SourceCred: An Algorithm That Knows How to Reward People
How do you reward contributors in a decentralized organization?
Throughout the history of capitalism dictating employees’ salaries has primarily consisted of evaluating their years of experience, expertise in that field, demand for the desired skill set, location of the job, company budget, and what competitors are paying employees in similar roles (Indeed). We know this is a grossly oversimplified view, and there are other factors as well, but this provides us with a framework for how these decisions are made. These criteria all make sense for the traditional, centralized, hierarchical organization where positions are consistent, long-term, and the responsibilities are pre-defined. But, how do you transpose these ideas onto a DAO where the organization is decentralized, the roles are not pre-defined, and contributors (“employees”) can come or go as they please? Meet SourceCred, a DAO & open-source community tool to measure & reward value creation, who may become the modern-day human resources for valuing contributions.
So, what is SourceCred and how does it work? “SourceCred (in the most basic sense) is a technology that makes the labor of individuals more visible and rewardable as they work together in a decentralized community. The goal of SourceCred is to use this technology to make rewarding labor as nuanced as human contribution often is.” Through an algorithm, SoureCred determines how much value a contributor or contribution added to a project. This algorithm uses weights, which are a set of rules dictated by the community for valuing how much different contributions are worth.
There are two main components to understand how this algorithm rewards contributors.
Cred
When a contribution is made to a project, SourceCred’s purpose is to "see" that contribution and assign it an amount of "Cred" based on how much value it brought to the project as a whole.
The community defines the parameters and weights for valuing these contributions
This can be applied to all aspects of the organization
Examples of contributors earning Cred:
Creating a blog post that generates a lot of traffic. For each view, share, or like the post gets, the author can be rewarded with Cred based on those pre-defined weights
On Discord, the community can decide that attending calls, votes, or other community events is a contribution that should be rewarded
Code or bug fixes that developers make on GitHub
These are just some examples of the many possibilities for how DAOs can customize their community’s SourceCred reward system. Cred is something that contributors can accumulate over the duration of their time on a project and the level of engagement they display. “Cred is a score that shows how valuable your contributions have been in a specific project. In a sense, it’s a reputation score for the contributions you‘ve made in that community and therefore cannot be bought, sold, or traded. It’s simply earned.” So, how does Cred benefit contributors? What can they do with it?
Grain
Grain is a community-specific digital currency that is issued on the basis of Cred scores. If cred answers the question "who provided value?", Grain answers "how should we reward people given the value they provided?"
Grain will act as the “currency” that contributors to a project can redeem their Cred for. In the example of SourceCred, which uses their own solution internally, Grain is redeemable for USDC ( a stablecoin that is equal to the US dollar). However, Grain can be redeemable for whatever the community decides.
Communities without funds might treat this as a share of future income. Another might treat it as weight behind a community member's vote. The use cases we offer are a product of our limited imagination, and the space of design is endless, so don't let us limit your creativity.
While it may seem a little dystopian that an algorithm is deciding who gets rewarded, remember that the criteria for rewards are voted on by the community and it is totally open sourced for anyone to see. While no social reward system is perfect, everyone knows someone at work who was dispraportionately rewarded relative to their contributions, at least SourceCred provides transparency and a democratic process that has historically been absent in these systems.
SourceCred has integrations with popular DAO tools such as GitHub, Discourse, and Discord which make it easy to track contributions. MakerDAO, 1Hive, MetaGame, and ShineDAO all already use SourceCred to distribute rewards in their communities.
It makes sense that with the advent of a novel organizational structure a new type of reward system is needed alongside it. SourceCred provides DAOs with the framework, tools, and infrastructure for implementing this new reward system. It will be exciting to see how DAOs use this solution and customize it to match their community’s specific values. As SourcCred mentions on their website, “the possibilities are endless, so don’t let us limit your creativity.”
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