[RFC] RSR Health: Request For Comments

0xJMG · December 18, 2025, 8:30am

Good morning.

Related to RSR health discussion, the recent posts from Reserve ecosystem veterans 0xd15co, Ham, and Blue stood out. I encourage everyone to review them and ask questions as Confusion Capital / ABC Labs prepares to unveil an updated approach.

This is the ripe window to engage in discourse now. Six months from, the path chosen is probably in motion, yet still needing runway to prove we chose well.

But first, I want to return to the problems named in the original RSR health RFC so we are on same page, without drifting into tangents.

After two months of forum discussion, and seeing where my original framing caused confusion, it feels timely to restate the problems as clearly and succinctly as possible.

1. Metrics legibility.
RSR’s large idle supply distorts first-impression ratios like TVL/FDV that institutions and builders use to allocate capital. “You don’t get a second chance to make a first impression.”

For Warren Buffett-style allocators, RSR does not immediately register as a “value” without deeper analysis and connecting the dots. Unfortunately, these allocators’ opportunity supply exceeds demand - it’s a buyers market. But what if RSR can meet them where they are, or at least half way?

2. Shared ownership.
RSR remains concentrated in centrally controlled wallets, creating perceived dump risk for institutions and builders allocating scarce capital. Predictably, they gravitate toward alternatives that appear safer and more credibly distributed.

Governance also reads as centralized, to the point that some governors disengaged or unstaked from specific RToken/DTF contexts. Emissions fund multiple investments without holder voice or clear visibility into size, purpose, or ROI. The emissions narrative echoes Bitcoin’s meme, but lacks Bitcoin’s trust-minimized and granular transparency.

The downstream cost is steep. The ecosystem underutilizes a core web3 principle: community as capital. Without shared ownership, the compounding flywheel of building, challenging, governing, and promoting never fully spins.

In the original RSR Health RFC, you can see the initial problem statements, admittedly clumsily framed, alongside early solution sketches.

Thorough expansion included across subsequent posts:

I will skip restating the proposed solutions since they are easy to find in the links above. The original intent of this RFC was to invite a collaborative, rigorous debate on both problems and paths forward.

Given CC and ABC Labs’ depth of insight, data access, and talent, I expect their formal response around Christmas to be the most comprehensive. I am looking forward to engaging with it.

For now, back to 0xd15co, Ham, and Blue recent and thoughtful posts.

First up, 0xd15co went deeper on veRSR and the Reserve Fund, filling gaps where my post was intentionally light. Thank you, 0xd15co.

0xd15co notes that “RSR lacks a strong long-term alignment mechanism.” This is a big deal and I’m glad he put emphasis on ”long term alignment.”

Roughly 4% of the 100B RSR supply is staked across RTokens and DTFs, typically with unstaking windows of 14 days or less. Only a small fraction of stakers participate in governance or delegate meaningfully. The behavior skews toward short-term, “what’s in it for me” incentives, rather than long-horizon ecosystem compounding.

Here are a few illustrative comparisons from a quick survey across FX Protocol, Curve Finance, and Frax:

FXN: Over 60% of circulating supply is locked as veFXN for 3+ years, with more than 50% of vePower actively voting.
CRV: Over 30% of circulating supply is locked as veCRV for 3+ years, with more than 40% of vePower voting.
FXS: Over 50% of circulating FXS is locked as veFXS for 1+ year. Notably, governance is shifting from FXS on mainnet toward FRAX on Fraxtal, which likely depresses these observed figures.

While these ecosystems are far from perfect and have their own challenges, this approach displaces unserious hype and negative shitposting with a ferocious, shared ownership, qualified product improvement feedback loop.

One additional concern with 0xd15co’s Reserve Fund and governance framing is scope. Oversight appears limited to the RSR treasury, while CC and ABC control an estimated $10–20M in stable assets across onchain and offchain venues. A veRSR-governed Reserve Fund should, have full transparency into these capital movements.

If you have not reviewed or commented on 0xd15co’s post, I encourage you to do so. See link above.

Another superb breakdown and set of recommendations, this time from Ham. I will not rehash his asterisks and caveats and Path Forward, but they are essential reading and worth reviewing via the link.

I do want to push back on one point. Ham suggests that “metric legibility and protocol dump risk” are not high priorities (at least to him). I respectfully disagree.

When you examine the comments across this RFC, the most pervasive concern by far is the 100B supply. It’s a surface-level fixation, but it actually also mistakes the fever for the disease.

Improving metric legibility and reducing perception of dump risk are structural to RSR health. Idle tokens create latent sell pressure and muddy metrics. Removing them clarifies ownership, tightens incentive alignment, and improves legibility. As long as RSR is healthy, a veRSR governed tail-emissions can fund investments and growth. Price may respond, or it may not. System health improves either way.

This reflects what I’ve seen investing across crypto since 2017, including firsthand work with RSR investors at Reserve from 2022 to 2024.

Suggestion: On questions like this, high signal beats high volume. Open surveys amplify low-information bias. The responsible next step is structured feedback from qualified allocators and builders, shared transparently with the community.

If you have not reviewed or commented on Ham’s post, I encourage you to do so. See link above.

Lastly, I want to comment on Blue’s recent detailed post. It has been encouraging to see the Reserve community surface thoughtful ideas, refinements, and critiques of my original RFC. That engagement is exactly the point.

Similar to 0xd15co’s post, Blue emphasizes giving “ RSR the strongest long-term narrative.”

Whatever path we choose, my hope is that RSR sits at the center of a growth loop built on immutable, compounding mechanisms over years, not days. Blue points toward promising ideas, such as letting holders lock RSR in exchange for emissions that otherwise would have been burned, explicitly rewarding long-term alignment.

