Discussion: RSR emissions approach for the second half of the token supply

[r2g]

I know many have the urge to burn the 50 billion tokens. This might well be the right answer, but I doubt it. Here are three parameters that need to be explored:

1. Strategic Boosts

Confusion Capital clearly envisions needing to maintain direct control over a pool of RSR in order to continue to direct the growth of the ecosystem for:

• Incentivizing key individuals to work with the ecosystem

• Staking on promising RTokens that are not yet popular

• Investing in key outside businesses that create tie-ups with the ecosystem

The team has been doing all of these things over the past five years, and I don’t think we would be where we are now, if they hadn’t. The question is, are we past that stage now, where we no longer need these strategic boosts? I don’t think that we are, but I also don’t think that this ‘Strategic Pool’ should be used for all things big and small.

Ideally, the ‘Strategic Pool’ should be earmarked right now and remain under the complete control of the team in a slow-like wallet for all to see. The team should view the ‘Strategic Pool’ as a tool to be gradually (or aggressively) used for the next, say, ten years. It should be reserved for major strategic events that they think would be accretive in the long term.

As a side note, strategic staking on promising RTokens should ALWAYS be temporary. Such staking could be viewed as providing a lifeline to an RToken to see if it gains traction. If, after a period of time, it does not, the strategic staking should be removed, and the RSR returned to the ‘Strategic Pool’. [More on why this is important in #2, below].

Additionally, there should be a ‘Success Sunset’ where, if certain milestones for the ecosystem are met, or a certain number of years have passed, the remaining balance in the ‘Strategic Pool’ would be automatically burned.

2. Cash Runways

In the past, the team have said that they have sufficient cash to fund operations into the far future. However, the scope of the business has changed, and a lot of time has passed. So, I don’t know how long the current runway is. It is important for the team to make sure that their cash runway is sufficient. Their businesses are standalone companies now and should go looking for capital away from RSR.

In addition, the team’s reliance on RSR staking income to fund operations has always rubbed me the wrong way. It effectively skews the economics and crowds out the very market that they are trying to build. It’s fine to strategically stake (as described in #1 above), but only temporarily. Beyond startup friction, RTokens should sink or float on their own merit. This might not seem like an important point, but it is. I don’t want to go down an economic theory rabbit hole here.

To be clear, it’s fine, of course, for individual team members to stake (or not stake) their own personal RSR on whichever RToken(s) they like.

3. Decentralization

We all know that the long-term aim of the project is total decentralization, but we are not there yet and won’t be for a long time. We will get there as the ‘Strategic Pool’ eventually runs out or is burned under the ‘Success Sunset’ scenario, and it’s up to the team to use the ‘Strategic Pool’ before they lose it.

In the long term, RSR holders might need a pool of RSR of their own, to use in ways that we cannot envision at this time. To that end, I think that it makes sense to allocate some of the 50 billion tokens to a DAO as proposed by others.

How much in the ‘Strategic Pool’ and how much in the DAO?

I think the ‘Strategic Pool’ should not be too small so as to be ineffectual. Making it too large (relative to the rest of the 100 billion tokens in existence) is also not a good idea as it might encourage the team to overuse it. The idea here is to have a strategic tool available to the team to improve on an already successful project, not to create a shadow over it. I think, 10 billion tokens is a good starting point for a discussion.

As for the DAO, the same logic of not-too-small, and not-too-big applies. I think, 10 billion tokens is also a good starting point for a discussion.

So:

• 10 billion in a Strategic Pool, completely under the control of Confusion Capital, with no limits on withdrawals, and a Success Sunset.

• 10 billion in a DAO for decentralized use.

• Burn the remaining 30 billion

• Figure out cash runways for the companies in a different way, away from RSR

[Citizen_Crane]

I think RSR emissions are just one aspect of a much larger problem. At this point the whole reserve ecosystem is one convoluted mess due to less than optimal communication.

First and foremost a clear framework needs to be defined after which a discussion about future emissions can take place. Let me explain:

1. What is the overarching vision for the protocol (granted, this one is established but not in a larger context).

2. A roadmap with clear short / medium / longterm goals to achieve the aforementioned vision.

3. Concrete measures that need to be taken in order to achieve said goals.

4. Which measures are expected to be taken by the community, which ones are tackled by Reserve (being it ABC labs, Confusion Capital etc.)?

5. To what degree is Reserve involved in growing the ecosystem? Is Reserve still actively trying to approach and win over larger players or is it more or less about developing the code base and helping with the onboarding process once a third party decides to participate in the ecosystem?

Only once this framework is established and clearly defined there should be a discussion about future emissions. Of course within the above mentioned context:

6. Does an emission benefit the ecosystem? If so, how? Is it helping to achieve a short / medium / longterm goal (e.g. onboarding a third party, growing presence on social media, incentivising liquidity pools…).

7. What is the impact on current holders? (Even though it is not encouraged to talk about price, it IS important).

8. What is the impact on the general reception of the ecosystem? If billions of tokens are dumped regularly without reason people will see it as a cash crab for the founders. Once a negative sentiment is out there it is extremely hard to counter.

