[Proposal Idea] Securing Validator Economics and Network Sustainability

Proposal Discussion Proposal Ideas
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Securing Validator Economics and Network Sustainability

Background

Over the last year, the Casper Network has undergone a remarkable operational and strategic turnaround, with accelerated delivery across protocol, governance, and ecosystem initiatives. Key milestones include Casper 2.0 and 2.1, major CSPR Suite upgrades, the launch of core DeFi primitives such as a new DEX and liquid staking, and the Americorp parking MVP, alongside an upcoming native Ethereum bridge (now in audit) and beyond. Decentralized governance is live, with multiple on-chain votes already shaping network outcomes. This renewed momentum has restored direction and credibility, but sustaining and scaling it now requires a structural reset.

Much progress has been made in this respect, with annual expenditures being reduced by approximately 80% compared to 2021-2024 averages. Under this more efficient operating structure, development pace and product output have continued to accelerate. The Association is now operating leaner while executing at a higher level, creating a stronger foundation for disciplined growth.

The primary constraint today is no longer strategy or execution capability, but the capital required to break through key market gatekeepers. These include top tier centralized and decentralized venues, as well as stablecoin issuers and distribution through real-world asset vault structures. Against this backdrop, tokenomics must evolve.

Proposal

  1. Base protocol inflation remains 8%.
  2. 2% of total supply per year is allocated to Casper Association operations and ecosystem development, while 6% of total supply per year continues to flow through validator reward mechanisms.
  3. A one-time issuance of 33% of circulating supply is allocated to accelerate market-enabling integrations, subject to the Token Issuance Unlock Schedule.
  4. A portion of this allocation will be placed through structured OTC agreements with lockups, staking and staged release provisions.
  5. The remaining tokens will be staked across the validator set in accordance to the network-approved delegation program, aligning the Association’s balance sheet with long-term network security and validator performance.
  6. Expenditure on grants, new hackathons, targeted R&D, and new initiatives that require capital investment are subject to approval via a network vote, to be held once quarterly, unless extraordinary circumstances require more timely votes.
  7. Expenditure against exchanges, major stablecoin integrations, interoperability network integrations, core protocol, Odra smart contract framework and CSPR product suite development and maintenance, provision of liquidity to Casper DeFi initiatives, Testnet validator incentives, finance/legal/regulatory expenses and G&A overhead are exempt from the network vote process.
  8. The Association will regularly make available to delegators and validators, via an authenticated portal, a financial report detailing expenses by category.

Detailed Explanation

Inflation

Under this proposal, base protocol inflation remains 8%. Of total token supply, 2% per year will be allocated to the Casper Association prospectively, to fund ecosystem coordination, core engineering, and market enablement. The remaining 6% continues to flow through existing validator reward mechanisms, resulting in a net validator-facing inflation rate of approximately 6%. Validator selection and reward mechanics remain unchanged. Redirecting a portion of emissions to the Association converts part of inflation from passive market supply into targeted ecosystem investment that reduces market structure risk and supports long-term demand growth.

One Time Issuance

In addition, a one-time issuance equal to 33% of circulating supply is proposed to accelerate specific market-enabling outcomes. Of this increase, 9% will be made available immediately, after which 3% will unlock each quarter through March 2028, according to the Token Issuance Unlock Schedule. These growth paths could include, exploration of centralized exchange listings, consideration of native stablecoin integrations, interoperability with external protocols, and activities intended to encourage liquidity within the network’s DeFi ecosystem. In order to ensure necessary liquidity needs are met, while limiting the need for ongoing market activities, a portion of the overall allocation will be placed through staggered, structured OTC agreements with appropriate lockups, staking and staged release provisions. Remaining tokens held in treasury will be staked across the validator set, aligning the Association’s balance sheet with network security while providing stability to the ecosystem along with the time required for these integrations to translate into stronger usage, deeper liquidity, and long-term value.

Transparency and Governance

Continuing the expansion of decentralized governance of the project that was initiated when the new Board of Directors was installed one year ago, this proposal seeks to provide stakeholders with greater insight into the Association’s budget and expenditures, while enabling increased transparency into the Association’s financial reporting.
The first quarterly financial overview will be made available the week of July 20th, 2026, followed by a Validator Meeting to address questions and discuss any extraordinary budget requests for the next quarter.

Rationale

One year ago, a new Board of Directors began executing a complete and focused turnaround strategy to reposition the network for long-term growth, following a number of adverse events. Faced with dramatically fewer resources, this progress was achieved through a disciplined operating model that prioritized capital efficiency and execution focus. The new team embraced the turnaround opportunity and within one year achieved significant progress and forward momentum for the network:

  • the long-delayed Casper 2.0 protocol upgrade was released, followed by significant protocol changes including deflationary burning mechanisms and increased block speeds.
  • Decentralized governance finally became a reality, with the introduction of an on-chain voting mechanism that has since produced 7 opportunities for Casper stakeholders to determine critical outcomes for the network.
  • On the ecosystem front, Casper Network has achieved more in a year than all years before: the mainnet launch of a key, real-world enterprise use case, dozens of releases across the CSPR Suite, the launch of key DeFi primitives including Decentralized Exchanges, liquid staking, perpetuals, oracles and an upcoming bridge to the Ethereum ecosystem and beyond.
  • Through a successful first hackathon, the network now features prediction markets, games, intent based frameworks, collateralized lending and much more.
  • Operationally and financially, annual expenditure was reduced by approximately 80% compared to the levels maintained between 2021 and 2024 by the prior board.