One place I disagree with Blue is the claim that “burning is a weak meme.” Two things to say about this: First, burning is a powerful meme, as a quick scan of X, Reddit, or Google makes abundantly clear its an attention flashpoint. Second, memes are shortlived by nature. Memes rarely last.

No one cares that Ethereum began as proof of work, was slow, expensive, and pitched as the “world computer.” What matters now is that it’s seen as digital oil, ultrasound money, and the leading chain for stablecoins, settlement and tokenization.

As a reminder, roughly 98% of the world does not transact onchain monthly. Legacy memes have already had their chance and likely will not onboard them. Today and tomorrow’s utility and value (and related memes) are our best shot.

Present and future RSR Health should be the priority, not what happened last year or 5 years ago.

I also want to highlight Blue’s Field Notes on public optics, the power of Ranger as an identity, and the resulting inbound interest. As I have argued a bit, improving metric legibility and reducing perceived dump risk directly reinforce these dynamics.

One final point from Blue’s post is the goal of cementing “RSR as a leader among peers.” It is easy to lose sight of this while focused on day-to-day execution, but this is a competitive arena. Institutional capital and builders have choices. They care less about what we think and more about what the RSR ecosystem enables them to do.

We need to stay in a customer mindset and frame everything around what value it delivers to them.

Throughout this RFC, we have talked about different structural RSR health issues.

The main argument I’ve tried to make is LEVERAGE. Not the kind of risky leverage often discussed in crypto, but rather the kind of leverage built by world class institutions and ecosystems.

I believe Reserve’s edge can be allowing anyone to launch onchain indexes faster, safer, at lower cost, and with credible neutrality, amplified on Day1 by a built-in community of thousands testing, governing, and spreading the word. RSR is the engine. But this only works if the incentives and support are healthily aligned.

Looking forward to the formal response from Confusion Capital and ABC Labs.

Jamesrwatsonx · December 31, 2025, 6:47am

On Timing, Leverage, and Order of Operations

What’s striking about the current conversation is not just that trust is being questioned, but how urgently we are trying to fix it. There is a sense that something must be done immediately, that different mechanisms need to be proposed, adjusted, or accelerated, even as the broader market tells a far more complicated story.

Many projects that are widely regarded as successful are down significantly. They are operating in the same unresolved regulatory environment. In that context, relative performance matters. For a project this small by market cap to be positioned at the centre of one of the largest and most consequential segments of crypto is not a weakness. It is one of our greatest advantages. The problem is not where we are. It is how we are choosing to interpret and respond to it.

The mistake is starting from trust as the thing to be fixed. When we treat trust as an input in a young, legislatively constrained industry, we assume a degree of freedom, and even a standard of success, that cannot yet be meaningfully measured in a market that is still forming. In systems like this, trust is not something that can be managed directly. Trust has to emerge once the structure has had time to establish itself and prove adaptability under real regulatory and market constraints.

This industry itself is still underdeveloped. Regulation remains unresolved, market structure is immature, and price driven sentiment routinely substitutes for fundamentals, even across otherwise strong projects. In that environment, not all opacity is misalignment and not all concentration is a design choice. Many constraints are external, and responding to them as if they were internal failures only freezes assumptions before the system knows what it needs to become.

The same inversion shows up in how decentralization is framed. When having a stake is treated as synonymous with steering authority, alignment and control are collapsed into the same thing. A stake is meant to align people with outcomes, not entitle them to direct execution before the system has proven adaptability or reached establishment. Systems that distribute direction too early do not become resilient. They become brittle because they lose the ability to pivot as laws, markets, and requirements change.

There is also a behavioural risk in centering the conversation on distrust itself. Once dissatisfaction becomes the signal the system responds to, each adjustment trains the next complaint, and nothing is ever sufficient.

Dialogue is valuable, but we must be mindful of what we elevate within it. Decentralization is a good example.

Bitcoin is often used as a reference point, but decentralization works there precisely because the system is finished and no longer needs to evolve. Stable protocols operate in the opposite environment, one defined by coordination, compliance, and continuous adjustment. Future ownership will be layered and participatory, but also constrained, because ideological purity is not how unfinished systems survive.

The more constructive focus at this stage is preserving optionality, continuing to identify real market gaps, and directing participation toward contribution and usage rather than sentiment management.

Durable infrastructure is not built by fixing trust. It is built by continuing to function until trust stops being the relevant question.

That distinction becomes clearer once you zoom out and look at the environment Reserve is actually being built for.

We are still extremely early, not just to this project, but to the market itself. We are moving toward a world where money is programmable, stability is customizable, identity and value are native to software, and everything becomes a digital asset. That future will not be shaped by projects competing inside existing lanes, but by those defining the lanes themselves.

Reserve sits in a uniquely asymmetric position here. It is small by market cap, yet operating at the centre of one of the most consequential layers of crypto. That asymmetry is leverage. It allows for coherence, rapid iteration, and the ability to pivot as regulation, AI, and market structure continue to unfold. Evaluating that position through today’s expectations about decentralization or near term optics misses the temporal reality of category formation.

The real advantage right now is not scale or sentiment, but optionality moving forward. We are still extremely early.

Dialogue is good when it keeps the focus who we are, where we’re headed, and what makes us, us.

Let’s stay focused.

0xJMG · December 31, 2025, 6:55pm

Thanks for sharing this here, @Jamesrwatsonx. I’d enjoy learning a bit more about your background, if you’re open to it.

Also, are you currently or previously working with the Reserve team in a paid capacity? That context would help us better understand where some of the viewpoints are coming from.

0xJMG · December 31, 2025, 8:30pm

I previously posted a Deeper Dive Into “Ownership” with emphasis on transparency, which that alone would be healthy progress for the RSR ecosystem.