I am well aware that some of the issues mentioned above have been talked about but never in a complete and coherent manner. Even if you visit discord on a regular basis, follow on twitter and listen to spaces / townhall meetings etc. you do not get a clear picture of Reserve.

Also, a lot of developments have never been explained. What happened to all the early investors?

1. PayPal launched their own stable coin outside of the Reserve ecosystem.

2. Sam Altman launched Worldcoin. Also outside the ecosystem.

3. Coinbase still has not listed RSR. And now they are in a strategic partnership with Blackrock.

All the community got was a removal of the early investors from the homepage. Explanation: the protocol should stand on its own.
But why did not a single one of those big names translate into a fruitful partnership?

Finally, the planned emissions fall into the same category. They are casually mentioned. No further explanation besides basically „we are short on liquid RSR“.

Clear communication is key. If there is transparency then not only the good will be accepted by the community but the bad and ugly as well.

TLDR:

At this point there should be no further emissions for the time being. Establish a framework first and then discuss emissions within said framework.

[mattimost]

@nathan

What is the goal of this project? Is it to provide “Stable currency, a human right”, or is it to “Farm like it’s 2199”? Based on the framing of the discussion, it looks like the project has evolved it’s mission to focus on the latter, correct me if I’m wrong.

Just clarifying a quick item here on mission & strategy.

The ABC Labs mission is to fight inflation and expand access to stable currency.

But, a reality is that defi assets are most useful once they are big (mental unlock for users that it is “safe”, in addition to the social proof of something being big for a long period of time and gaining lindy status).

So the short term ABC Labs strategy is to 1) get big in defi, 2) become a leading voice in defi-backed stablecoin space, and 3) expand into broader usage & adoption.

Getting big in defi means appealing to the defi farmers.

IMO this strategy and initiatives like Farm like its 2199 continue to be aligned with broader ecosystem vision of fighting inflation and expanding access to stable currency, and are stepping stones to getting there.

Does that make sense to you?

[Fortis]

Hi guys, thanks for holding this discussion. There are a lot of good points raised by community.
What I personally hate to here is for example when RSR is compared to CRV and how veCRV is important to the ecosystem. Maybe its a systemic mistake ? Look at where CRV price wise is, holders are crushed the system really does not perform well and with time it will most probably fail the project itself. Why not take different example and look at how say Binance token is established, they have auto burn mechanics, they buy back the tokens from the open market and look at the price dynamic. Now that’s what RSR should aim for. If Binance is the market leader in exchanges RSR should aim for market leader in decentralized finance and stable coins issuer. I think relaying on locked tokens as RSRs strategic buffer to fund the business model could of been ok at the beginning as Nevin mentioned but using the same approach now is bad for sure. It brings us back to the first point with systemic error on approaching business model. The remaining RSR in my opinion should not be used for funding of operation. In can be used to bring in strategic partners that add value to the project. Also I think that current supply in reserves is quite big and some of it should be burned but not all. I liked the Idea that for any Unlocked amount you BURN the same amount. This way you do release funds on the market but you also at least reducing circulating supply which reduces the pressure on the token it self. I think for the project to succeed the token it self has to be deflationary and not inflationary Nevin, since at this point you kinda contradict the very real world problem you are trying to solve and that is LOSS of purchasing power!

[lycurguz]

A lot of good ideas and important sentiment shared already, just wanted to share my 2c. I agree with others that the 50B RSR looms over the Reserve ecosystem like a dark cloud. As an RSR holder and a builder, I have to admit that price is a motivating factor for me as I try to build something on top of the protocol.

And let’s not pretend that unlocking the tokens, using any issuance mechanism, will not depress the price simply because 50B is a lot. Unless… If all those unlocked tokens go towards improving the ecosystem in very meaningful ways and acting as a value multiplier which I believe it can, the the dilution will be offset by the growing value of the protocol. That’s why I don’t think burning them is the right thing to do for the long-term.

As others have pointed out, it’s difficult to make any suggestions or assumptions because we don’t know what’s happening under the hood in the multiple Reserve entities. I do think though that we can all agree on the following objectives that would constitute as “meaningful ways” to improve the ecosystem:

1. Accelerate decentralization
2. Grow the ecosystem
3. Continue development

To achieve these goals, I suggest the following allocations:
A. Reserve Foundation: 20B
B. Reserve DAO: 20B
C. RSR Airdrop: 10B

1. Accelerating decentralization

Since RSR is used for RToken governance, a risk exist for any deployed RToken that there is an entity that holds the majority of the total supply. I doubt that the team will wield such voting power to influence an RToken but until the control of that much RSR is relinquished, the Reserve protocol could be described to be as NOT trustless.

Accelerating the progress of decentralization improves the security of existing and yet to be deployed RTokens and demonstrates to everyone in the space that Reserve is serious in becoming a trustless protocol as soon as possible. This might also help with the legal side and exchange listings if there are any issues associated in that area.

The question is how best to distribute the remaining RSR. I agree with r2g’s assessment here: Discussion: RSR emissions approach for the second half of the token supply - #21 by r2g

There should be an allocation that allows for actions and developments that are discreet in the short-term and guides the protocol for the long-term, this would be the Reserve Foundation.