The new Board of Directors believes it has adequately shown what can be accomplished in one year with limited resources and during adverse market conditions, and believes it has positioned the project on the precipice of significant growth. Now it needs the runway, time and resources, to convert the accrued potential into substantial outcomes.

Precedent

One-Time Recapitalization Issuance

Recapitalization events in turnaround scenarios are quite common in the traditional business world. In recent years, companies such as:

  • Rolls-Royce - ~77% dilutive recapitalization in 2020(source)
  • TUI - 32% dilutive recapitalization in 2021(source)
  • Lufthansa - 50% dilutive recapitalization in 2021(source)
  • Virgin Atlantic - private recapitalization in 2020(source)
  • Aston Martin - 80% dilutive recapitalization in 2020(source)
  • Noble Group - 80% dilutive recapitalization in 2018(source)
  • Carnival Cruises - 43.4% dilutive recapitalizations in 2020 and 2021(source)

all implemented dilutive recapitalizations in order to finance their turnarounds and avert significantly worse outcomes for their stakeholders. Within our industry and amongst L1 foundations, significant precedent exists as well: MakerDAO minted new MKR to recapitalize its protocol. The EOS Network Foundation approved new tokenomics that redirected large amounts of tokens to fund network growth and sustainability as part of a strategic turnaround.

Protocol-funded development

Blockchain protocols funding ongoing operations and development of their ecosystems through protocol-based issuance are common place in the industry:

  • ZCash (ZEC) redirects 20% of block rewards to fund development/operations
  • In Decred (DCR), 10% of all block rewards go to the Treasury for sustainability
  • Dash (DASH) uses 10% of the block reward to fund its own development
  • Cosmos (ATOM) implements a Community Tax as a percentage of staking rewards to fund its ecosystem
  • Cardano (ADA) takes a 20% cut of total rewards to fund its treasury
  • Polkadot (DOT) diverts 15% of its annual inflation (staking rewards) and 80% of transaction fees to its treasury for operations and development

These examples demonstrate that protocol-funded development and ecosystem support are established practices among mature blockchain networks, and this proposal aligns Casper with proven industry models for sustainable growth.

The Process

Timeline:

  • Proposal Posted: February 17, 2026
  • Proposal Discussion and Iteration Period Ends: February 22, 2026
  • Validator Vote: February 23 - February 25, 2026
  • Implementation: Immediately following vote

Proposal Lifecycle

  • Stage: Discussion
  • Voting Options
    • For: Support the proposal.
      • 011de3a86cd71d98a83bddf57384e1a0c3b4ea5be696fcbd6fa9a80b3cdcf396de
    • Against: Oppose the proposal.
      • 0118c145c88386f6cf0dd12c30702742013ab23260253e8748f620dd31c27ccadb
    • Abstain: No opinion.
      • 015dc16c2072eaf747f559385ee0ac277fbf91ab87b536da8c5bb6177940e833ac
  • Voting Starts: ~TBD UTC, February 23, 2026 (at block height TBD)
  • Voting Ends: ~TBD UTC, February 25, 2026 (at block height TBD)

How to vote:

  • A voting token, with a total supply of 100.00, for the proposal will be created, and distributed to Mainnet validators based on their network weights as of era TBD.
  • Voting token contract: TBD
  • Make your decision and send all (recommended) voting tokens to one of the corresponding addresses below.
    • For: 011de3a86cd71d98a83bddf57384e1a0c3b4ea5be696fcbd6fa9a80b3cdcf396de
    • Against: 0118c145c88386f6cf0dd12c30702742013ab23260253e8748f620dd31c27ccadb
    • Abstain: 015dc16c2072eaf747f559385ee0ac277fbf91ab87b536da8c5bb6177940e833ac

Evaluation of the results:

  • Quorum ratio: +50% network weight (>50.00 tokens, including the abstains)
  • Decision threshold: Simple majority (+50% of participating weight, excluding the abstains)
  • Example:
    • For:35.00, Against: 25.00, Abstain: 15.00
    • Quorum reached with 75.00%, proposal accepted with ~58.33%
  • The feedback collection & discussion topic: TBD
  • The final proposal topic: TBD
  • Proposal on IPFS for reference: TBD

Frequently Asked Questions for Validators (External PDF)

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[CVV008] Proposal: Securing Validator Economics and Network Sustainability
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A document with Frequently Asked Questions for this proposal is available here.