The post did not get much into the nature of onchain economics direction and participation, which would also be a healthy component for the RSR community.

Since my post we’ve seen some market progress and challenge on ownership that I want to flag here for the community.

(Bad) Axelar project team and IP being acquired by Circle leaving AXL token holders behind. Many such stories like this. Expect barrage of lawsuits in coming years.
(Tbd–>good) Aave Labs disagreement with Aave DAO on responsible ownership of IP, front ends, fee-direction, etc. The unforgiving market has answered with price cratering of AAVE at least temporarily. Expect this to get clarified and win-win fixed in Q1.
(Good) Uniswap UNIfication passed; UNI governance now directly controls value accrual through fees, parameters, treasury actions, and token burns.
(Good) Aragon announcing its Ownership Token Index, think of it like a Bluechip scorecard but for ownership of ecosystems.

Aragon succinctly frames the big 5 questions on ownership. These questions likely will differentiate how the next-generation of web3 winners compound capital, talent and community into one tight mega flywheel.

Do tokenholders (or tokenholder-controlled mechanisms) control contract upgrades/admin keys and critical parameter changes for core protocol contracts?
Is protocol fee/revenue routing enforceable via immutable code or tokenholder-controlled governance? (e.g., hardcoded distribution or governance-controlled routing such as a fee switch)
Can tokenholders execute or constrain treasury transactions (spend/allocate) via tokenholder-controlled mechanisms?
Is there an enforceable mechanism (tokenholder-controlled or immutably defined) that routes value to tokenholders or token-controlled systems?
Do tokenholders control token supply changes (minting, emissions parameters, inflation/dilution decisions)?

I’ve been arguing the benefits of this kind of ownership for some time now. Here are a few of them…

Economically aligns everyone around clear, PMF-specific goals on user adoption and retention.
See blindspots faster.
Less nodding along. More honest, tighter feedback loops with the product team.
Governance handled by the community, freeing the product team to build.
Activated word of mouth awareness with friends, family, Uber drivers, and their networks
Extend BD outreach with clearer alignment, intent and sheer firehose volume
Surface missionary, nascent edge talent earlier.
etc.

You can read the Aragon blog post here:

Nevin mentioned in an earlier post the “people don’t know and trust us” (yet). These are the 99% of the market we hope to attract to the Reserve ecosystem.

If Reserve leans into web3’s “can’t be evil” ethos, I would encourage collaboration with Aragon’s Ownership Token Index. With updated docs and code, this feels well-suited for Ranger to tackle for Reserve so the core team can keep building/testing/iterating. Who knows, it might even make a useful DTF people want to hold!

Last thoughts:

The Reserve Rights (RSR) token and community already exist, but remain design-incomplete and exhausted, tapped as exit liquidity more than as an engine of ownership and ecosystem growth.
Opinionated products are best built by central coordinated, highly focused teams. Stating the obvious.
Having to argue and prove for capital periodically is absolutely necessary for any pre PMF venture. Its a forcing function for discovery of blindspots, sharper goals and finding shortcuts.
Having unfettered FU money before PMF is a recipe for disaster; side quests, leakage or worse. Easy to ignore RSR utility/growth-leverage with plethora of other shiny objects around.
Scarcity is an amplifier for creativity and accountability. When we eliminate the side quests, there is only one way forward, it’s do or die time and we are actually in this together.

Happy new year everyone.

Jamesrwatsonx · January 1, 2026, 2:53am

Happy New Year James!

I’m not speaking from a place of employment or compensation. My views stand or fall on their logic, not my proximity to the team.

With that context, I’ll respond directly to the substance of the ownership question.

One way to look at this is as a debate about the so-called “Big 5” questions of ownership, about admin keys, fee routing, and the checklists of the Aragon Index. That is the surface framing, and if you are a lawyer or a bureaucrat, it is a very comfortable one.

But I suspect the real tension here has little to do with indexes. The tension comes from stagnation disguised as process. Uniswap and Aave are often cited as success stories of distributed governance, but that comparison makes a category error. Those are post-settlement systems. They are utilities, not formation-stage protocols.

When you demand that a system still forming its architecture, and still navigating a legislative landscape that has not yet been written, be governed by a crowd, you are not asking for decentralization. You are asking for institutionalized exhaustion. You are asking to turn a startup into a committee before it has solved the underlying problem of programmable money.

You mention token holder exhaustion, but intellectual honesty matters here. That exhaustion is almost always price exhaustion. No one demands the right to vote on the plumbing when the water is turning into wine. Governance only becomes urgent when progress feels slow or the chart goes sideways.

The central hub you find so distasteful is not a betrayal of Web3 values. It is a definite plan. In the real world, regulators do not negotiate with abstractions or index scores. They negotiate with people they can subpoena. Systems that survive regulation require accountable counterparts. To insist on a DAO spectacle at this stage is not principled. It is self-sabotage.

There is a reason why centralized ETFs get so much attention at the moment.

I will get back to that a bit later.

True ownership is not a prerequisite for trust. It is the byproduct of a system that has already won. Right now, this is not the ownership phase. It is the survival phase. And in survival, adaptability is the only scarce input.

Adaptability requires coordination, not opposition. We are builders operating in real time, inside constraints that are still being defined. Until the full shape of what can be built is known, the task is not to govern outcomes prematurely, but to stay within the rails long enough to outpace scale when it arrives.

Digital assets are capable of innovation far beyond what the market currently understands. What we become alongside them may be even more significant. Those are the only optics that matter. You cannot govern what you have not yet become.

You can optimize for governance optics today, or you can build something that still exists in 2032. You cannot do both.

