Summary
Confusion Capital pledges to abide by a base-level governance mechanism for enacting any RSR unlocking system update. The governance mechanism is: Confusion Capital must propose and RSR holders must vote to approve. The RSR holder vote excludes Nevin, Confusion Capital, ABC Labs, and Best Friend Finance, so that it measures sentiment from individual RSR holders. It is self-amending, in that we can use this base-level mechanism to change the mechanism itself.
Introduction
Confusion Capital owns 37.5B locked RSR which has never been withdrawn to be placed in circulation.
Until now, it has always decided on its own when RSR would be unlocked.
For years, it used the Slow Wallet, which requires withdrawals to be initiated onchain four weeks ahead of being made, so that holders would always have advance notice. Later it began migrating tokens to the Slower Wallet to add a further rate limit to withdrawals.
These were not seen as sufficient mitigation to the supply overhang, so two years ago in 2024 we implemented the Bitcoin-inspired release schedule. For a time this schedule was welcomed, but holders grew unhappy with the rate of release as we entered a bear market and RSR price continued to drop. (In case you haven’t followed: Confusion Capital has been a net buyer of RSR for this period, though it has also distributed liquid RSR to project contributors.) Confusion Capital chose to pause these withdrawals at some point, since it didn’t need more RSR in the near term and the FUD was a net negative for the ecosystem. We’ve stated that if no alternate system is sorted out, we will eventually resume with the Bitcoin-shaped curve, but we are in no hurry to do that, given no need for more liquid RSR any time soon.
In recent months, the RSR community has discussed alternate systems for RSR unlocking. As we get closer to settling on a system, Confusion Capital is hereby establishing a new base-level governing mechanism so that any update to its RSR unlocking sustem must be opted into by RSR holders, rather than chosen by Confusion Capital independently.
While we’ve always done our best to engage deeply with the community and let feedback shape what we do, this further step is meant to ensure that no update is adopted if it’s not what the majority of independent RSR holders approve of.
Governance is not only a system of rules and a vote, it’s a process of communication and negotiation. We’re setting the baseline rules, but to be successful with this process we need token holders to show up to participate and spread the word to others to increase participation.
We’re beginning this phase in the depth of a bear market when altcoin prices are at a very low point relative to many past eras, so we must expect that many of our passive token holders will be checked out at this moment. We must do our best to reach them and get them to participate from time to time, and if the project progresses well and the markets cooperate, I expect we’ll see increasing participation over time.
For anyone reading this post: you are one of the committed ones. You have outsized influence in early votes and have the power to engage your friends and build coalitions. Use your power wisely!
The Pledge
Confusion Capital pledges that from this point forward, it will only make updates to the RSR unlocking system it follows by way of the governance mechanism below.
Confusion Capital also pledges that, going forward, it will not update this base-level governance mechanism except by way of applying the base-level governance mechanism itself.
That is to say, this mechanism shall govern:
- Any updates to Confusion Capital’s system for unlocking its locked RSR
- Any updates to this governance mechanism itself
This is a non-binding pledge, not a legal contract. Turning this into a legal contract may have unwanted consequences for the legal nature of the RSR token that would not be in the interest of the Reserve ecosystem. Confusion Capital retains all legal right to control the RSR it owns and transfers no legal rights to RSR token holders.
The Starting State
As of today, the Bitcoin-inspired RSR emissions curve is the effective RSR unlocking mechanism in place, temporarily paused by Confusion Capital.
We reserve the right to un-pause should all stakeholders be unable to agree to any updated system via this new governance process. That said, we are in no hurry to do any unlocking, so this is not at all meant to be a tactic to pressure RSR holders to rush into approving a replacement mechanism. It’s just the best fallback we have in the case that for some surprising reason no other replacement can be agreed on for a very long time.
The Base-Level Governance Mechanism
For any update to be made to (a) Confusion Capital’s effective RSR unlocking system, or (b) this base-level governance mechanism, the following must be satisfied:
- Confusion Capital must propose the update
- RSR holders must approve the proposal in a snapshot.org or equivalent token ownership-based vote
The vote must have the following characteristics:
- Nevin Freeman, Confusion Capital, ABC Labs, Best Friend Finance, and any future companies incubated by Confusion Capital shall not participate in the vote with any RSR they hold
- A majority (>50%) of votes must be in favor of the update proposal
- Voters can choose Yes, No, or Abstain, and all count towards quorum
- At least 1 billion RSR must participate in the vote to reach quorum
- The voting window must be seven days
- The proposal must be proposed in full on the main forum (currently this website, adapting to other conditions in the future if appropriate) and announced on our main communication channels (e.g. currently X and Telegram, but adapting to any future changes practically) seven days in advance of voting
(Potential further restrictions could potentially include preventing any currently project-affiliated/employed whale from voting with more than some number of their RSR in order to down-weight “insider whales” other than Nevin, or requiring a supermajority of votes to make changes. We are starting with lower restrictions since this process permits self-modification and we will learn how this base-level mechanism performs as we go. If there is popular demand to change it or add further restrictions, we can use the mechanism itself to do so.)
Simple Version
- Confusion Capital pledges to only update the RSR unlocking system it follows if RSR holders approve the update in a Snapshot vote
- RSR votes exclude Nevin, Confusion Capital, ABC Labs, and Best Friend Finance
- This governance mechanism governs two things: (1) RSR unlocking and (2) itself, nothing else about Confusion Capital operations
If you have any clarification questions, you can drop them in the thread on this post and we will clarify. Any edits to this post will be to add further clarification based on Q&A below, for future readers of the pledge and base-level mechanism. This post can be referred to as the source of truth for how this pledged governance mechanism operates.