On the other hand, there should also be an allocation that enables fully transparent initiatives that requires buy-in and support from the community. This would be for the Reserve DAO, which would also give an added utility to RSR as well encourage holders to care more for the whole protocol and ecosystem and not just per RToken project.

2. Grow the ecosystem

The team has accomplished so much during the last couple of years given that the RToken platform has only launched not too long ago. I do think there’s more that can be done as we’ve seen some newer protocols grow to billions in TVL seemingly in a matter of months. I can envision the Reserve Foundation and the Reserve DAO launching initiatives to expand the ecosystem such as events, hackathons, more partnerships, etc.

I would suggest that we look into doing airdrops which has been the meta recently. Aside from yield farming, other defi projects have grown quickly by incentivizing adding liquidity in exchange for points that can be redeemed via airdrop. Make it clear with no vague criteria to earn points such as minting RTokens and staking RSR. Execute it in stages across multiple seasons to drum up excitement and the TVL grows, we should get more eyes on the protocol.

3. Continue development

Of course, the continued development of the protocol is paramount. It seems the team has enough resources to do this at the moment but in the future they can also request funding from either the Foundation or the DAO if needed.

Lastly, I also fully agree with the other posts that all of these must be done with clear and open communications.

TLDR: Instead of burning all that RSR, go big now by using it to be more decentralized, grow the ecosystem, and continue improving the protocol by setting up the Reserve Foundation, DAO, and massive Airdrop!

[StableboyCrypto]

It appears that most people that are aware of this would favor burning the tokens, including myself.

If Confusion Capital wants to use some of the tokens, the community would like to know a very clear plan for their use. If there is no clear plan and the community cannot see how it would benefit them, then there will only be a negative response which will ultimately hurt the project. I personally cannot think of many reasons that would convince me that diluting the supply for Confusion Capital is a benefit to myself.

We are currently in the midst of a bull market in crypto. This is honestly the worst time to dilute the supply. However, on the contrary, if the other half of the supply were burned, it would do wonders for the narrative surrounding the ecosystem. The more adoption, the better it is for all holders of RSR (confusion capital included).

If all momentum the project currently has is killed over short-term thinking by diluting the RSR supply, Reserve will possibly never reach its end goal of decentralized stable currencies.

From my perspective, the best thing to do right now (if confusion capital has enough funds to continue on), is to burn it all or most of it.

Another idea: Airdrop an equal amount of RSR that is being withdrawn to current RSR holders.

[LuisR]

First off, I really appreciate we’re having this open discussion; it’s the way I envisioned a truly decentralized governance model would work, so it’s great to see it happening in practice.

I can also see the level of engagement and anxiety it brings, and I see that as a good thing. First, because it means people care about this, and secondly, because it’s a testament to how true democracy plays out in practice. It’s often messy by nature because there are potentially as many perspectives as there are individual participants! The “easy” thing would be to make a top-down decision, while it’s much harder (but complex is a better term) to make a bottom-up decision because we need to reconcile zillions of different views into one single decision. But at the same time, that’s the richness of it, so I’m glad this is happening!

Now, I still don’t have a definitive or well-educated position on this as I’m more of a spectator at this point. I will definitely look to learn more and potentially contribute more at Monetarium. However, I do have some high-level mental models that I’d like to offer here to start with on each point:

Supply Release: Fixing the supply release schedule makes sense to me. This helps provide predictability, which leads to certainty and confidence, positively impacting performance in the long term (or at least using things like caps or ranges would do the job). Also, maybe applying a decreasing inflation rate curve BTC-like (maybe not discretionary halvings every 4 years, but something a bit more continuous and a bit shorter).

Supply Allocation: Finding the right balance to make it sustainable both in the short and long term. For me, that includes ensuring we’re at least covering a healthy allocation share across three areas/stakeholders: 1) Market/Customers: Allocation to support adoption and expansion to promote future growth of the Reserve ecosystem. 2) Partners/Workers: Allocation to compensate people and organizations that are devoting time, energy, or resources to develop and improve the Reserve offering to the world. 3) Investors/Supporters: Allocation to reward holders somehow for supporting the project by devoting part of their own capital and for them to not have to wait very long to see the benefit.

These are my 2 cents for now! Looking forward to meeting more people and further discussing this at Monetarium with y’all!

[BonnieDoon]

The current value of this 50b RSR is ~$285m
If this was in USD instead, then maybe the answer of what to do would be simpler, eg. mint rtokens and use the revenue to fund incentives.
Having it in RSR at this stage means it will hopefully one day be worth a lot more which is good, but selling it off now has a much bigger impact on the project and the RSR holders then I believe it would if TVL was already a few billion

One option which may have already been suggested, is to release RSR once certain growth milestones are reached.
If RSR reaches certain price points, or a better metric may be if TVL reaches certain levels, then this could trigger a release of a certain $ amount or % of RSR over a certain period of time to fund the next period of growth.

It seems triggering on TVL may be a better choice as it looks to be a lot more stable.

There is already a release scheduled, so let’s just say as an example this was triggered for reaching 100m TVL. This released RSR must then be used to grow TVL to 500m or 1B before the next release is triggered.