Jamesrwatsonx · January 1, 2026, 5:38am

One way to look at the current obsession with “ownership” is that it’s a healthy pursuit of decentralization. That is the conventional view. But the truth is likely the opposite. What presents as a debate about ownership is often a profound discomfort with duration.

In a world where price has become the primary narrative, stagnation redirects attention toward claims rather than construction. What follows is not decentralization, but an attempt to extract certainty from an unfinished system. Ownership stops being about alignment with a future outcome and becomes a therapeutic assertion of control over a present that feels unresolved. That impulse is understandable, but it is not a reliable guide. In many cases, it becomes an unwarranted distraction for projects operating upstream.

Premature ownership does not relieve frustration. It institutionalizes it. It introduces claims before there is a stable object to claim against. When the chart is moving up, everyone is a “sovereign owner.” When prices stagnate, that same ownership is recast as a design flaw, and impatience is rebranded as “governance critique.”

Durable infrastructure is not built by fixing trust through early distribution. It is built by preserving the ability to pivot long enough for trust to stop being procedural and become cultural.

Jamesrwatsonx · January 2, 2026, 3:45pm

To ignore institutional adoption is to misunderstand how power actually consolidates.

Peer-to-peer systems do not eliminate regulation; they just relocate it. As regulation takes shape, protocols like Reserve are not choosing whether to engage with it, they are choosing whether to survive within it.

Treating governance as a philosophical exercise rather than an operational one is a category error. Aragon’s five questions are not a model for durable protocol success; they are an abstraction built for ideological comfort, not institutional throughput. Institutions do not integrate with open-ended debates, they integrate with clear accountability, predictable surfaces, and enforceable constraints.

Ownership will not materialize as a fully sovereign, frictionless ideal. That assumption confuses aspiration with incentive alignment. Real ownership emerges where responsibility, compliance, and capital concentration intersect. Anything else remains a social experiment, not an economic system.

The uncomfortable truth is that protocols scale not by maximizing freedom, but by minimizing ambiguity. The winners will not be the most decentralized in theory, but the ones that can translate decentralization into forms institutions can actually touch.

Jamesrwatsonx · January 3, 2026, 4:33pm

At this stage, some degree of centralization isn’t a flaw. It’s a necessity. And it’s fine the way it is.

Holder exhaustion does not occur when prices are rising. It emerges when momentum slows and people mistake boredom for failure. In Web3, that boredom often gets reframed as a demand for control. When perceived influence fades, coordination follows it out the door. What gets lost in the process is the only thing that actually matters at this stage: trust in direction and focus on execution.

Protocols don’t find PMF (product-market fit) through governance mechanics. They find it through sustained innovation. Ownership becomes meaningful once there is something stable to own and real decisions to steward. Introducing it earlier confuses market impatience with structural concern and risks locking in the wrong assumptions.

It’s also worth remembering how young this industry is. Much of what’s happening reflects market conditions, not protocol failure. The instinct to cling to ownership or “having a stake” is understandable, but a stake is just a slice of a pie that hasn’t finished baking yet. Arguing over portions before the oven’s even warm doesn’t speed things up one bit.

James ^JMG^ clearly has good intentions (though his wording at times reflects otherwise) and puts in the work, but the broader dynamic here says more about where the market is than where the protocol is going. Direction hasn’t been lost. It’s just quieter than all this speculation that’s been going on. Nobody is owed ownership on a schedule. In systems that must interface with law, regulation, and institutions, accountability precedes participation. Most regulatory bodies do not negotiate with DAOs, not out of ideology, but because abstraction cannot be subpoenaed. That constraint isn’t a flaw in the system, it’s the environment the system must survive. Once you see that clearly, impatience stops looking principled and starts looking unnecessary. The rational move is restraint: let execution run ahead of consensus, and let structure harden only after reality demands it.

So for now, the right move isn’t to over-formalize. It’s to build. Let the system mature.

Let the product earn its gravity, and let rest arrives when there’s actually something to guide

0xJMG · January 3, 2026, 7:09pm

Appreciate the philosophical framing but difficult to ground without knowing your background or Reserve affiliation @Jamesrwatsonx. I do respect the bull posting though!

At any rate, this RFC’s initial post frames a problem supporeted by evidence and suggests specific solutions. Subsequently, many others acknowledged the problems, unequivocally, in the most responded to RFC ever in the Reserve community. And other specific solutions have been proposed throughout the discourse.

Just to be clear: are you suggesting Reserve and community defer action entirely, or are there specific alternatives you’d advocate in the next 12 months?

Jamesrwatsonx · January 3, 2026, 7:35pm

Appreciate the direct question. I’m not suggesting deferral for the sake of deferral, nor am I arguing against action. I’m arguing for the right actions at the right stage of system formation.

My views don’t depend on proximity to Reserve, in anyway. I prefer to lean towards the idea that they stand or fall logic alone.

Early systems benefit more from first-principles thinking than from credentialism.

The RFC correctly identifies pressure points in the current RSR design. Where I differ is on sequence. Many of the proposed mechanisms assume a level of maturity, regulatory clarity, settled demand, and stable economic roles, that asset-backed stable systems simply have not reached yet. Locking in rigidity before those variables are legible risks hard-coding the wrong assumptions.

Concrete steps over the next 12 months should focus on execution, education, and optionality, not premature formalization.

Specifically:

Clarify milestones and narrative discipline. The market needs a clear sense of where the system is going, not just how tokens behave today. Measurable execution milestones matter more than symbolic alignment mechanisms.

Expand and communicate collateral strategy. Broadening collateral types while improving transparency and explainability builds real confidence. This is where trust is earned, not through governance theatrics.