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I’ve spent quite a bit of time going through the proposal, the presentation, the FAQ, older governance discussions, and talking with other validators. I want to explain clearly why we cannot support this proposal as it stands, both for our own delegators and for anyone else following this vote.

To be clear upfront: funding the network itself is not the issue for us. What we cannot support is approving permanent dilution while the governance and transparency changes that were promised in 2024 are still largely unfinished.

This vote has long-term consequences, so I think it’s fair to look at where we actually are today compared to what was communicated when the current board took over.

Governance progress

When the interim board was introduced, in 2024, the message was clear. Casper would move toward community-led governance where validators and ecosystem participants gradually gain real influence over direction and decisions.

Some concrete things mentioned at the time:

  • a General Assembly including validators

  • a community-elected board

  • on-chain voting tied to real governance decisions

  • a validator representative with binding authority (DAM)

Right now those pieces are still missing.

We do have on-chain voting technically, but so far it has mainly covered operational topics. The governance structure validators were told would follow has not materialised. No functioning General Assembly, no elected board, no DAM role.

Now we are being asked to approve one of the largest supply changes the network has ever seen before those mechanisms exist.

That order feels wrong.

Timeline

Another point that makes this difficult is the timeline.

The proposal was posted on February 17, discussion ends February 22, and voting follows immediately after. That leaves roughly six days of discussion for a proposal that introduces a one-time issuance equal to 33% of circulating supply and materially changes how network funding works going forward.

For routine parameter changes that timeline might be acceptable. For a structural decision with permanent consequences, it feels extremely compressed.

Validators are expected to evaluate governance implications, financial impact, incentive alignment, and long-term risks within a very short window.

Given the scale of the decision, a longer discussion period would have helped build confidence that the outcome reflects broad understanding rather than urgency.

Transparency

Transparency was another major theme during the transition (and for a long time before that with different leadership as well). Validators (and the broader community) have repeatedly asked for financial clarity over the past year.

What we have seen publicly is mostly high-level messaging about restructuring and a summarized expenditure table from the latest Validator Call presentation. That gives directionally positive signals, but it does not provide an actual understanding of the Association’s financial position or how funds are structured and controlled.

We still do not know:

  • how treasury decisions are executed,

  • who ultimately controls spending authority,

  • how responsibilities are separated between entities operating around Casper,

  • or what the Association’s actual financial position looks like, including treasury composition (CSPR vs fiat or other assets) and remaining operational runway.

Approving large issuance without that visibility is a difficult ask.

Validator governance scope

After reading the validator FAQ, another concern became clearer.

Validators would only vote quarterly on grants, hackathons, special R&D, and certain new initiatives.

At the same time, a long list of core spending areas is explicitly excluded from validator voting, including exchange integrations, stablecoin integrations, interoperability work, core protocol development, liquidity provisioning, CSPR Suite maintenance, legal and regulatory expenses, and general operational costs.

In practice this means validators approve the issuance, but most of the capital deployment tied to it would remain outside validator governance.

If validators are being asked to approve permanent dilution while oversight over the majority of spending remains centralized, governance becomes mainly symbolic rather than supervisory. That is difficult to reconcile with the earlier goal of moving toward community-led governance.

Concentration of control

A large portion of essential infrastructure comes from MAKE. Wallet, explorer, staking tools, and several ecosystem products depend on it. Michael owns MAKE and is also President and CTO of the Casper Association, while operational direction inside the Association effectively runs through the same leadership.

I understand how this situation developed historically, but from a governance perspective it concentrates a lot of influence in one place.

If additional treasury resources are introduced under the same structure, dependency increases instead of decreases.

Even Michael acknowledged previously that reliance on a single party runs counter to decentralization ideals. Expanding treasury control without reducing that dependency moves us further away from that goal.

Infrastructure dependency risk

If MAKE infrastructure disappeared tomorrow, the network would technically still run, but realistically most users and delegators would lose access to the tools they rely on daily.

That would not be a smooth transition. It would likely cause immediate disruption across the ecosystem.

This dependency already represents a centralization risk. Increasing treasury scale without addressing it increases that risk.

Historical context

Under the previous structure, CasperLabs received significant funding from the Association and later moved their main product, ProveAI, to Hedera. Many long-time participants experienced that as a major breach of trust.

The 2024 board transition was widely understood as a reset meant to restore confidence through transparency and shared governance.

Because of that history, validators are naturally cautious when asked to approve large new token issuance before those safeguards are fully realised.

Recapitalisation comparisons

The proposal references airline and industrial company recapitalizations as precedent. I don’t think those comparisons translate well.

Those companies had existing revenue models and customers. Dilution was used to stabilize businesses that already generated income.

Casper does not operate that way today. Funding comes from tokens themselves. The proposed issuance is meant to enable future growth rather than preserve an existing revenue engine, which is a very different situation.

Redirecting inflation

Redirecting part of inflation toward ecosystem development is reasonable in principle and common across many networks. I do not oppose that idea on its own.