This way, all future releases are known and predictable and only happen if the previous release has been used wisely and growth has continued

The obvious question then becomes what happens if growth stalls or goes backwards. In this case, given that crypto currently works in cycles, I personally would rather wait it out then have more RSR released to try and drive growth in a bear market

Thanks for the opportunity to make a suggestion

[nathan]

Thanks for the response, Thomas - if I understand your premise correctly, we want to grow market share to help with perceived legitimacy.

I guess it might be helpful to define who Reserve is marketing towards. The switch from “…a human right” to “farming” is inherently a different market audience (underbanked to crypto native). The crypto native seeks the newest highest yields, while the underbanked are the ones with the hair-on-fire problem. Since these are two audiences, I think your steps 1&2 can but doesn’t necessarily lead to step 3.

Reserve was aggressive in its pursuit on step 3 way before most other crypto projects, via LATAM adoption. That was done way before Reserve was “big” in defi, and it seemed like it ended not due to any fault of 1&2 being missed but from external regulatory challenges.

Just my opinions… I think I’m against the grain here anyway. IMO to give others perception of legitimacy it comes from regular protocol audits, transparently backed & over-collateralized tokens, and yes high total value secured, but that is the long-tail of consistent “boring” but trustworthy projects that give real people easy access to stable assets. If anything, focusing on growing TVL from high yields via external platforms might just introduce new forms of protocol risk.

I don’t want to detract from the main thread, but happy to pick this conversation up elsewhere. I’m sure there are sides to this story I’m not seeing the full picture on. thx for your time.

[Mallo]

I’m very much of the opinion of R2G here, but potentially with a few additional factors.

1. The availability of RSR to confusion capital and ABC Labs cannot be permanent emitted in my opinion - to be truly decentralised this needs to be the decision of a DAO and the control of the project at some point needs to be handed over to this DAO - when that is will depend on certain milestones (which none of us are aware of at the moment). I believe that in a number of years the DAO should decide the fate of an amount of RSR. That timeframe should at least be estimated and some reasonably clear goals created, with the caveat being if a switch/pivot for the protocol is required then they can be reformulated.

2. The availability of an RSR wallet as an additional resource should not be available forever. I think the project should be able to pay for itself after a number of years, be that through fees, investment strategy or further capital investment rounds.

As I said I’m broadly in agreement with R2G so no point me reiterating that, although I would like to see an amount of RSR available for project use for 5 years planned specifically for growth of the protocol, with the rest locked for 5 years and also an amount allocated to a DAO for ‘other purposes’.

We don’t know the metrics so I can’t say how much, but if we’re left with excess after 10 years I say burn it. I anticipate the vast majority should be spent in the next 5 years as burn rate is highest in younger companies when growth is the main factor - cost of acquisition is one of the key metrics and we all know Mr Thiel went big on getting PayPal account incentives. We’re not in the same position as there is a lot of competition, so again metrics and aspirations will guide the volumes required.

I know the project has taken flak before for aspiring to goals and having circumstances change them, but I think we’re on a bit more stable ground here, so I don’t think there’s quite the same need to keep it all under wraps. If there are NDAs then fair enough, we can’t know about those and they can be accounted for if they have been real and can have an allocation accordingly.

I’ve thrown those out as additional points for discussion. I think there have been some excellent contributions to this topic and hope others come in and aren’t afraid to voice an opinion, no matter how silly they may think it is.

[0xTom]

I think the team can retain 5B-10B tokens as ecological reserves, but no more, and the rest should be burned.
If you want to protect users and make $RSR more decentralized, this is the only option.
A total of 55B-60B tokens is enough.
Unlocking 50% of tokens will destroy the project in a bull market.

[Davide]

I believe that an ecosystem like Reserve will need less self-funding in the future because of his nature. I compare it to Ethereum: after the initial phases, it was able to stand on its own thanks to its incredible network effect.

Nevin himself made a great example on X months ago, comparing Reserve to a teenager.
Right now, these 459m tokens can help in the transition to adulthood, but in the future, these operations should help less (better visualized graphically, like a decreasing curve regarding the importance of funding).

Funding is especially needed from now to 2030, but at the same time, it’s risky to force too many withdrawals like this for the token’s health.

Perhaps the healthiest choice is to use 1/5 of those 50 billion to fund projects in these starting years, burning or something similar with the remaining amount.
I really like the idea of a “Reserve Foundation” mentioned above.

Anyway, I’m convinced that the real difference won’t be made by an extra 10/20 billion, but by the ideas patiently spread on the internet in the coming years/decades, especially from big accounts.

[Spunkfish]

Decentralization and protection from getting dumped on are the two most common concerns with this project that I’ve heard. It seems to me a smart contract with a systematic burn & release mechanism would be the most effective method to allay this criticism. How much would say a contract with a daily 3m release to CC along with 5m burn hamper CC from their goals of building this project? What are arguments against something like this?

[Saneel]

Just my thought:

1. Release Confusion Capital RSR.
2. Burn all remaining RSR in slow wallet and Slower Wallet
3. Introduce 0.5 to 1% fees on all RSR traded on exchanges.
   Currently as on last 24 hrs total on Binance(22/06/24) was$2.06M approx 1% =$20600* aprox 200 day=$4.12M approx /yr
   this can increase as the usage will increase and also as the price and vol goes put and can be put away for Reserve running etc until such time the team thinks it can generate independant revenue.
   The fees should be automatically sent to a reserve governance wallet…
   Thanks

Also introduce the fees on exchanges 1st before the burn so that if dramatic increase in trading the revenue generated will be massive. just btw 0.005 to 1% of all RSR traded on all exchanges.