Improve DTF communication and framing. DTFs are still early instruments operating within a volatile, identity-driven market. Better education around what they are (and what they are not yet) matters more than trying to force adoption through optics.

Begin modeling dynamic assets, even if initially theoretical. Exploring AI-driven risk management, adaptive basket construction, and inter-asset coordination sets the intellectual groundwork for where this space is heading. Doing this now, even conceptually, prepares the protocol for the moment the market and regulation catch up.

Stay aligned with the trajectory of asset-backed stables. These systems will not win by mimicking DeFi governance patterns. They win by becoming boring, reliable, and legible to institutions that actually move capital.

From an execution standpoint, Reserve is roughly where it should be given the state of the market and the industry. Emissions discipline and centralized points of accountability are not weaknesses here, they are the negotiation layer that allows the protocol to survive long enough to matter.

Ownership and governance are not meaningless. They are simply lagging indicators. They work once there is something stable to own and real decisions to govern. Introducing them too early doesn’t increase trust, it substitutes process for progress.

So the question isn’t whether action should be taken. It’s whether action should optimize for short-term sentiment or long-term viability.

My position is simple: build toward what the system will need to be, not what feels reassuring while it’s still forming. That means execution first, adaptability second, and formal governance later, when it actually does the job people expect it to do.

Most people already understand that crypto is volatile. DTFs exist precisely to spread that risk over time. The point of talking about them now isn’t to encourage immediate participation, but to build familiarity with what they become once the market matures and risk aversion starts to matter again.
That, I think, was Nevin’s point. Not that adoption today is a growth lever, but that understanding precedes usefulness. Investment follows clarity, not the other way around.
The problem is when people evaluate early instruments as if they’re finished products. That leads to impatience masquerading as critique. DTFs don’t need hype right now. They need time, education, and a market that’s ready to use them for what they’re actually designed to do.
If you study where this space is heading rather than where it’s stalled, the current state starts to make sense.

The path forward isn’t confusion, and it certainly isn’t the premature execution of a romanticized ownership or decentralization myth. It’s sequence.

It’s using time to understand where the system is actually headed, not where people wish it already were. It’s patience paired with execution, not symbolism dressed up as progress. In early systems, restraint is not inaction. It’s the discipline required to build something that survives its own success.

nevin.freeman · January 10, 2026, 3:21am

To those following this thread I just wanted to give a brief update from my side. As most of you will know by now, I’ve stepped into the CEO position at ABC Labs, so am now overseeing both ABC and Confusion Capital. That transition has been time consuming and has gone well, but left me with zero time to progress on these topics until this past week.

I’m working on a reply, but all of the time I had blocked out for it this week has been spent reading the ongoing commentary and several of the linked posts, internal and external. I appreciate all the input, and as I read through things, all of your ideas and views continue to marinate. I don’t have a full proposal I would support yet, but I do have a number of pieces I’d like to put out there to see what you all think.

This coming Thursday, I’m going to be presenting on a community call to share what ABC Labs and Confusion Capital’s approach will be in 2026. I’ll make some reference to the elements that we’re exploring here for RSR health alongside the core focus of how to get product-market fit for DTFs.

I’m also interested in moving this RSR discussion from just forum posts to small interactive video calls to see what kind of communication and ideation that gets us. So, in addition to this initial community call where I present, I’d like us to try a couple of calls with the most active contributors to this thread to discuss these topics aloud face to face.

I’m excited for this year. While we will miss Thomas’s execution ability, I’m energized by being back in the driver’s seat, and I think there’s a lot we can do together.

nevin.freeman · January 16, 2026, 2:02am

All right, I’m excited to share some further thoughts.

Reminder on how I think this discussion should go:

Step one is airing the concerns. Check

Step two is discussing the concerns. Check

Step three is discussing potential courses of action. In progress

Step four is baking overall proposals until one “passes.” As I noted above: Once we have a working menu of live options, we can bake overall proposals. This is what James came out and did to start this conversation, but we need to take more stock of concerns and potential courses of action before we’re really ready to bake something real. In congress, bills get introduced symbolically to start a discussion all the time, and while they don’t pass in their initial form, they can lead to other bills later that make big things happen. I see James’s proposal as a symbolic bill that ignited a useful discussion. It’s not yet the true one big beautiful bill to make RSR great again, but it raises the question of what that ought to be.

Let’s have some video calls

In order to have a higher bandwidth conversation, develop and move these ideas faster, and get to a solution faster, let’s try doing some face-to-face calls.

If you are an active contributor to this thread or have something that you want to say but don’t want to write it down, join this first call and participate in the discussion. I would ask that everybody who joins the call plans to have their camera on and actively participate in the discussion, as having people lurking in a call like this will be a detraction from open communication and collaboration. No lurkers.

Here’s a link where you can put in your availability for three days next week so that we can pick a day and time that works the best for people who are actively following this thread:

(timeful tutorial here: https://www.youtube.com/watch?v=vFkBC8BrkOk)

More detail on RSR allocation for 2025

I shared these further numbers on RSR usage for 2025 in the community call this morning and I wanted to include them here for anyone who didn’t make it to that:

We’re pausing unlockings while we participate in this discussion

As you can see, we unlocked way more RSR than we actually allocated on net. As a result, there’s no pressing need for additional RSR unlocks right now.

I had preferred to have a deterministic unlocking schedule for the sake of clarity and certainty, but my sense is that the important promise we made was to never unlock any faster than the pre-determined Bitcoin curve. For now, we will pause unlocks. If we don’t end up changing the emission schedule, then at some point we’ll just start them again on the same pre-determined schedule, but with a delay in time. There won’t be any unlocks that go faster in order to catch up; rather, there will just be a gap in time where no unlocking happened, and then unlocks will pick up along the same schedule as was determined before but on a later date. However, one purpose of this discussion is to consider whether there’s some better way to proceed, and as I’ve shown in my post above, I have an open mind about that.

