Making REV Token Solvent

It's as difficult or as easy as we wish to make it

I'd rather have 80% of a 2018 Ford Mondeo with 30k miles on the clock than 100% of a Lambo wrapped around a tree by a coke addict and half a dozen ambulance chasers fighting over the litigation, which is what we have now. - Me

TL;DR

• Good and bad, right or wrong says nothing about the value proposition of an asset. The value proposition is defined by quality, quantity and variance, and blockchain’s highest use case, from an engineering perspective, is in measuring this better.

  • Something might even be a mountain of smelly horse sh-t, but 10 million tonnes of composted horse sh-t, with all the microbes and earthworms and so forth, is worth tens of $millions to gardeners, farmers and so forth, because it’s great for growing vegetables in.

  • No asset is all things to all people, it doesn’t have to be nor should it be, especially in a start up the value is mostly defined by the unique value proposition and by its ‘Okatu’ not because of what most people think.

  • Popularity is a game for politicians and everyone hates them anyway, so who cares? Nobody does unless you make them with your value proposition.

• The REV treasury is currently 130 million tokens, the initial strike price is 1 cent, let alone the last agreed price of 0.3c, $1.3 million isn’t enough to pay down the debt, develop a light client for DEX integration and stand up a network, period. There’s a hole of about $1-$2 million that needs to be filled.

• We can agree layered strike prices with creditors say at 1c, 3c and 10c, at roughly 3x intervals to keep it simple, but that conversation is littered with problems and will be difficult to come to consensus on. It will take lawyers and creditors a long time to work out, and in all that time there will be no money anyway.

• We, as REV holders, declare a ‘force majeure’ event that wasn’t accounted for in the initial tokenomics model, holders take a haircut, maximum 20%, to restock the treasury to pay back debt at a 1c-3c strike price, stand up a viable main net and a light client plan to list on Cosmos DEX, which also requires additional developer man-hours.

I’m Stupid, You’re Stupid, It’s Stupid & That’s OK

An important material event that should be accounted for in all Proof of Stake tokenomics models, especially tokenomics models linked to funding of a blockchain that either doesn’t exist yet or is in an unstable state, is the state of insolvency, the state that 90% of startups end up in usually anyway: an illiquid token, a treasury to debt ratio below 1, no main-net and no development team. This is where RChain CoOp ended up in 2022, with roughly, according to my knowledge, $1 million in unpaid back-pay to developers, and another $1 million in arbitrated obligations and no way to pay.

In terms of the tokenomics of REV token itself, this represents a ‘force majeure’ event. Nowhere in the REV tokenomics was this event planned for, even by the supposed experts in ‘collective intelligence’ who were going to ‘re-imagine capitalism’ when this journey began. Alas nobody will ever ‘re-imagine’ a punctured bicycle tire back to its previous inflated state, but with a shimming tool, a puddle, some glue, a bit of know how and elbow grease, it’s eminently possible, and the same is true, imho, of REV token solvency at this time also.

Blockchain is itself a highly volatile market, a gold rush market, where trading often takes place on poorly regulated ‘bucket shop’ exchanges; where true liquidity levels are opaque and wash trading is common; and where anyone who can buy enough Twitter followers can become an overnight expert. FTX is the latest in a long list of examples of the dangers of this, and it collapsed soon after the RChain CoOperative. The bankruptcy of RChain CoOp could easily be interpreted as an extension of the bankruptcy and contagion from FTX, the malfeasance of which leading those in its economic orbit astray, making decisions they otherwise wouldn’t. Both were registered in the same country, the USA, with the same problems, the Pandora Papers and ‘Pandora’s Box’ as described at length by Mike Gill, a multi-$trillion problem in the USA, affecting not just the blockchain industry but every aspect of life in states like New Hampshire, as previously described.

Rholang, the Rho-Calculus and Co-Operative governance centered from the Washington State, USA were all bleeding edge concepts themselves also. Technical challenges, recruitment challenges, regulatory burdens over time were not accounted for, in addition to the board of the CoOp making a series of poor strategic and spending decisions absent proper accountability by majority view in hindsight also.