My concern again is governance and control. If protocol funding is supposed to strengthen decentralisation, governance maturity should grow alongside it.

Right now that connection is missing.

The numbers

There is also a disconnect between the success narrative and observable network data.

Since late 2024:

  • price moved from roughly $0.016 to around $0.0034

  • daily transactions dropped from about 2000 to roughly 400

  • TVL remains effectively zero

Metrics are not everything, but they are neutral indicators of adoption. If execution momentum is the justification for expanding treasury resources, stronger signals would reasonably be expected here.

Why we cannot support this proposal currently

Issuance cannot be undone later. Once approved, the effects are permanent.

At this moment we still have:

  • incomplete governance reform,

  • limited financial transparency,

  • restricted validator oversight over spending,

  • heavy reliance on a single infrastructure provider,

  • and leadership concentration largely unchanged.

Expecting different outcomes while operating under the same structural conditions is difficult to justify.

What would need to change

For a proposal of this magnitude to become supportable for us in the future, we would expect to see:

  • governance mechanisms promised in 2024 actually implemented,

  • clear financial transparency and treasury oversight,

  • separation between protocol stewardship and ecosystem vendors,

  • a credible path toward reducing single-party infrastructure dependency,

  • and structural changes that reduce leadership concentration rather than expanding it.

Final position

We want Casper to succeed and believe a capitol injection can play a role in that. But governance maturity should come before irreversible decisions, not after them.

For these reasons, we cannot support this proposal in its current form.

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Thank you for your in-depth and thoughtful response, Jeroen. I can tell you put a lot of thought and energy into it. I’d like to respond to some point you made, and ask your further input on some others:

With regards to the DAM-based governance process - you are correct that this is not implemented yet. As we mentioned during the validator call, the legal and regulatory aspects of it in Switzerland are more complicated than anticipated. In particular, we are still working to figure out two things:

  • how to shield that person from personal liability. Nobody is going to want to take that role if it means they are held personally liable for wrongdoings or perceived wrongdoings by anyone else in the project. Currently, with the proposed structure, that’s what would happen.
  • how to prevent the reclassification of CSPR to a security instrument as a result of this structure

So instead, we have implemented the “next best thing”, which is the on-chain governance process we introduced last year, where for decisions ranging from feature development, to testnet incentive grants, to deciding how CA should delegate its treasury across validators. And you’re right, it’s not “technically” binding, because that would mean token holders have shareholder-like control over the entity and CSPR would be reclassified as an unregistered security by FINMA and other regulators. But CA has shown 7 out of 7 times to adhere to the on-chain community vote. Sometimes “perfect is the enemy of good”, and I’d argue that this is the case here too.

The same thing applies to all your points around validator “oversight”, “control”, “access to information” etc. As soon as those are defined as a “right” stemming from token ownership, that makes the token a security. So they can’t be a “right” or “entitlement”. Whether we like it or not, that’s the reality of the environment we’re all operating in.

As to your questions about transparency around how decisions are executed - I believe this information is publicly available. If you look up “Casper Association” in the Zug trade registry, I believe you can download the Articles of Association for free and find exactly how decision making is governed for the Association (you may have to register for an account before they allow downloads).

The scope of validator governance, as mentioned, is a function of multiple things: on the one hand the regulatory regime applicable to security vs. utility tokens. On the other hand, legal constraints. Even if the regulatory regime would allow token holders to “override” the entity’s expenditures (it empathically does not), the law still sits in the way - whether it’s tax law, employment law or contract law - an on-chain vote by anonymous people around the world cannot direct a Swiss entity not to live up to its obligations under the law. (certainly not if that prospective future DAM wants to stay out of Swiss jail! :slight_smile:)

So here too, while theoretical principles are nice to have theoretical discussions around, ultimately they have to be implemented in reality and within the constraints that exist there. Perfect is the enemy of the good. And I think we have adequately shown that we are serious about on-chain voting, about implementing the outcomes, and this proposal would massively expand that compared to what’s already there.

With regards to your observations of my role in both MAKE and CA - the observation is accurate to the extent that I indeed hold both roles. I disagree with your associated conclusions, that dependencies increase rather than decrease - as clearly the objective here is to grow the ecosystem, not to shrink it. There is no “expansion of control”, but rather a proposal to have a much more community involved approach to collectively deciding where investments get made for the ecosystem.

As to my dual role - I’m open to suggestions! I already don’t vote for anything MAKE related on the CA board. I didn’t “apply” for this role but was basically implored to come help oversee this strategic turnaround, and put tons of other things on hold for it. If you have alternative candidates, propose them! I assure you that in this case too, if they’re willing and able, CA will adhere to the community vote here too.