Here are some ideas of mine for what might make sense:

Comparison to startup fundraising for inspiration

In a startup company, new shares are issued when it’s time to raise funds. Everybody gets diluted, but at the same time, if things are going well, the valuation of the shares has gone up, and so everyone is happy and willing to be diluted. The company has to prove that it has made progress and that its future looks bright in order to issue and sell those additional shares and in order for investors to be willing to buy them. This holds the company’s management accountable to making progress in order to unlock the ability to cause dilution and bring in further capitalization.

One thing to note here is that startup company valuations are only measured when funding rounds happen. There is no liquid secondary market for their shares. This provides a nice clean upward trajectory in valuation, though it does have the downside of no liquidity. Narratively, though, this makes it easier to stomach dilution because you don’t really see any volatility in valuation when investors are only taking a look every year or two and the valuation at each fundraise continues to go up. In our case, we’re not talking about shares in a company; we’re talking about a crypto token that’s traded on open markets, so as we’ll see in a minute, the analogy is not perfect.

Sometimes companies need to raise more capital even when things have not gone well. When you do a fundraise at a lower valuation than prior funding rounds, that’s called a down round, and nobody likes it because it means you have to take dilution and you have to stomach a lower valuation at the same time. Sometimes it’s the right thing to do; maybe progress didn’t go as well as planned, but the prospects overall still look promising, and so it’s worth raising further capital and continuing, as opposed to giving up and letting everything go to zero.

In this forum thread, people have talked a lot about emissions not being tied to progress, and for me it was clarifying to think about this analogy, since startup companies do tend to follow a pattern more like what some are calling for.

Let’s look at how this could apply to RSR:

In theory, we could do something similar for Reserve and RSR. What if RSR was only unlocked when we proved some degree of progress and some additional need for further capital?

In thinking this idea through, though, there’s an obvious difference that needs to be taken into account, which is that there are no venture capitalists involved to make a judgment about whether progress has been satisfactory. Instead, I would assume that we would rely on the RSR holders themselves. If we’re talking about a decentralized body of thousands of token holders, we can’t expect them to do the job that lifetime professional investors would do. We’ve seen lots of limitations of DAO governance play out throughout DeFi’s history already so far.

The method that comes to my mind for how to address this would be to hash out and agree on in advance a series of pre-defined milestones so we could come to basic agreement on the trajectory we want the project to traverse, then rely on the RSR holders only to vote yes or no on whether a given milestone has been reached, as opposed to having a fully open debate every single time about whether it’s appropriate to do a further unlocking.

It’s tempting to think that maybe everything could be programmed deterministically on chain to happen in response to certain onchain numeric metrics, but realistically I don’t think that would end up being feasible. Even something as simple as TVL of index DTFs is not automatically available on chain, because the index protocol is specifically designed not to need oracle price feeds. The protocol itself doesn’t know its own TVL in dollar terms by default. I also think milestones we care about would likely end up referring to more nuanced features of the situation than something as simple and potentially gameable as TVL.

If we could figure out good milestones in advance (easier said than done!), it could be really nice to have emissions only occur when progress has happened.

Potential issues

As I called out above, market price for RSR is volatile, unlike illiquid startup company shares. It very well could be that the price at one milestone in unlocking would be lower than in the past, even if positive progress has occurred and the project is arguably more advanced and more valuable. So you don’t quite get the same “it’s fine to be diluted because the pie is worth more overall” property.

There also could be situations where progress doesn’t go as well as we would hope, and RSR that had been unlocked is consumed. If that happened, we would need to have some ability to do something similar to a down round, where RSR holders would have the option, perhaps through a supermajority vote or something, to approve the release of additional RSR even though a milestone hasn’t been hit, if they deem that that is the best way forward. In a circumstance like that I would think that the RSR unlocked would be deducted proportionally from all future tranches that would have been attached to future milestones. Basically: spending capital that was earmarked for the future in the present. That’s something that everyone would want to avoid but would need to be able to agree to do if it was deemed appropriate.

What about burning?

Some proposals in this thread suggested that, in response to progress on the project, we burn RSR from the treasury. At first, I found this very counter-intuitive. As I said before, any burning, from my perspective, needs to be permanent, as opposed to burning RSR but also giving ourselves the ability to mint further RSR in the future. That just adds further uncertainty, kicks the can down the road, and I believe is going to cause massive FUD for projects that go that direction.

If RSR that’s burned is permanently burned, when is it appropriate to do so? Maybe the answer really is in response to progress. If we were to burn predetermined amounts over time in response to progress and we knew that we were going to burn it for sure right now, why wouldn’t we just burn it right now? The whole reason why I’m generally wary of burning RSR right now is that we don’t know how much we’ll need over the course of time to do what we need to do.

So what about this: what if every time we hit a milestone, we burn RSR if and only if there’s some left over from the last unlocking (i.e., we came in under budget)? Let’s say there’s, to pick a simple number, 3 billion RSR that’s unlocked to get to the next milestone. When you get to the next milestone, let’s say there’s still 500 million RSR left. Because we got to the next milestone, we’re unlocking some further amount (say, another 3 billion). Rather than keeping that extra 500 million RSR around, maybe this is the time where we’ve learned, “okay, we didn’t need that,” so some of it could be burned. A reward to all of us for reaching a goal and proving we didn’t need more effort to get there.

