Definition ∞ A Compensation Plan outlines the structure for remunerating individuals or entities for their contributions within a decentralized protocol or organization. This typically involves the distribution of native tokens, transaction fees, or other digital assets as rewards for specific actions, such as providing liquidity, validating transactions, or developing network enhancements. These plans are integral to incentivizing participation and sustaining network operations.
Context ∞ The design and evolution of compensation plans are critical for the long-term viability and governance of decentralized autonomous organizations (DAOs) and blockchain protocols. Current discussions often address the fairness, sustainability, and effectiveness of different reward distribution models, including inflationary versus fixed token supplies and performance-based incentives. The impact of these plans on tokenomics and community engagement is a subject of continuous analysis.
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