RSR holders will vote on a proposal to replace Reserve's time-based token unlock schedule with a system that ties future supply to economic performance.
RSR holders will vote next week on a proposal to replace Reserve's existing time-based token unlock schedule with a system that ties future supply to the ecosystem's financial performance and the market price of RSR.
Under the revised framework proposed by Confusion Capital, the first milestone would require the Reserve ecosystem to reach $2.5 million in Net Annualized Recurring Revenue (NARR). Hitting that target would make up to 3 billion RSR eligible to unlock, subject to additional price conditions based on RSR's 30-day moving average.
The proposal sets a $0.005 price floor and a $0.015 price ceiling for an automatic 3 billion RSR unlock. Below the range, the tokens would remain locked unless holders approved an alternative. Above it, the automatic allocation would instead be capped at $45 million worth of RSR.
Voting through Snapshot begins August 27 and runs until September 3. The proposal is the latest version of a plan first put forward in May to move Reserve away from unlocking RSR according to the passage of time.
Reserve Would Tie RSR Unlocks to Economic Progress
Reserve is a crypto protocol for creating asset-backed tokens and Decentralized Token Folios, or DTFs. RSR is its governance and staking token, with part of its supply still locked under an emissions schedule.
The existing schedule follows what Reserve describes as a "Bitcoin-shaped" unlock curve. The new proposal would replace that with individual economic milestones, beginning with $2.5 million in NARR.
NARR is designed to measure how much sustainable economic activity the Reserve ecosystem produces after accounting for the costs needed to generate it. It is not recurring revenue in the contractual sense commonly used by software companies. Instead, Reserve defines it as revenue that can reasonably be expected to continue if current economic conditions persist.
Broadly, Reserve takes revenue generated by the ecosystem, removes the share owed to external partners and subtracts ongoing incentives required to persuade users to hold or use its products.
For index DTFs, Reserve annualizes the average TVL fees collected over six months and the median monthly minting fees over the same period. The median is used for minting because those fees can spike during periods of unusual activity. External revenue shares and incentives are then deducted.
For yield DTFs, Reserve annualizes average gross revenue and subtracts incentives. The results are combined to produce ecosystem-wide NARR.
There is some flexibility for money spent launching new products. Short-term incentives can be treated as customer acquisition costs rather than ongoing expenses if Reserve reasonably expects the additional revenue they generate to repay those costs within two years.
The methodology is also intended to accommodate businesses Reserve hasn't built yet. Sustainable recurring revenue from future products can be incorporated into NARR, with the methodology for material new revenue sources disclosed publicly.
That makes the $2.5 million threshold an ecosystem-wide economic target rather than a target exclusively for DTF fees.
Reserve remains some distance from it, as during its Q2 community call, co-founder Nevin Freeman said NARR had improved from negative $7.4 million in Q1 to negative $1.6 million in Q2, with another improvement expected as remaining incentive expenditure rolls off.
RSR Price Determines How Much Can Unlock
Reaching $2.5 million in NARR would not by itself trigger the full 3 billion RSR unlock.
Reserve would also look at RSR's 30-day moving average price, limiting the effect of a short-lived price spike or drop around the date the revenue milestone is reached.
If the average sits between $0.005 and $0.015, all 3 billion RSR would automatically become unlocked under the proposed policy.
Below $0.005, there would be no automatic unlock. Reserve could wait until the 30-day average returned to the prescribed range, or propose a different course of action and put that change to another RSR holder vote. The floor is intended to prevent a large addition to unlocked supply during substantially weaker market conditions.
The opposite mechanism applies above $0.015.
Three billion RSR would be worth $45 million at $0.015. If the 30-day average exceeded that price, the number of tokens automatically unlocked would fall so that their total value did not exceed $45 million.
At $0.03 per RSR, for example, that formula would permit an automatic unlock of 1.5 billion RSR rather than 3 billion.
Confusion Capital could again propose a different allocation, but holders would have to approve the change through Snapshot.
An unlock also does not mean 3 billion tokens would immediately be sold or distributed. The proposal makes the RSR available for strategic use by the project over time, with Reserve continuing to report treasury RSR purchases and sales quarterly.
Holders Would Vote on Future Changes
The revised proposal also limits Confusion Capital's ability to alter the system after it has been approved.
Changes to the revenue milestone, price thresholds, unlock amount or other material elements outside the predefined rules would require another Snapshot vote. Confusion Capital, ABC Labs and Best Friend Finance propose abstaining with company-owned RSR so votes reflect non-treasury holders. Freeman will also abstain from the initial vote.
The commitment is explicitly non-binding rather than a legal contract, a distinction Confusion Capital says is necessary to avoid affecting RSR's regulatory status.
Reserve also isn't proposing a complete schedule for the remainder of the locked supply.
Instead, it plans to set one milestone at a time. If the first $2.5 million NARR milestone is eventually satisfied, Reserve would return with a proposed second milestone and its corresponding unlock conditions. The reasoning is that the ecosystem's products, revenue sources and RSR itself could look substantially different by then.
RSR Vote Begins August 27
RSR holders will have from August 27 through September 3 to decide whether to adopt the framework.
RSR held directly or staked and vote-locked across Ethereum, Base and BNB Chain is eligible without holders needing to unstake or move the tokens. Snapshot voting uses wallet signatures and does not require gas fees.
RSR held on centralized exchanges is different. Holders who want those tokens counted must withdraw them into self-custody by August 26.
If approved, the proposal would fundamentally change what determines when Reserve's remaining RSR supply becomes available. Time alone would no longer be enough.
The first 3 billion-token allocation would instead require Reserve to move from its current negative NARR to $2.5 million in sustainable annualized net revenue - and even then, the amount that unlocks would depend on where RSR is trading.
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