But here’s a twist. In order to fully align the incentives of founders, like me, and community members who want RSR to be burned, what if instead of burning 100% of that RSR, half of it is burned and half of it is distributed as compensation to the founders? This incentivizes the founders, who are arguably very involved and able to take steps to reach milestones more efficiently, to be as efficient as possible, and to increase the excess RSR and thus drive up the burn number. We could even take it so far as having such founders, like myself, only receive any further RSR through this mechanism, no other RSR compensation, such that if milestones were not reached under budget, no RSR comp accrues to them at all. I had this idea because I’ve been puzzled about how to compensate myself. If things go really well and Reserve does awesomely, I feel like I deserve to be compensated well. If Reserve does poorly, I don’t really feel like I deserve more upside, and this is a mechanism that could get at that pretty elegantly.

This founder reward pool could be applied to people other than me down the line as well. But for now, I can only speak for myself in saying that I would be open to foregoing all other RSR compensation with a high risk, high accountability, high potential reward arrangement like this.

This also clearly aligns incentives for avoiding a “down round” situation because if that happens, the RSR that’s available for all future milestone tranches gets eaten into. That reduces the likelihood that when future milestones are hit, there will be excess left over, which reduces the amount that’s burned but also reduces the amount that goes to a founder reward. Thus, everyone would be incentivized to cooperate on using resources efficiently.

Further details

If we went this direction, there would, of course, be further details to work out, chief among them being:

What the milestones would be (again, easier said than done, though trying and failing could still produce useful planning and goal alignment for the project)
How much RSR would be allocated for each one

There’s also the question of who receives the RSR when it’s unlocked. Presently, the locked RSR is the property of Confusion Capital. There could be a mechanism where, by default, it would continue to unlock and be allocated by Confusion Capital, but RSR holders would have some ability to vote to change that if they decided to.

What about selling impact?

Even with a system like this I expect there would still be fear around the moments where RSR got unlocked. Even if milestones had been reached and things were going well, if a huge chunk of RSR were unlocked at once maybe that would be seen as problematic.

There could perhaps be some rate limiting mechanism for how quickly the RSR could be withdrawn, similar to what we’ve done in the past with the Slow and Slower Wallets. There could in theory be some commitment in place by Confusion Capital or whoever the recipient of the unlocking RSR is not to sell that RSR for less than a certain price, say 0.01 or maybe in the future as the milestones progress, some rising schedule of prices.

And there’s ongoing concern about when and if team members are selling their RSR. This would apply to any founder reward as well… I’m sure many would be worried about what would happen to it once unlocked. One possible idea there that’s occurred to me is: what if team members were compensated not with RSR tokens directly but with options to purchase RSR tokens at a certain price, say again 0.01 or maybe some higher set of prices over time. That way you wouldn’t know exactly when people would sell. But you would know that they would have no reason or a way to sell for less than some price that perhaps we as a community would determine is a reasonable level or valuation for the project overall.

These ideas obviously come with downsides, and I don’t really feel at all confident in saying that I think we should go these directions. In particular, team compensation in options rather than directly in tokens would just be less valuable per RSR token to the people receiving it. So we might need to spend more RSR tokens per team member for the same level of compensation incentive, and thus, we might just be less efficient in allocating that resource. Similarly, if the project treasury could only sell above a certain price. That restricts its ability to capitalize and fund project operations. And so we could be forced to stop operating for long periods of time if prices are low.

This also calls to mind another issue with the milestone approach overall: let’s say a bull market is in full swing, but a milestone hasn’t been reached, so no further RSR is getting unlocked. Five months after the end of the bull market, the milestone is finally reached and RSR gets unlocked. Well, now prices are low and it doesn’t seem like a reasonable time to sell and capitalize. This is in contrast to how we currently approach treasury operations: buying when prices are low and selling when markets are healthy and prices are high. As you may begin to see from our published numbers, this has produced a responsible pattern of buying and selling, and we may get less of that discretionary benefit if we lock ourselves in to only being able to unlock and sell RSR at certain points in the project which would likely be disconnected from crypto market cycles.

Let’s discuss

Let me know what you think about these different directions, or what ideas this sparks for you. I will, of course, spend some time in the upcoming call next week, discussing these directions along with others that people bring. Even if there’s an idea that it seems like I’ve passed over based on the views I shared in my prior post, if it’s something that you still think makes sense and you think I’m not getting it, I do invite you to bring it back up and try to explain what I seem to be missing.

On the one hand, as I said this morning on the community call, our number one priority needs to be getting product-market fit for DTFs so we can’t take too much time away from that core activity for this RSR health discussion and for thinking about emissions. On the other hand, these are core features of our ecosystem and we need to get them right and we need to approach them in ways that take into account our plurality of perspectives. So I’ll be proceeding with the goal of making my interactions and work on this topic time-efficient but not rushing the timeline on the calendar to finalize what we’re going to do here, in order to make sure there’s ample space to work through the relevant discussions.

Looking forward to talking to some of you next week and reading responses here from others.

A note on composing these posts

I’m using an app called Wispr Flow to compose my posts here. It’s a voice transcription tool that does a pretty good job and speeds up the process. I wanted to share that in case others would find it helpful to do the same thing.

I’ve noticed a lot of these posts feel like they were composed using LLMs, and it makes it a little bit difficult to tell which ideas are coming from the person who is posting and which ideas are inserted through the writing process by the LLM’s embedded assumptions. That’s not necessarily a problem, LLMs can be smart and can be good inspiration. But to the extent that LLMs are being used to simplify the writing process, I would just point out voice transcription as another way to efficiently participate in long-form writing with words that come directly from you.

Jamesrwatsonx · January 17, 2026, 6:08am

Always working.@nevin.freeman Always looking ahead.

This project has not paused. The progression from airing concerns to focused action marks a shift from indefinite community pessimism to definite protocol optimism.