Historical context - it is exactly the confidence that we have built with much of the community and the large institutional stakeholders that resulted in this proposal being put forward. When a team is brought in to lead a strategic turnaround, there are steps to the process. The first step is to clean house and right size the organization, while making sure that the core function operates and delivers. We have the metrics to prove that both those responsibilities of our mandate were delivered. The organization is as lean as its ever been, while executing at a more productive level than ever before. This has instilled the confidence that is required to proceed with step two: now that operations and execution capability are proven to no longer be a limiting factor, to make sure that the organization has the runway to convert this momentum into sustained growth and positive outcomes.

I hope that addresses your main concerns. I understand where you’re coming from, but much of what you’re suggesting is simply not grounded in regulatory and legal reality, and therefore there’s a certain leap of faith required that would have you conclude that:

  • CA’s only motivation is the health and success of the protocol, the project, the ecosystem, the token, and all its stakeholders
  • we share your principles around governance and transparency, and have implemented over the last year a completely new mechanism that materially increases community input via an entirely on-chain, transparent process, while nothing like that existed prior (ie. that should show you we’re not just talking about intent, but actually doing). Now we have a proposal that further expands the scope of this, and has very explicit topics and cadence. We’ve also made the full historic expenditure of the organization public, which was never done before, nor is it done by most projects. And, there are real world limitations to what can be done. What you write might sound nice, but in reality is that they would result in delisting of the token and place legal restrictions on most non-qualified investors from holding it. Not to mention legal liability for board members, including the prospective DAM.

As to separation between protocol stewardship and ecosystem vendors (I assume you mean MAKE) - I’m open to suggestions, as I said. If you have a candidate in mind who wants to step in to lead the Casper Association through this next phase, bring them forward. I assure you, I only serve at the pleasure of the stakeholders - if the majority doesn’t see it that way anymore, I am perfectly fine with stepping aside.
If you have another “vendor” in mind who’s willing to invest the amounts that MAKE has into this ecosystem, bring them forward please.

Since you say you have reached your “Final position”, I assume you will also share this with your delegators so that they can draw their conclusions as to whether they share the same view?

And as I mentioned to all validators before - I am more than happy to schedule time with you 1:1 to discuss any questions or concerns you may have via Zoom. You have my Calendly.

Thanks again for your thorough review of the proposal and the effort you put into writing your response, Jeroen.

All my best,

Michael.

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Thanks for taking the time to respond.

I think where we’re still not lining up is around what follows from the constraints you describe.

You’re saying the DAM structure isn’t implemented yet because of liability and regulatory issues, and that binding governance or stronger validator rights aren’t realistically possible without creating security risk. If that’s the situation, then what exists today is ultimately a trust-based model. That may be unavoidable legally, but it also means validators are being asked to approve a very large issuance without the governance direction that was originally communicated during the transition.

The current on-chain voting helps with signalling, but the votes so far haven’t covered decisions comparable in scale to this one. Following community votes on smaller operational topics doesn’t really answer questions around treasury size, spending authority, or long-term financial commitments.

Pointing to the Articles of Association also doesn’t address what validators have been asking about for a while now. The legal structure is one thing, but we still don’t know what the Association’s financial position actually looks like in practice. How much runway exists, what assets are held and in what form, and how spending decisions are executed day to day are still unclear. Those feel like basic inputs when evaluating permanent dilution.

Reading through the FAQ made another part harder to reconcile. Validators would vote on grants and similar initiatives, while most of the large spending areas connected to this proposal remain outside validator voting entirely. Validators approve the issuance itself, but not most of how the capital is ultimately deployed. That doesn’t really look like governance expanding in a meaningful way.

Something else I’m struggling with logically is the regulatory argument itself. You explain that stronger governance, oversight, or binding validator influence cannot exist because it risks reclassifying the token as a security. At the same time, validators are being asked to approve a major dilution event that directly changes token economics and expands the Association’s treasury under the same structure. So validator participation appears acceptable when legitimising structural decisions, but not when it comes to ongoing oversight afterward. That imbalance is where a lot of my hesitation comes from.

On the MAKE topic, this isn’t about questioning intent or past contributions. The dependency exists regardless of motivation. A large part of the network relies on infrastructure tied to one organisation today, and this proposal increases the amount of capital operating within that same setup. Growth might reduce that dependency over time, but there isn’t a clear path described for how that transition happens.

The suggestion that validators (or I) should bring forward alternative leaders or vendors also doesn’t really follow from the concerns being raised. Validators are here to evaluate risk and represent delegators, not to recruit replacements or redesign the operating structure themselves. If reducing concentration is part of the goal, the plan for doing that needs to come from the proposal side.

I’ve already shared our reasoning with our delegators so they can make up their own minds as well. From my perspective the issue is still timing. The governance clarity and financial visibility that were supposed to build confidence aren’t fully there yet, while the decision being asked now is permanent.

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Hey Jeroen - apologies for the delay in responding! I missed the notification!

You are correct that there’s an element of trust involved. For the simple reason that when it goes from what you call “trust” to a written-down “explicit right”, it changes the legal and regulatory regime in the way that I described.

