Should You Pay Employees with Tokens?

Helping crypto founders and teams grow their projects with token-related tips and insights

Robin Ji
May 04, 2023

Welcome to the second edition of Liquifi Drip!

Let’s get right into it.

This week: The Comprehensive Guide to Token Compensation

Not every project should compensate with tokens - it’s worth careful consideration.
If you decide to go for token compensation, bring on your own legal counsel - ideally, a tax & compensation attorney well-versed in token regulations. Important considerations include payroll taxes and tax withholding, accounting and tracking token-based awards, and legal documents and processes to ensure compliance with tax and securities laws.
You’ll need to set up a secure company wallet, organize employee wallets, and set up a system to track vesting events and ensure timely, accurate deliveries of tokens to recipients. There are multiple platforms that can help you set this up, including Liquifi.
We recommend one of these three approaches for your token compensation offers: Market-value based, annual token grants, or as a percentage of total tokens. We recommend picking and sticking with one approach for consistency.

For all the details, check out our full writeup.

The SEC opened a lawsuit on April 17th against Bittrex for failing to register as an exchange, broker-dealer, or clearing agency.
The six tokens identified by the SEC as securities are OMG Network (OMG), Dash (DASH), Monolith (TKN), Naga (NGC), Real Estate Protocol (IHT), and Algorand (ALGO).

MiCA stands for Markets in Crypto-Assets Regulation
The landslide vote tallied 517 MEPs for and only 38 votes opposing the framework
As shared by @paddi_hansen

a16z’s Guy Wuollet suggests starting with a clear objective, articulating and validating assumptions, and reducing exogenous parameters — all in line with first-principle thinking.
Wuollet also covers several use cases for tokens: ownership, alignment, incentive structures, and accessing goods and services. He suggests moving past ‘Tokenomics’ because it doesn’t include values like art and expression.

Despite being forthright about no plans for an airdrop, users were let down.
Instead, the SUI token will be issued through a token sale on Bybitm OKX, and Kucoin. Each exchange will limit to 10,000 per user at $0.10 per token.

RNDR is the ERC-20 token behind the Render Network.
The Render Network is a decentralized, automated marketplace for rendering compute which offers scalable, on-demand GPU rendering and visual effects. It allows participants to exchange unused GPU bandwidth in exchange for RNDR tokens.
What’s notable: RNDR facilitates a true utility in the fee-for-service format. It’s not another token created for the sake of being a token — it’s leveraging a decentralized token to address real rendering and VFX needs in an efficient way.
RNDR token price has gained over 50% in the past few weeks, seemingly due to the community vote to deploy on Solana.

The memecoin launched in mid-April with little initial traction - but only for a moment.
Since then, its price has increased by over 22x. An early investor bought 5.9 trillion tokens for $250, which is now almost $8M USD. Cashing out will be problematic, however, until there’s more liquidity.
Its website features a tokenomics section. 93.1% of the coins have been sent to a liquidity pool, with 6.9% remaining tokens going to the treasury. Nice.

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We've built the best token vesting & distribution platform there is for crypto.

That's all for now.

Thanks for reading, and we'll see you in the next edition!

— Robin