Video chats will be key.

Public consensus, when it moves horizontally, is the enemy of the vertical move. Public threads optimize for average opinion. The future is not average, and neither are the projects that define it. One can see that pausing emissions removed the default. Dilution is no longer something the system drifts into. It is now a cost that must be justified by real progress. That single change clarifies intent and surfaces commitment. Complaints are easy. Construction is not.

The real leverage point is becoming more and more visible. Time to innovate.

The next phase is not about emissions mechanics or governance optics. It is about index creation and the core questions raised this week. As we move into 2026 and beyond, indexes will evolve from passive exposure to programmable intelligence. The future does not belong to structures that merely hold assets. It belongs to systems with an opinion.

That direction is already visible. Gabo, Ugly Cash, BFF, Confusion Capital, Moneterium are not side efforts. They’ve been clear signals for those paying attention. Signals pointing toward participation, activity, coordination, and intentional allocation.

This work that will bring us to monopolize what we do will not originate in public threads, becasue it seems that forums merely stress-test outcomes at best. Any new financial primitive can only be built on truths that are not yet obvious and would not survive premature exposure. RSR’s role will not be argued into existence. It will be built into necessity.

Lastly, stability is earned by systems that turn volatility into throughput. Stability is volatility, correctly structured.

The market punishes ideas before they become inevitable.
Build anyway.

Teeb · January 17, 2026, 8:31pm

Thanks Nevin for progressing the thread.

appreciate the confirmation of stopping supply emissions
On the burn point, you kinda confirmed that coin market cap breakdown of RSR is largely correct. So 20% of the current supply of the team seems already fair. If you’re the only founder I’m sure you already have a bulk of that 20B of RSR, correct me if that’s wrong. Therefore, if the treasury right now is enough to support the medium term costs (5 year etc), then why would 50% of the unlocked 37B I.e 18.5B go to the founder? I don’t think anyone suggested this in the thread above. If you do have majority of the 20B, and the current treasury is paying you an annual salary from what you shared above then I believe you’re compensated well if Reserve does well. There’s no need for the 37B unlocked tokens and it should be burnt and there shouldn’t be an option to allow for anymore minting of RSR.
Focus on $$ of each RSR, let’s stop beating around the bush here. If RSR was $1, you won’t be paying 1B RSR in “team compensation” I thought this project understands how finance works.

This project needs a rewire. Burn the complete locked supply. And create an environment for no free lunch

nevin.freeman · January 17, 2026, 10:47pm

For the avoidance of doubt for anyone reading this thread, many of these numbers are not correct: I’m not the only founder, I have not earned a majority of the tokens distributed to team members, the remaining pool of tokens is not 60B and most of them are locked, not unlocked, and the idea I put forward was to split excess RSR upon each milestone between a founder reward pool and burning, not to divide up the entire pool this way.

Teeb: I considered deleting your post since it creates more misinformation than adding to the discussion, but your comments are on topic and if the numbers were what you believe them to be and I was suggesting what you took me to be it would be a fair point to make, so I’m assuming you are acting in good faith. However, you are misinterpreting several things at once here, and I’d ask that you more carefully read and consider if you want to contribute to this discussion.

Teeb · January 18, 2026, 4:45am

My bad wrote the comment late at night and misread coin market cap, updated the numbers according to what they have now. Definitely acting in good faith and in no way trying to down play your contribution at all, more trying to understand the make up of the numbers listed on Coin market cap

rspa_StableLab · January 19, 2026, 7:53am

I want to point to a recent example of a massive (100M token) burn on a major project, Uniswap. As part of the Unification proposal, 100M $UNI tokens where burnt. Fees were introduced to reward $UNI holders and a lot of old execution debt was cut.

See if you can spot the effect in the chart below. Token burns sound appealing, but very often they just reduce optionality for no clear gain.

Fortis · January 19, 2026, 11:16am

This can be a two way street. Here is OKB token burn. Spot the difference…… 4.5x at the top and 1.2x as of now after the burn took affect.

0xJMG · January 19, 2026, 4:22pm

(post deleted by author)

0xJMG · January 19, 2026, 4:55pm

Token burn isnt meant to pump the price.

Its meant as a tool to improve upstream health through about three channels:

Metrics legibility with capital allocators
Reinvigorate trust with the current and untapped community = future customers and amplifiers
Focus team and community on the collaborative ride or die path forward

Seasonal markets, black swans and geopolitical preferences come and go. Make RSR healthy again and price will overindex compared to peers and competitors. The longer it stays unhealthy, the more the exit liquidity cushion evaporates.

In 1519, Hernán Cortés landed on the coast of present-day Mexico with a small Spanish force, far outnumbered and deep in hostile territory. As doubts spread among his men and rumors of retreat grew, Cortés made a decisive move: he ordered the ships burned or deliberately scuttled at Veracruz. With no vessels left, there was no path home and no fallback plan. The only option was to move forward together into the interior and confront the Aztec Empire. The story endures as a symbol of radical commitment, where removing the escape route forces absolute focus and collective resolve.

There is more than one way to improve RSR metrics legibility, reinvigorate trust and focus but it won’t be unenforceable promises.

Topic		Replies	Views
[RFC] RSR Health - A Meta Thread Ideas & suggestions	1	175	December 12, 2025
Discussion: RSR emissions approach for the second half of the token supply Ideas & suggestions	59	5048	November 3, 2025
Discussion: RSR Allocation Mechanisms for the Future Ideas & suggestions	2	318	August 28, 2024
RFC - Introducing RSD More DTFs	7	1323	July 4, 2023
RSR Burning Mechanism with RSR Burn RToken Ideas & suggestions	5	1695	June 15, 2023