You are also correct that the previous on-chain votes were not comparable in scale to this one, as there is barely a more pivotal time or more pivotal decision in the history of the project than this, right here, right now. That said, votes have been held on real expenditures, as well as real tokenomics topics, and the track record of adhering to the outcome of those votes is 100%.

I pointed to the Articles of Association in response to your question about how the Association is governed and how decisions are made. I think the topic of runway, the urgency of the situation and the implications of this vote failing have been thoroughly discussed, as well as the regulatory requirement to hold a liquid (fiat) asset-to-liability ratio over > 1 under Swiss regs.

With regards to your assessment that validators would not vote on how the capital is ultimately deployed - again, this is not the underlying intention that you should get from the FAQ. And, just like with the “explicit right” conversation above, there’s a limit to what can be enumerated as a “right” here without threading into dangerous regulatory territory. So yes, as I said in my original response, there’s some leap of faith required in that the gap between the expressed intentions and what can formally and explicitly be documented can be bridged in practice.

With regards to your struggle with the regulatory argument, let me try and explain it again:

  • it is perfectly fine for validators to vote for governance of the decentralized protocol/network (which emission and tokenomics changes fall under). That’s how proof of stake works. Every block that gets produced is technically a vote by governance. The protocol/network is not a Swiss entity…
  • What’s not fine, is for token holders/validators to govern/oversee the “issuer” of such token, ie. the Casper Association. THAT would make the token a security, as it would afford token holders rights akin to that of a shareholder.

Hope that makes it clearer for you.

With regards to MAKE/dependencies/etc - I was honestly asking for your input. I don’t know of another solution than to grow the ecosystem, make it attractive for other parties to build in and provide services to, and work for its success. That’s both the goal, and the plan.

As to the timing being the issue from your perspective - there I cannot really be of much help. The timing is now. Not next month. If by now I haven’t built confidence fully in that we do things very differently from what was before, that we overhauled the operational and financial execution of this organization, that we are collectively working our butts off to make this project a success, that when I express intentions that I mean them, and that I’m always accessible and responsible to stakeholders, I don’t know that I ever will.

Thanks again for all your diligence!

Michael

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Hi Michael, hi everyone,

As a Testnet/Mainnet validator, I want to thank Michael for the work done over the last year. The technical progress is real with Casper 2.0 and the CSPR Suite. It is a solid job and it is important to say it.

However, I cannot support the proposal as it is today. I am not against funding growth, but I do not think this document justifies a 33% dilution. Here is why:

1. We need more details in the proposal

The current text is too vague about how the funds will actually be used. Asking for such a big dilution based on just a few lines of intentions feels wrong. For example, Testnet validators have to provide very strict reports just for 300 euro rewards. It is only fair to expect the Association to provide a much more detailed and professional document for a move this big. We cannot sign a blank check.

2. Talking to people, not just about tech

Technically, many things have been achieved, but they are not promoted enough. The perceived value of Casper could be 100 times better than it is now. The market does not realize what has been done yet. Current marketing is way too technical. We need to start talking to humans again. We can be on every exchange, but if we do not tell a story that people understand, nothing will change. Investors buy a vision first. We must fix our image before diluting everyone.

3. Being honest about the power we have

I have no problem with a centralized approach if it works. But we should not call it “decentralization” when the community only has about 10% of the real power. We are asked to vote on a huge financial decision, but we are not allowed to oversee the most important spending like marketing or listings. It is an uncomfortable position: we vote to approve the structure, but we have no weight on what happens next.

4. The market and the timing

The FAQ mentions Cardano or Polkadot. But those networks built their models after they already had a lot of users and value. Doing it now for Casper feels too early. Also, in the current cycle, altcoins are the last place where money goes. Forcing a massive dilution now, when people are careful, is a risky bet. Is this really the best moment to do this?

5. We need to see where we are going

We absolutely need an official and visual Roadmap. Anyone should be able to see at a glance what was done and what is coming next. This is the only way to prove the project is moving and to fight the “stagnation” image on social media.

I would not be against this if it really saves the blockchain, but in its current form, it is impossible to validate. We are talking about this here, but currently, it is not being discussed publicly on social media because people are afraid. I understand the need to avoid making Casper look even more “bearish” right now.

However, I think this proposal should be reworked to be more complete. Asking validators to take a pay cut from 8% to 6% while we have not even finished voting on the previous proposals to secure our status is a lot to ask. We need real visibility before moving forward.

Thank you for your time and your dedication.

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Thanks Marc, for taking the time to write out your thoughts. I know that you explicitly made time to research all the materials, which is much appreciated.

I understand you’ve come to a conclusion, yet I would still like to respond to some of your points:

You state a “33% dilution” which is not accurate. A 33% emission is an effective 25% dilution (100/133), and that’s if it were to all be added to circulating supply at once - which it’s not. Only 9% is added to circulating supply at once (an ~8% dilution), with the rest locked, staked to validators to secure the network and increase the percentage staked, and only unlocked over a period of 2 years. While it may not make a difference in your assessment, I wanted to make sure you’re operating on accurate assumptions.

