To maintain a dynamic, fair reward system, DAOs can implement point decay within Contribution Weighting. Point decay gradually reduces the value of older contributions, preventing early contributions from overshadowing recent efforts and keeping contributors motivated to stay active.
Why Use Point Decay?
One of the challenges of Contribution Weighting is ensuring rewards stay fair and relevant over time. Without point decay, early contributions can lock in an outsized share of rewards, disincentivizing newer contributions. Point decay:
- Promotes Continued Engagement: Contributors are motivated to keep contributing, knowing that their allocation is best maintained through ongoing involvement.
- Balances Early and Recent Contributions: Older points gradually reduce in value, ensuring that recent, active work has a meaningful impact on the reward distribution.
- Reflects Evolving DAO Priorities: As the ecosystem grows, the types of contributions that matter most can shift. Point decay keeps the reward system aligned with current priorities.
Implementing Point Decay in Your DAO
To set up point decay, DAOs need to establish a rate at which points lose value over time. Here’s an example approach:
- Determine Decay Rate: Decide on a decay rate (e.g., 5% per month) that gradually reduces the value of points. Contributions from earlier months will hold less weight than recent contributions.
- Regular Decay Calculation: Integrate decay into your contribution tracking. A daily or weekly decay process can automatically adjust contributor points, ensuring the point totals stay current without manual effort.
- Transparency and Feedback: Clearly communicate the decay process to all members. This includes explaining how decay works, why it’s implemented, and how it affects their reward distribution over time. Allow space for feedback to adjust the decay rate if it proves too fast or too slow for your ecosystem.
- Tools for Tracking and Updating: Automate point decay by using tools like Flow State’s allocation software or a simple script to update point totals. This can be managed in a shared Google Sheet or database where points automatically adjust according to the decay rate.
Example of Point Decay
Let’s say a contributor earned 100 points three months ago, with a monthly decay rate of 5%:
- Month 1: 100 points
- Month 2: 95 points
- Month 3: 90.25 points
As contributions age, their value gradually decreases, emphasizing recent contributions in the current allocation.
Final Thoughts
Point decay keeps Contribution Weighting fair, real-time, and adaptable. DAOs can balance the influence of early contributions with ongoing work, rewarding sustained engagement and ensuring that each contribution aligns with the current needs of the community.
Using point decay, DAOs in Flow State can ensure a dynamic, balanced reward system that keeps contributors engaged and rewards their latest efforts fairly.