zebec announced it had raised $15 million, with the investment led by Solana Ventures and Distributed Global, with participation from Lightspeed Venture Partners, Circle, Coinbase, Alameda Research, OKX Blockdream Ventures, DST Global Partners, Road Ventures, Global Founders Capital, BECO Capital, and others. Additionally, with subsequent token sales and institutional additions, Zebec has raised a total of $28 million, which is relatively high in the current crypto industry financing cases.

On-chain data shows that Zebec's protocol token ZBC currently has a circulating market value of around $17 million, which is significantly undervalued compared to the valuations given by top institutions, indicating substantial appreciation potential.

Summary—Flow payments will become a trend in the future.

Flow payments are not just about simple salary payments; they will also fundamentally change the existing economic operating model. The traditional financial industry has not implemented flow payments, partly due to system load and technical reasons, and partly due to the unfair phenomena caused by capital power. Blockchain and Web3 inherently bring an open financial environment, eliminating inequalities among various financial tools through code. In this regard, Zebec's flow payments will develop alongside Web3, changing a series of economic realities, and the impact of this will be profound.

The core reason why the best talents are entering the cryptocurrency industry.

Clearly, cryptocurrencies provide enormous wealth opportunities for those preparing to enter the industry. By the end of 2021, the total market value of cryptocurrencies reached $3.3 trillion (less than a year earlier, it was only $800 billion). The astonishing growth of crypto projects and massive-scale financing has attracted attention. Take the Phantom wallet as an example; it raised $9 million in Series A funding and then raised $109 million at a $1.2 billion valuation just six months later, which is almost unheard of outside the crypto space; looking at Alchemy, its valuation grew nearly threefold in about three months, reaching $10.2 billion.

The potential for appreciation is not limited to salaries and equity; tokens also hold significant potential. For many looking to enter the industry, tokens are a relatively new and unfamiliar concept. Projects like Uniswap, Axie Infinity, and Aave have each reached market capitalizations of $7 billion, while there are numerous opportunities among projects that have not yet issued tokens, offering the potential for life-changing wealth.

Compared to traditional equity, token-based compensation differs significantly, including:

• Instant liquidity, faster listings (no need to wait for the company to exit through acquisition or IPO)

• No exercise costs or exercise windows

• Compensation adjusts automatically in real-time based on the market (the value of equity in startups is linked to the valuation at the last funding round)

• Returns are more directly tied to the company's technological products and/or community value, rather than being constrained by the company's financial/capital structure.

• In some jurisdictions, individuals performing the same duties may face pay inequities due to capital gains, wage taxes, or local regulations, while token-based compensation can compensate for this in different ways, thus retaining talent globally.

• Borrowing markets allow for acquiring inherent liquidity without triggering taxable events.

• Staking, lending, and earning additional tokens as incentives.

• No dilution (for tokens with a fixed supply); or at least transparent dilution—potential adjustments to the total token supply can be made transparently through coordination among stakeholders.

Given the average dilution levels of equity in startups, the last point is particularly important:

From the company's perspective, how does the early token compensation system operate? Sounds good, right? So how do you establish this system?

First, do not issue tokens just for the sake of tokens. Tokens are not equity unless you decide to issue security tokens. Tokens must provide real benefits to products and communities; otherwise, it is unfair to employees and stakeholders. Moreover, deploying tokens solely for compensation purposes can lead to significant reputational, financial, and potentially legal risks.

If you do have this need, many projects initially offer employees equity and an additional option to accept unissued tokens as compensation. Given the uncertainty and complexity surrounding tokens and their markets, some companies have decided to provide employees with both equity and tokens, aiming to create a risk-adjusted compensation mix,