You are absolutely correct. If you take a look at the “Ecosystem” line-item in the financials that were shared, which is effectively the “marketing and promotions” budget, you’ll note that it went from CHF 10-15MM per year under prior management, to about 720K last year under our restructuring of the organization. Obviously the ROI on the 10-15MM and how it was spent is highly questionable, but on the flip side, the 720K is certainly not sufficient “to fix our image” as you put it. Now that the operational turnaround is behind us, we can focus on highlighting the very compelling narrative that is Casper Network again. Like you said - to humans. Marketing is critical.

I kindly refer you to my responses to Jeroen above. The regulatory environment is such that strict oversight rights by a token holder over an issuing entity means the token is a security. So as I explained to Jeroen - there’s certainly a leap of faith required that the intention that’s being expressed by management is genuine and will be adhered to, even if it cannot be formally binding. I believe that we have a track record of adhering to these things that should make that leap a little easier to make.

Cardano and Polkadot (and the others) have had these structures since day 1. Not “after they had a lot of users and value”. Frankly, Casper should’ve as well.

Whether it’s the “best moment”? The best moment is “never”. The second best moment is the absolute last moment it can still be done, which is now.

As to “what we need” - there are a lot of divergent opinions about that amongst validators and both large and small delegators. I’d love to find ways of finding effective methods to collect that feedback and find true consensus around it. The reality is that most of the time, most people don’t really care to spend the time to weigh in. I hope that with passionate validators such as yourself, we can change that after this vote.

It does in fact do exactly that. Like I said above. The best time to do this is never. The second best time is the absolute last moment it can still be done. That time is now. Not a week/month/quarter from now.

It is being discussed on social media. And on the Telegram channels.

What do you mean by “the previous proposals to secure our status”?

Thanks again for your consideration, and the many years of support of the project Marc! Regardless of how you vote, I hope you’ll continue to be a contributor to the ecosystem, and serve your delegators with the integrity that you always displayed.

Michael.

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Hi guys, Piotr / SwissStake here. I asked a couple of questions, and Michael & Matt provided some answers. My summary below (these are my notes; I assume we can get them corrected here, if needed).

In my opinion, despite the tight deadlines on the CA side, we would all benefit from more time for discussion.

What I am missing here is a contract between CA/Make and token holders that outlines features, milestones, and KPIs that can unlock the tokens if they are met. This contract can be in the form of a technical roadmap, but more importantly, a business development roadmap that shows the growth potential (on-chain utilisation, mainstream traction).

I think this project is quite capable, both in the core and the ecosystem; unfortunately, it’s not enough to attract more user demand, as we are in a very competitive vertical. My wish would be to see if we can get any long-lasting partnerships, not sponsorships.

The questions and answers:

1. What is the current monthly burn rate?
  • ~ 300k USD
  1. How many months of runway exist today?
  • A couple of months at most. Adds that Swiss asset-to-liability coverage requirements force immediate action, so “runway is kind of irrelevant” in practice (they must act before they fall out of compliance).
  1. What is the headcount of CA?
  • Management: 2
  • FinOps: 2
  • Engineering: 6
  • Social media/ecosystem: 3 + community managers
  • Everyone is on partial furlough. Several have been given notice (multi-month notice periods).
  1. What is the budget split between the internal team and MAKE? Do you plan to keep it after the extra issuance?
    • MAKE: 40%
    • Odra: 13%
    • Halborn: x
    • AWS: 2%
    • Internal: ~40%
  • Post-issuance split: no explicit commitment stated. There is a need to rebuild the ecosystem team.
  1. What runway does the 33% issuance create?
  • ~3 years runway
  1. What % of issuance is intended for exchanges vs liquidity vs operations?
  • Answer: to be clarified.
  1. Are unlocks conditional on integration milestones?
  • Answer: No, not at the moment.
  1. What are measurable success KPIs for this recapitalization (roadmap for the extended runway)?
  • Answer: None, not at the moment.
  1. Why is the proposal timeline so short-notice?
  • Answer: They need to know whether to let people go because of multi-month notice periods and near-term runway constraints.

I hope this will help you to get a better picture of the situation.

In addition to that, one of the delegators (Stizzley) of SwissStake posted the following points that I am forwarding directly below:

1. The 2% Operational Funding (Fully Supported & Non-Negotiable)

Based on the current supply, the 2% allocated to the Association equals roughly 287 million CSPR every single year. That is a massive amount of tokens and millions of USD guaranteed for the Association. From my perspective, this 2% is absolutely non-negotiable. It is strictly for daily operations, payroll, and core ecosystem development. The team needs and deserves this stable runway.

​2. Sunset & Burn for the 33% Issuance (Deadline: Jan 1, 2029)

Because the daily operations are heavily funded by the 2%, the additional 33% one-time issuance must be treated differently. To protect investors from permanent dilution, I propose a ‘Sunset & Burn’ clause:

By January 1, 2029, any tokens from this 33% issuance that are still held in the Association’s treasury must be burned.

