How did you arrive at the 8%? Let's not judge that by it self, that could be a great deal, or it might not be. You've had some success, and are expecting more. How closely have you tracked to your current plan? How large is the market, how long will it take you to get there, and will the 8% of an $X target comany be enough for the developer?
Let's assume yes, the developer could have a nice $10m exit after 10 years (to keep numbers round and easy).
Let's also assume that the 1/4 pay will only last for two years and that after that, you'll be able to get the developer a full market rate. So, let's say he is forgoing $200k to work for the company. But he has the 8%. If the company gets acquired early (because you guys are awesome), a $30m exit after taking $1m in financing for 20% of the company. I'm not an expert at this, but your friend would be diluted to 0.54% so the $10m exit is still a good outcome for him.
However, a $10m outcome is only $540k, and he gave up a lot of security for that.
So, I think the real question, and the way you have to look at it is what will the developer be giving up, what is his potential upside. Is your company ever going to be big enough to make it worth his while.