Editing Reputation (section)

=== REP Salary Mechanism ===
''Any fees the DAO earns are split proportionally with every REP token holder.''

Specifically, suppose the total number of REP tokens in the DAO is <math display="inline">R_T</math>, the number of REP tokens member <math>m</math> holds is <math>R_m</math> and that the DAO earns a fee of <math>$f</math> in cash. Then member <math>m</math> earns <math>$f*R_m/R_T</math>.

Instead of fees going directly to those who do the work, newly minted REP tokens proportional to the fees are given to those workers. Workers only get cash later, as their REP continually earns parts of new fees through the REP salary.

The REP salary mechanism is the last stage of the [[Validation Pool|Validation Pool smart contract.]] 

As an example, suppose that <code>worker1</code> has 50 REP tokens in a DAO with 1000 REP tokens total. Suppose <code>worker1</code> finishes a [[work smart contract]] (WSC) which earns a fee of $100. Then <code>worker1</code> does not receive the $100 fee directly. Instead <code>worker1</code> receives 100 newly minted REP tokens. The entire DAO shares the $100 fee between all 1000 REP tokens, meaning each expert receives $100/1000=$0.10 for each REP token they own.

[[Reputation tokenomics|Tokenomics formulas]] show that, on average, the REP salary eventually pays out the present value of the fees for the work. The system is ultimately fair, since all the profits are shared entirely with the members. The REP salary delays the distribution of the fees, which gives REP tokens some of the meaning of reputation, since they can be slashed if at any point the DAO discovers the actions which earned the REP were harmful to the DAO.