[Figue]

Hey folks, there’s a lot of very interesting discussion and challenges regarding the current RSR system. As a big fan of Reserve and someone who works on a daily basis with tokenomics I thought I’d throw in my 2 cents.

1. Burning RSR is short term and will rob Reserve of growth opportunities;
2. Obviously having non allocated tokens is a substantial risk of unpredictable allocation for stakeholders;
3. If Reserve wants to become the primitive that enables “Currency as a Human Right”, then its tokenomics should reflect it: projects using or collaborating with the Reserve primitive should be rewarded healthily.

The current staking system is interesting but it can be upgraded. You want builders and partners of Reserve to be aligned to the tune of the revenue they bring in to the protocol. This is why I believe the RSR emissions should be divided into 3 baskets:

• A contribution flywheel, similar to staking to receive RSR at a fixed rate per revenue unit the Tokens brings in;
• Bootstrapping budget that is taxed from total protocol revenue (say, 10%) and enables to kickstart a minimum of network effects for any project using Reserve (enables a minimal amount of liquidity and TVL just for using Reserve)
• A partner program that rewards external actors (mainly Stablecoins) in partnering with Reserve.

I believe that by creating a well defined system with emissions over time it will create much more certainty for holders. Additionally, the flywheel should evolve at some point with revenue being used to buy back RSR and create an infinite loop of emissions, making the protocol a permanent flywheel for new currency creation.

Cheers

[nevin.freeman]

Thanks everyone for your thoughts and questions so far.

Timing

Here and on X I’ve seen some ask: what’s the timeline for getting to an answer on how the remaining 50% of RSR should be released and utilized? Here’s how I’m currently thinking about timing:

• We’ll continue discussing this and thinking it through as a community for as long as it takes to get to a solid plan. Confusion Capital has the responsibility to approve the final plan, and I take responsibility for facilitating the discussion that will go into forming the plan.
• I want to give the topic time for in-person discussion at Monetarium (July 19-21) and at the ABC Labs coworking week (July 22-26).
• As discussed starting in January, ABC Labs is developing a new system for allowing RSR holders to collectively vote on RSR emissions allocations. The current idea is that 20 billion RSR would be placed in an immutable emissions contract that would slowly emit the RSR over many (e.g. 20) years, and RSR holders would vote on where the emissions are directed – to uses like incentivizing liquidity providers in DeFi. They’ve asked Confusion Capital to finalize the decision on launching this system and settle on an amount of RSR and emissions curve as soon as possible, since they will need to write code based on what’s decided, and this decision will likely be the bottleneck on releasing this new system. I’ve let them know that the final decision to allocate any RSR here along with the details of how it would be emitted needs to be taken along with this broader planning for all ≈50 billion remaining RSR. So this is one source of urgency, but again, it’s crucial that we take as much time as needed to get this plan right, as it’s so consequential to how Reserve plays out over the coming decades.
• In summary, I think it will take a few months for us to finalize this plan, but I will aim to help us narrow down the options significantly early on, so that we aren’t swimming in too much uncertainty in the meantime. ABC Labs needs to allocate dev time, and the community needs to have a good sense of where we are headed.

Questions raised

Many have asked very reasonable questions about how Confusion Capital and ABC Labs operate, their finances, their plans, etc. Historically we have intentionally not discussed these things in public for specific strategic reasons that have been carefully thought through. This discussion is forcing a re-think of those strategic reasons since (a) as many have noted, it’s impossible for community members to form meaningful opinions on some of the questions I’ve posed without access to a bunch of info that hasn’t been shared so far, and (b) there would be a lot of additional value to transparency beyond this discussion (though that’s nothing new). I don’t yet know if we are going to decide to publish this kind of info or not – we’re started evaluating and will come to a decision soon.

Digesting proposals made so far

I’ve read all of the comments above twice and have been distilling the various positions I see represented here. I’ll list each position as simply as possible, steelman it, and then share my take on it.

• Position: It’s about the narrative not the math. Releases scare people away, burns give people confidence, even when each is too small to mechanistically matter.

  • Steelman:
    • If tons of holders are scared by something and sell, it’s very plausible that their fear and ensuing selling is much more powerful than whatever the thing itself was. The market is self-aware about this fact, so if sophisticated holders see unsophisticated holders panicking, everyone can end up selling.
    • This can go in reverse as well – if many are excited for something that is not actually a big deal and all buy at once, price can go up more than would be reasonable. Again, sophisticated buyers may observe this happening and trade the event of unsophisticated buyers buying, even if the underlying event is not that impactful.
    • Relatedly: when we updated the protocol design prior to implementation, taking away the burning mechanism and replacing it with income to stakers, the reaction was irrationally strong in my opinion. Even though they were economically very similar, holders were broadly disappointed and angry there would not be burns, despite the fact that the new mechanism would bring pretty much the same income to RSR participants (and allow each holder to customize their own risk and rewards per their own risk appetite).
  • My take:
    • We do indeed need to consider the second- and third-order effects of how narratives will play out when planning what will happen with remaining RSR.

