Summary
I propose that we replace the current Bitcoin-shaped RSR unlock curve with a milestone-based approach tied to the reserve ecosystem’s net annual recurring revenue. The first milestone would be $2.5M in net annualized recurring revenue (measured over trailing six months), and hitting it would trigger an unlock of 3 billion RSR, to be utilized strategically over a period of roughly one to two years. Upon reaching the first milestone, Confusion Capital would determine and announce the next one. This ties RSR supply growth to demonstrated product-market fit and growth rather than to time elapsed.
Abstract
This proposal replaces the Bitcoin emissions curve currently governing RSR unlocks with a milestone-triggered structure. No additional RSR unlocks would occur until the reserve ecosystem reaches a trailing-six-month annualized net revenue of $2.5M. Net revenue here means gross revenue minus external partner share minus incentive spend, a metric we began reporting in the Q1 2026 quarterly report.
When that milestone is reached, Confusion Capital would unlock 3 billion RSR from the treasury. That RSR would not be sold or paid out to contributors immediately; it would be distributed strategically by Confusion Capital, likely over a one to two year window, with financials reported retrospectively each quarter, similar to the Q1 2026 quarterly report.
The plan specifies only the first milestone and unlock amount. Upon hitting Milestone 1, Confusion Capital would choose and announce Milestone 2 along with its corresponding unlock size. Holders would retain one milestone of forward visibility, and the project would retain flexibility to adjust the metrics and magnitudes as it evolves. Confusion Capital would reserve the right to deviate from this plan only in extenuating circumstances where it is clearly in the project’s best interest, and with full transparency to the community.
No RSR burn is proposed in the near term. Burning is addressed in the Rationale section below.
Progress toward the milestone would be tracked on a public dashboard, which would include other stats as well. Here’s a screenshot from the draft dashboard the team has been working on:
Note: current NARR number is negative, this is a representative example image.
Problem statement
The current Bitcoin-shaped unlock curve has two problems worth solving.
First, it decouples RSR supply expansion from project progress. Tokens unlock on a fixed schedule regardless of whether the ecosystem is generating organic demand and capturing revenue, or spending treasury capital without payback.
Second, and equally important, the community has made clear that the fixed unlock schedule is intimidating, regardless of whether those tokens actually hit the market. In practice, most unlocked RSR has stayed in the treasury; on net, Confusion Capital has been a buyer of RSR rather than a seller over the relevant period. But the perception of a fixed schedule dripping new supply into circulation has still been a persistent source of community concern. A structure that makes the connection between unlocks and project health legible, rather than asking holders to trust that unlocked tokens won’t be mismanaged, is a healthier arrangement for everyone.
Milestone definition
I propose that we set annually recurring net revenue as the north star, define one milestone at a time, and require the project to hit the milestone in order to unlock further RSR.
What do I mean by net annually recurring revenue?
- Total revenue = all revenue collected by all Yied and Index RTokens.
- Partner share = any revenue distributed to any parties other than RSR holders or RSR burn.
- Incentive spend = any spending done by any entity in the Reserve ecosystem in order to incentivize holding RTokens in an ongoing way.
- Note: funds spent to initially promote RTokens for short periods, with an expected net revenue payback period of less than two years (meaning if we spend $10 in startup incentives we expect the ecosystem to make back that much more more in revenue within two years) can be counted as cost of acquisition, not ongoing incentive costs. The incentive spend cost is meant to capture ongoing expenses that drive the gross markgins of an RToken into the red.
- Net revenue = total revenue - partner share - incentive spend.
- Net annually recurring revenue is measured over the trailing six months, meaning it needs to be above the milsetone level on average for a six month period before the milestone is considered satisfied.
Rationale
Why net revenue as the milestone metric?
Net revenue (gross revenue minus external partner share minus incentive spend) is the simplest available signal that the DTF product line has product-market fit. TVL can be bought with incentives, so gross revenue can be subsidized. Net revenue can’t. If we hit $2.5M annualized net revenue on a trailing-six-month basis, the capital in the products is there because the products are valued, not because we’re paying to keep it there. That’s the condition under which additional RSR unlocks are justified to fuel growth.
Why $2.5M specifically?
The figure is meaningful enough to represent genuine product-market fit rather than noise, without being unreasonably high for an early stage ecosystem. As a rough reference, assuming ~80 bps of TVL flowing to RSR holders, $2.5M NARR implies roughly $300–400M in non-incentivized TVL (a useful scale check, not a target in and of itself).
Why 3 billion RSR as the unlock size?
The figure comes from estimating the RSR spend the treasury will need to carry the project from this milestone through the next meaningful phase of growth. Three billion is not a sell event; the intent is strategic distribution over roughly one to two years. Quarterly reporting (established with this Q1 report) gives holders retrospective visibility into how that RSR is actually being used.
Why not a full multi-milestone schedule up front?
The appeal of specifying every future milestone and unlock in advance is obvious: total forward clarity. We considered it, but it’s very difficult to know what metric will best capture project health two or three milestones out. After hitting $2.5M NARR, the next meaningful threshold may warrant a different metric or a different unlock size. Pre-committing now trades real future optionality for certainty. Announcing the next milestone upon hitting the current one preserves one milestone of forward visibility for holders while preserving the flexibility the project needs.
On burning RSR instead of unlocking:
There’s been lots of community discussion about whether treasury RSR should be burned rather than unlocked. Confusion Capital’s position:
We support permanent burns only: tokens burned with no corresponding mintability added to the contract. The RSR Health proposal paired burning with new mintability, which we believe is unhealthy long-term. If we burn, we burn.
The governing question on any unit of treasury RSR is: does releasing and spending this token generate more RSR value (burned or distributed to stakers and voters) over the next 10–20 years than burning it directly today? If strategic spending of 1 RSR leads to 5 RSR burned and 3 RSR distributed downstream, holders are better off than if we burned that 1 RSR today. If spending 1 RSR only leads to 0.1 RSR in downstream value, direct burning is better.
Confusion Capital’s current position is that careful, strategic RSR spending ought to meaningfully outperform direct burning in expected RSR-holder value.
That calculus can reverse. At project maturity (think organic growth, ossified ecosystem, spending no longer materially moving the trajectory), direct burning of remaining treasury RSR becomes the right move. We’d support it at that point. We are obviously not there yet.
On reserved flexibility:
Confusion Capital would retain the right to deviate from this plan in extenuating circumstances where it’s clearly in the project’s best interest. A major partner opportunity requiring unlocked RSR for a lockup, or a circumstance where the community votes and agrees an early unlock serves the project, are examples. Any deviation would be transparent and discussed with the community before execution.
Risks
The milestone could take longer to reach than expected.
If the flywheel takes longer to turn than anticipated, no RSR unlocks occur for an extended period, which affects treasury runway and strategic optionality.
The 3B unlock could be perceived as scary.
Market perception at the moment of unlock may be negative regardless of how slowly or strategically the tokens are actually distributed. We saw this with the BTC-shaped curve, where tokens were presumed to be dumped even when they were not.
The discretionary-deviation clause could be exercised in ways the community disagrees with.
My take is that these risks are worth bearing and the overall impact of this system is clearly positive for incentives, transparency, and project growth.
Do you support this milestone-based proposal?
- Yes, as proposed
- Yes, with modifications (please comment)
- No
I’ll engage directly with substantive feedback before transitioning to an IP. Having considered many different options and ideas suggested by the community and core team members, I’m pretty convinced this is the best available direction, but I want to discuss directly and account for any comments on this concrete version of the plan.
Nevin
President, Confusion Capital
CEO, ABC Labs
