written by
Major Tom

Chainlink Hackathon - Token and Options Compensation Contracts

3 min read


The problem of compensation that can be trusted and based on cryptographic truth hurts companies, shareholders, and employees. While the focus of the MVP will be on employees (workers) in crypto organizations (including DAOs) that pay out in tokens with limited liquidity on fiat exchanges, we believe the problem space can extend to all forms of compensation by linking to a range of cryptographically verifiable data.

Achieving this would put our solution into a standard HR arsenal across all companies, big and small, by aligning incentives and verification to outcomes that matter.


Token-based Compensation

As crypto grows, tokens may become a growing percentage of compensation for web3 workers.

However, without being able to trust the tokenomics, this becomes difficult for employees or DAO members to gauge their compensation.

While this might be fine currently for the wild west degens, if we desire web3 to become as accepted as part of a benefits package, we need to increase transparency and trust.

Stock Options Based Compensation

Stock options are often opaque to employees. This includes not only the amounts and value, but also the vesting.

Consider what happened to Skype after their acquisition by Microsoft. After the acquisition, employees were terminated, and their vested stock options were cancelled.

Related is also accurate benchmarking. Some solutions available include this web site from Index Ventures and Morgan Stanley. However, in the case of Morgan Stanley, it’s limited to company founders in exchange for data.

In both cases, there are benchmarks that are proposed, but there’s no enforcement mechanism. If the employee has limited insight into those benchmarks, what results in enforcement?


A cryptographic truth system for compensation removes many of this uncertainty, risk, and fraud. The infrastructure for this is Chainlink.

By scoping the problem to tokens, we are able to acquire on-chain data.


To simplify our solution and problem space, we will need to identify the primary actors.

Organization (Traditional or Decentralized)

For example, NewCo. compensates its developers and product managers with a combination of fiat salary and tokens. The tokens exist on-chain, but haven’t been placed on an exchange yet to achieve liquidity for fiat.

Compensation Contract Creators

This person must actually enter the contract that will be issued to the employee or worker. It must be understandable from a UX perspective. Inevitably, both employer and employee will have questions so the design must remove as much confusion as possible.


This persona bears the greatest risk traditionally because of asymmetric information and enforceability. Questions that emerge for employees include:

  1. Am I being low-balled?
  2. How do I know what these tokens (options) are going to be really worth?
  3. How do I know whether these have been distributed fairly?
  4. How do I know I won’t have some adverse action (see Yammer)
  5. How can I trust I will still be issued valuable tokens across different scenarios?

Solution: Jobs To Be Done

JTB #1 by Prospective Employee

I want to understand how my variable compensation is linked to cryptographically verifiable data in terms of token value and issuance.

  • What is a reasonable fiat value if it were exchanged now of what I’ve accumulated
  • What will the value be in the future, including contractual expectations of new issuance/burn and so forth
  • What are reasonable scenarios for me to consider that impact the value?
  • How does this relate to my job band and space?

JTB #2 by Contract Creator

I want to create a basic employment contract that isn’t just “trust us” but that will execute in a way that reduces risk to both the employee and the organization.

  1. How do I understand how to best create a compensation contract?
  2. How do I communicate the risks and variability?
  3. How do we align with teams to ensure that the outcomes have been designed and measured correctly?
  4. How do I ensure I have accurate benchmark data?

Solution: Product Design Principles

Principle #1: Flywheel for Acquiring Customers and Data

The basic playbook already used is that, as more data and better benchmarks are acquired, the more likely customers will provide their own compensation data. A common approach includes offering the product for free to early users.

As a crypto-native solution, how can we accelerate acquisition to incentivize data. We could issue a token which has value in the future by being used once we begin charging subscriptions. Those subscriptions will likely be paid once we cross into more mainstream companies seeking compensation contracts.

Principle #2: Preservation of Privacy

Employees want to be certain that their private information, including their actual compensation, is never disclosed.

Principle #3: Trust in Data and Contract Execution

How we design and message the product must reinforce “trust” in the data and contract execution and security.

Solution: MVP