• Position: The 50b is a storm cloud over the project. It scares people away.

  • Steelman:
    • The bottom half of my recent blog post clearly illustrates that most modern crypto projects release their supply too quickly and thus underperform BTC, so it is clearly rational to worry about what will happen with such a large chunk of unreleased supply.
  • My take:
    • It’s reasonable for people to see this as a big risk if they are thinking about buying RSR to participate in staking. As I said in my post, the Slower Wallet is a step in the right direction by limiting the amount that can be released at any one time, but I think even more certainty is needed, and I am inclined toward a hard-coded release mechanism that cannot be changed by anyone.
    • As some have pointed out, the ≈50b RSR that’s yet to be emitted is a great asset not a problem if released and used wisely. With proper guardrails and mechanisms in place (like Bitcoin has), we can handle the fears about over-inflation and turn a storm cloud into rays of sunshine.

• Position: The companies involved in the Reserve project should fund themselves through means other than selling RSR. They can sell equity or generate revenue.

  • Steelman:
    • Confusion Capital:
      • Confusion Capital could take risk to invest its current (non-RSR) capital and generate returns. It could limit its spending to the returns that can be generated from those investments. (This return may not be high enough to permit significant spending - as noted above, I’ll get back to you on whether we are going to disclose this kind of info or not once we’ve re-considered our info-sharing principles.)
      • Confusion Capital could unlock and stake RSR without selling it.
      • While staking rewards may not be enough to fund current operations, Confusion Capital could do an equity fundraise where investors expect to get a share of the money made from future staking if RTokens grow.
    • ABC Labs:
      • ABC Labs generates some revenue from its defi operations (CRV voting, etc.). It could limit its spending to the revenue that can be generated from those operations. (This revenue may not be high enough to permit significant spending - as noted above, I’ll get back to you on whether we are going to disclose this kind of info or not once we’ve re-considered our info-sharing principles.)
      • If Confusion Capital had enough investment or staking income or did an equity fundraise as stated above, it could pay ABC Labs in cash to carry out various operations so ABC didn’t have to also fundraise.
    • Best Friend Finance:
      • Best Friend Finance is a more traditional fintech business. It can generate revenue with services it provides its customers, and can do equity fundraising to operate in startup mode.
  • My take:
    • I think it’s worth considering these routes.
    • Obviously once revenue is significant that solves a lot of problems. It’s not there yet for these companies, so startup capital is still needed.
    • We’d discussed the possibility of an equity fundraise for BFF already, though had not discussed it for CC. I appreciate the idea being pointed out.
    • However, it’s important to consider whether any given fundraising method would create misaligned incentives. If we added a class of equity investors to any of these companies, they may want something different from what RSR holders want, or what the founding team members are trying to accomplish in the world. This may not be a deal-breaker, but it’s a real issue that must be considered and might persuade me to advocate against some types of plans in this space.
    • One clear example of potential misaligned incentives: If Confusion Capital were to have a cap table of purely profit-seeking investors, they may not allow it to do things like handing over all of the remaining RSR to a DAO, as they may prefer it to be distributed to them or staked for income they would benefit from or sold for cash that they would have a right to.

• Position: Releasing tokens is necessary to fund incentives and development, so we just need to make sure to do it at the right speed. Too slow = not enough gas for the project, too fast = crash in RSR price.

  • Steelman:
    • Many of the most successful (so far) DeFi projects have achieved success through incentivizing early usage. At this point, this practice is so ubiquitous it may be impossible to compete in DeFi without early incentives.
    • As my blog post illustrated, the tokens from these same projects have often not performed well, presumably due to increases in supply happening too quickly relative to other assets like BTC.
  • My take:
    • I agree with this position – we must strike the right balance.
    • A hard-coded release schedule is a big plus in my opinion since it gives clarity and predictability in advance. It does of course also reduce flexibility and commit us to a decision that may not seem optimal later on as the project unfolds, but that may be a cost worth taking on.

• Position: Burn all remaining RSR. If partners are to invest, they can buy off the open market. If Confusion Capital or other entities need RSR for operations, they can buy it off the open market.

  • Steelman:
    • Burning the remaining supply would instantly increase the decentralization of the project.
    • Burning the remaining supply would eliminate all fears about inflation.
    • Burning the remaining supply would increase the long-term expected value of currently-circulating RSR by ≈2x, assuming future expectations of project success are unchanged.
    • Perhaps incentivizing RToken usage early on is not necessary for some reason.
    • Perhaps compensating current contributors with RSR is not necessary for some reason, or perhaps current contribution could be downsized to only what’s coverable with existing cash reserves. (As noted above, I’ll get back to you on whether we are going to disclose this info on cash reserves or not once we’ve re-considered our info-sharing principles.)
  • My take:
    • I would be very surprised if the best move for the project overall and current RSR holders was to burn all (or most) of the remaining unreleased supply.
    • I think fears about inflation can be allayed with a pre-determined, slow release schedule like BTC.
    • I think such a hard-coded, immutable release mechanism can also quickly increase the decentralization of the project (though the devil is in the details: who is entitled to the released RSR?).
    • While cutting the supply in half may 2X each RSR’s share of the future pie from each RToken, I would bet that it would decrease the size of RTokens in the future by a factor of more than 2X to deprive the project of this capital allocation opportunity over the coming decades.