Best Reasonable Efforts

Given that:

• in terms of REV economics, a force majeure event occured, that was in hindsight heavily linked to events in one country, the USA, which was outwith the control and reasonable predictive capability of anyone when it happened (FTX and SVB bankruptcies and broader contagion of boom-bust, gold rush market cycles);

• that spending decisions were made that give reasonable doubt to intentions of those making them at the time;

• that the blockchain technology sector is a highly volatile, high risk sector;

• and that both Rholang blockchain technology and CoOperative governance from the USA are and were a high risk bleeding edge risk to take in what can no longer be considered to be a first rate and trustworthy jurisdiction for such organisations.

REV Holders have an opportunity here to wipe the slate clean given the legal idea of ‘best reasonable efforts’ which says ‘sh-t happens’ (and sh-t really did happen), no guarantees but we’re all going to do our best to try to make this work. This is eminently in-keeping with the original CoOp’s principles and allows REV HODLers to at least get back more than half of something, as opposed to all of what is currently insolvent.

The Options

The Haircut Option

The Pros:

• REV HODLers declare Force Majeure and take a haircut of 20%, which is returned to the treasury

• Due to Force Majeure stemming from financial irregularities both in the general market and in the specific, everyone waives rights to litigate or whinge over the sore arse they received before, including me, even.

• with 870 million REV in general circulation, that’s 174 million REV added to the treasury, bumping the Treasury account up from $1.3 million to roughly $3 million at a 1c REV strike price

• That provides $1 million to pay developer back-pay, $1 million to appease creditors and arbitration and $1 million working capital to stand up a main net, a light client and list on at least one DEX,

• we have a roadmap to solvency that’s reasonable and achievable with a project plan.

The Cons:

• What I consider pride and ongoing envy and bad feelings may prevent consensus on this, the emotion and gossip ratio to constructive progress and conversation ratio is not good and has not been good for a long time.

• Laziness, apathy a lot of people might no longer care either way, have given up (but at least we make best reasonable efforts to make them care).

• ‘Taxation is theft’ or ‘but muh collective intelligence’ (decision by committee that doesn’t exist anyway) ideology purity spiraling in favor of trying to make a silk purse from a sow’s ear rather than address the problem in front of us.

The Strike Price Option

The Pros:

• Pure expectation of future reward is an easy justification and an easy sell. ‘We’ll all come to consensus some time in future’ is fine because a problem postponed is always a problem half solved in some ways, even if the problem is just avoiding conflict, which is probably good in terms of REV’s legacy because there’s already been a lot of it.

• Everyone gets paid out in turn according to the laws as currently being presented, there’s a payout hierarchy according to priority, and because it’s all based on promises in future, no one can feel any worse off than anyone else if the future never arrives anyway.

• It’s ideologically pure in terms of ‘collective intelligence’ principles in that the promise of everyone producing a better idea than someone is always better than someone or anyone’s idea ever could be.

The Cons:

• Options markets have expiry dates, there’s no such thing as an option that doesn’t expire and in the end we’re all dead anyway

• St Peter doesn’t care what we intended to do while we were all sat around with our thumb up our bum waiting for whatever.

• Even though Jim Whitescarver is brilliant and perhaps the best and most experienced collective intelligence computer science expert on planet Earth today, at his age, retired, doing this mostly as a hobby, he’s got no magic wand to wave around, many problems, few friends, and a lot of this consensus forming stuff goes at the pace of the slowest participant. All that time is both opportunity wasted and gained, and more is being wasted than gained in my view.

The ‘Goldilocks’ Option

The Pros:

• Everyone weighs up the pros and cons above and chooses a bit of both, including those owed money, and we all work to negotiate a deal.

• It would be most fair and would force those who believe in one option of the other option to find middle ground and negotiate, to justify their value proposition.

• Everyone’s forced to make a decision and actually participate in this ‘collective intelligence’ thing, even if ‘taxation is theft’ or ‘but muh dencetralisation’ none of the other forks are any better at this time save their token is solvent and REV token is not.

The Cons:

• Clearly just taking the haircut off the top is the best option, in my own unilateral view, and this option would require me to listen to a whole lot of ‘blah blah blah’ but OK. I understand I need to put my underpants back on inside my trousers before I get too carried away.

Conclusion

Making decisions is better than not making decisions, sh-t happens, that’s life. That never stopped billions of years of evolution of life on this planet and it certainly should not stop one of the most promising projects in this industry from realizing its potential.