Flexibility Valve (New): To prevent hasty or low-quality spending just before the deadline (as Grok correctly pointed out), the Association may request an extension for specific, ongoing strategic deals. However, this extension MUST be approved by a community vote. If no vote is held or it is denied, the excess tokens burn.

​3. The 10% Emergency Defense Buffer (New)

To ensure network resilience, we shouldn’t burn 100% of the unused tokens. 10% of those leftover tokens should be exempt from the burn. They will remain staked and placed into a locked ‘Emergency Defense Treasury’.

​4. Strict Emergency Definition

This buffer can ONLY be accessed in true black-swan events: a critical network or bridge exploit (requiring immediate liquidity rescue), a sudden regulatory attack requiring massive legal defense, or an immediate delisting threat from a Tier-1 exchange. Not for daily operations or standard liquidity.

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Hi Piotr - nice to hear from you here!

Thanks for your outline. Generally speaking your notes are accurate. There are some small distinctions, but none that materially change the picture (for example, MAKE acts as a quasi-PEO for CA’s US-based employees, because CA doesn’t have a US entity).

On the “contract between CA/Make and token holders”, I unfortunately have to respond to it in the same way as I have above to similar comments - a written condition like that turns the token into a security and the proposal into a prospectus.However, I do not disagree with the underlying sentiment. What I would love to see is the formation of working groups, much like Ethereum Foundation does, around specific topics and priorities, and have the consensus amongst those working groups bubble up to an overall project wide consensus around priorities. As you will note reading through the comments above, every commenter has a different “top priority” so far. Yours is long lasting partnerships, Marc’s marketing (what’s in a name?), Jeroen’s more about governance, your delegator wants to see tokens burned, etc. There is no way to tackle everyone’s suggestion and come to universal consensus around it in the time that we have. As I explained to Marc, and I think you captured in your notes as well, the timing of the vote is already the last moment before regulatory compliance requirements kick in. The good news here is that what I’m seeing is a newly engaged community that is willing to be constructive in their thinking, and even expresses a desire to be involved in determining the future of the project. That is a phenomenal foundation to build on as we transition into this next phase of the project, which hopefully, should the vote pass, is one of growth on all fronts. I fully intend to harness this new energy amongst stakeholders, and look forward to working through priorities, roadmaps, partnership opportunities and spending priorities together, with renewed energy.

As to the Sunset & Burn proposal - rather than a burn, I actually like what APTOS recently proposed, where leftover tokens are permanently locked and staked. This accomplishes three things instead of one - it removes the tokens from the circulating supply, it continues to help secure the proof-of-stake protocol, while rewarding validators.

These are all refinements that we can work through in the time to come, and I’m excited to see you (and others) be part of the conversation!

Michael

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Thank you Piotr for the summary. These numbers help us understand the reality: this is not just about growth anymore, but a financial rescue driven by regulatory requirements.

I understand the timing is forced by the Association’s financial obligations. However, this urgency should not be an excuse for the lack of a structured plan. If we vote for a 3-year runway, we need to know exactly how these three years will be different from the past ones. As Piotr mentioned, clear milestones and KPIs must be defined to track real progress.

Michael mentions that written commitments could turn the token into a “security.” I respect the legal constraints, but a visual technical and marketing roadmap is not a financial prospectus. It is a standard communication tool. We are not asking for a binding legal contract, but a clear direction so the market can finally see that Casper is moving. Without this, even with 3 years of funding, we will stay in the dark.

Working groups are a good idea, but what will be their actual influence? If these groups have no impact on major budget decisions (exchanges, marketing), we are back to “fake decentralization.” The community is ready to help, but not just for show.

Regarding Stizzley’s “Sunset & Burn” proposal, Michael’s suggestion to stake or lock the remaining tokens is a viable technical alternative. But this increases the need for transparency: if the Association becomes one of the largest stakers with unused tokens, its responsibility toward smaller validators and delegators becomes even greater.

To answer Michael’s question about previous proposals: I am specifically talking about CVV006 (Minimum Validator Fee Mechanism). This is vital. The number of active validators is dropping every month. If we create a 3-year runway for the Association, we must also secure one for validators so they can at least cover their server costs. Implementing CVV006 (perhaps with a 6-month seniority rule to filter serious nodes) should happen immediately after this vote. Without validators, there is no network to promote.

I understand the tight deadlines, but to remove doubts, it is crucial that creating this roadmap becomes priority number one if this vote passes. This is what will allow me to reassure investors who have a lot at stake (sometimes more than $500k initially), by showing them that we are finally moving away from “flying blind.”

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Thanks for this feedback, @Marc_CSPR. I think we are aligned on pretty much all you lay out.
I’m also in support of CVV006. The accepted vote calls for it to be (partially) included in Casper 2.2.

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