• Position: Create an DAO and let existing RSR holders directly allocate all 50b locked RSR. Let any companies and individuals involved in the Reserve ecosystem request funding from the DAO and leave it to the DAO to decide whether to allocate it.

  • Notes:
    • The ≈30b RSR in the Slower Wallet cannot be emitted any faster than the hardcoded rate limit. However, it can be updated to only be able to withdraw to a single address forever after the update, which does give Confusion Capitl the option to hand over control of allocating all withdrawals to a DAO contract.
    • The remaining 20b in the Slow Wallet is already currently slated to be moved to an emissions contract that would be controlled by RSR holders, though that has not been fully and irrevocably finalized (see the beginning of this comment).
    • The upshot is: it would be possible to move all ≈50b locked RSR into the control of a DAO, and an emissions schedule could be determined as part of that plan, but the ≈30b already in the Slower Wallet could not be emitted faster than 1b / 4 weeks. If we did this I’d probably advocate for a slower release schedule anyway, so that limit would be unlikely to come into play.
  • Steelman:
    • This would immediately hand control from CC over to RSR holders, importantly decentralizing one aspect of the ecosystem.
    • If coupled with a hard-coded release schedule, fears about inflation could be allayed.
    • Individuals and companies that receive any RSR funding for contributions would need to publicly disclose the work they do and their compensation would be publicly known and subject to RSR holder control. Perhaps this would increase the efficiency or efficacy of capital allocation relative to leaving it up to Confusion Capital.
    • Since Confusion Capital, ABC Labs, and Best Friend Finance do not hold a large portion of the currently-circulating RSR, their voting ability in such a DAO would be very limited. Some early team members and investors would have significant voting power, but likely still a minority relative to the broadly distributed RSR.
  • My take:
    • I’m interested in this direction.
    • My main worry is that simple DAO structures end up mired in politics, move slowly, and can’t deal with nuance or details. I’m not sure how to overcome these issues without compromising on decentralization. Rune Christensen’s “end game” plan for Maker is conceived in response to these issues and meant to handle them, as one example of some thinking that’s further along than ours on this topic.

• Position: Leave a big pool of RSR with Confusion Capital to allocate at its discretion, sometimes in large chunks at a time, to capitalize on big opportunities. Don’t always require immediate transparency, in case deals need to happen privately.

  • Steelman:
    • One way to overcome the bureaucracy of DAOs is to delegate some portion of decisions to a more nimble party. Confusion Capital would be that party in this scenario, managing some pool of RSR and allocating it accordingly.
    • If the RSR were released on a hard-coded schedule, there could still be certainty about how much this pool would contribute to inflation. If it were truly discretionary (like the Slow Wallet is today), it would preserve some uncertainty. But perhaps if it were a small enough pool, the community would trust CC with this responsibility.
  • My take:
    • I’m interested in this direction. It has clear pros, but I don’t like the reduction in decentralization relative to a full DAO approach. It still may be the right thing to do, but as of now I am a bit uneasy about it.

I haven’t had time this week to finish steemanning and thinking about every proposal made, but I’ll get to all of them. The other positions I’ve seen mentioned here and plan to consider are:

• Hard-code a release schedule, and direct some fixed portion to Confusion Capital, leaving the rest to DAO control.
• Create a foundation.
• Make RSR available for use until some milestone is reached, and then burn the rest at that point if there is any left.
• Release RSR based on reaching milestones rather than robotically over time.
• Do an airdrop.
• Use RSR only for building costs. Do not offer any growth or liquidity incentives.
• Combine approaches – do some combo of the approaches above, since there’s no hard requirement to do everything just one way.
• Go slowly in deciding how this all should work, consulting our advisor network and other crypto projects, to make sure we get to the best answer.
• Charge fees on RSR traded on exchanges, and use that income to fund things. (Two people suggested this; is that even possible? If two people suggested it maybe this is something that memecoins have negotiated with exchanges these days or something?)

Some other ideas that have emerged elsewhere are:

• Require both CC and RSR vote to make withdrawals from some pool of RSR.
• Create an RToken that contains both RSR and stables and can be rebalanced throughout the market cycle, using that for the RSR DAO to manage a treasury, so that it can increase or decrease its RSR vs cash position as appropriate.

I’m looking forward to thinking through all of the above, and if you have any other idea you want to add to that list to consider, feel free to post below!

[Mallo]

I’ve just had a thought about the metric for possible emissions if that were decided to be a good idea. Instead of selecting a linear approach, it could be linked to RSR staking rewards.

At the moment $3.8M per year is the figure for staking rewards - if we were to say that in any one month the amount of RSR emitted could not be greater than the amount to stakers then holders will feel supply is not outstripping demand and the team (and protocol) are incentivised to raise TVL which will in turn return more staking rewards and allow more emissions.

Having said that, at current run rate to release RSR if it were 1c to be equivalent to the $3.8M staking rewards in a year it would take 52 years to disperse the 20Bn (32M per month for 624 months). That’s still $320,000 a month.

Thought I’d just add that before I forgot about it.

[Crypto_Goku]

I find this forum discussion very stimulating and exciting. Many excellent aspects have been addressed that we should definitely consider to avoid making the same mistakes as so many other protocols.

[Crypto_Goku]

I would like to contribute a potential way to effectively use the RSR from the Slower Wallet. One possibility is to directly incentivize the staking rewards on eUSD, for example, with 10-20% APY (or even higher?). In the long term, 1-2 billion RSR could be allocated for this purpose. This would lead to a significant increase in staking, resulting in eUSD being overcollateralized by 200-300% or even more.

Why do this?

By doing so, we could take 100% of the interest generated by the eUSD collateral and use it for incentive programs such as inside the Ugly Cash App or the Sentz App. A tiered system could be introduced where higher eUSD holdings in these FinTech apps would lead to a larger share of the generated yields.

This incentive program could be financed over a period of 6 to 12 months using RSR from the Slower Wallet for the staking pay outs of eUSD. This period could be used to establish an effective incentive program for Ugly Cash’s expansion in South America, with Ugly Cash receiving up to 100% of the generated interest if Sentz or other FinTech Apps cannot compete with minting and holding enuff eUSD.

Advantages:

1. Incentives for New Customers:

• FinTech companies could offer $50 or more to each new customer or for customer referrals → more eUSD holders and savers → increase of MC of eUSD.

• With a market cap of $23 million and an APY of ~8%, approximately $1.8 million yield could be used for customer acquisition, advertising, and expansion.

2. No Direct Inflation of RSR:

• Using RSR from the Slower Wallet avoids direct inflation through market sales.

• The eUSD-RSR staking community is unlikely to sell all their staking rewards, reducing selling pressure.

3. Increased Overcollateralization:

• A very high overcollateralization of eUSD could attract more minters and strengthen trust in the token’s stability.

Disadvantages:

1. Reduced Buying Pressure for RSR:

• The buying pressure for RSR might decrease due to the lack of auctions for eUSD yields.

→ However, this could be offset by the long-term growth of eUSD’s market capitalization.

@gabo @mattimost @nevin.freeman @Smeddy @Tom_hyUSD

[MaJoLnir26]

Bonjour l’équipe RSR et sa gouvernance !

Pour ma part j’indiquerais un point de vue purement macro, je pense (cela n’implique que moi) qu’il paraît opportun dans la période actuelle de chercher à élargir le cercle de reserve, à le rendre plus populaire je m’explique :

Actuellement le narratif RWA fait partis des narratifs les plus performant (top 3 des narratifs crypto), il faut utiliser ce levier exceptionnel pour étendre l’influence du reserve protocol au plus grand nombre, pour attirer de nouveaux portefeuille, que ce soit spéculatif ou investissement long terme.
Comme chacun le sait les tendances ne dure pas éternellement et c’est pour ma part le moment parfait pour jouer un gros coup, et montrer que reserve est un protocole d’avenir.

Je me vois mal promulgué un protocole qui a pour cheval de bataille la déflation tout en étant incapable de superformer ses propres anciens sommets (ath) en termes de prix à minima en période de bullrun.

En d’autre terme il est “urgent” de profiter du narratif et du coup de projecteur sur les RWA, c’est de la pub gratuite qui permettra au protocol de ce faire connaître par le plus grand nombre, les prochaines années nous verrons ainsi un plus grand nombre d’investisseur et partenaires nous rejoindre, cela est inéluctable le prix du RSR évoluera à la hausse ce qui offrira au détenteur originel (le projet et sa gouvernance) un meilleur pouvoir d’action que celui actuel avec un nombre de jeton équivalent.

Pour cela il paraît opportun comme plusieurs personnes l’on déjà mentionné de réduire voir annihiler ces 50% de jeton qui flotte tels un nuage menaçant au dessus de chacun de nous, bien sûr il faut conserver de quoi maintenir un budget au développement du protocole, ou allé trouver de nouveau financement.

Le marché et la technologie de la cryptomonnaie en est encore à ses débuts et même si cela me coûte je pense qu’il ne faut pas négliger le paramètre “d’argent facile” qui est pour la majorité des gens actuellement dans le marché la principale motivation, j’en veux pour preuve l’actuel narratif top 1 les mêmes coins. Cela changera avec l’adoption de masse, et le développement de vrai produit d’utilité publique comme le propose déjà reserve.

Je crois de tout cœur en ce projet qui apporte une réponse à un des plus grands problèmes de l’humanité à notre ère.

Le protocole est utilisable et prêt, ce qu’il faut maintenant c’est l’adoption de masse, le moment et la tendance s’y prête, les planètes sont alignés c’est maintenant où jamais, il faut que tout le monde entendent parler du reserve protocole pendant le prochain bullrun et cela passera inévitablement par des performances de prix exceptionnel dans les prochains mois. À la suite de ça il ne restera plus qu’à laisser faire le bouche à oreille et la smart monnaie ferra le reste lors des prochaines années.

Abandonné 50% de la supply joue totalement en ce sens.

Merci pour votre travail.
Salutations depuis la France .