Reserve Rights Defi Coins Review – A Detailed Review About Reserve Rights

What Is Reserve Rights

Reserve Rights is a dual-token stablecoin platform that was launched in May 2019 following a successful initial exchange offering (IEO) on the Huobi Prime platform. Reserve Rights’ dual token setup includes a stablecoin known as the Reserve stablecoin (RSV) — which is backed by a basket of assets managed by smart contracts.

The second token is the Reserve Rights Defi Coins token (RSR), which is used to keep the RSV stable at its $1.00 price target through a system of arbitrage opportunities. Unlike RSV, the Reserve Rights (RSR) token is volatile, and its main purpose is to help maintain the stability of RSV.

It can also be used to vote on governance proposals — helping holders shape the future of the Reserve Rights ecosystem. In the later stages of the project, Reserve Rights plans to back the Reserve stablecoin by an increasingly diverse basket of assets, and eventually move it away from the U.S. dollar peg — instead creating an alternative reserve asset where RSV tokens instead represent fractional ownership of the collateral pool.

Quick Fact About Reserve

The Mission

Reserve Rights Defi Coins building a stablecoin that can’t be shut down, and a network of decentralized fiat on/off ramps. They believe that everyone’s money should be secure. Billions of people around the world don’t have a safe place to store their money. Banks in some countries can’t be trusted, and some governments inflate their own currency to pay off debts, hurting citizens in the process.

With a few exceptions (money laundering, terrorist financing), we believe anyone in the world should be able to transact with anyone else. This requires low-friction, cross-border transactions, which are surprisingly hard to do in many cases today.

That’s the reason for creating a stable, decentralized currency that can’t be abused by a government, because it is globally distributed outside of anyone’s control, and thus nearly impossible to shut down.

Background

The initial production version of the Reserve Rights Defi Coins Protocol will operate in a substantially centralized way, and over time each protocol component will be migrated on-chain and released from control by the founding team, eventually becoming fully decentralized. There are three planned phases of the Reserve network:

1. The centralized phase — where Reserve is backed by a small number of collateral tokens, each of which is a tokenized US dollar.
2. The decentralized phase — where Reserve is backed by a changing basket of assets in a decentralized way, but still stabilized in price with respect to the US dollar.
3. The independent phase — where Reserve is no longer pegged to the US dollar, with the intent of stabilizing its real purchasing power regardless of fluctuations in the value of the dollar.

In this overview, they will be describing Phase 2, the decentralized phase, where Reserve is backed by a changing basket of assets in a decentralized way, but still stabilized in price with respect to the US dollar. For more info on the other phases, please refer to our whitepaper.

The Reserve Protocol can be implemented on top of any smart contract platform, or on its own chain. Initially we are developing on the Ethereum Network but ultimately we expect two-way bridges to enable complete interoperability of the Reserve token across all major smart contract platforms.

Background

The initial production version of the Reserve Protocol will operate in a substantially centralized way, and over time each protocol component will be migrated on-chain and released from control by the founding team, eventually becoming fully decentralized. There are three planned phases of the Reserve network:

1. The centralized phase — where Reserve is backed by a small number of collateral tokens, each of which is a tokenized US dollar.
2. The decentralized phase — where Reserve is backed by a changing basket of assets in a decentralized way, but still stabilized in price with respect to the US dollar.
3. The independent phase — where Reserve is no longer pegged to the US dollar, with the intent of stabilizing its real purchasing power regardless of fluctuations in the value of the dollar.

In this overview, Reserve Rights Defi Coins will be describing Phase 2, the decentralized phase, where Reserve is backed by a changing basket of assets in a decentralized way, but still stabilized in price with respect to the US dollar. For more info on the other phases, please refer to whitepaper.

The Reserve Protocol can be implemented on top of any smart contract platform, or on its own chain. Initially, they are developing on the Ethereum Network but ultimately they expect two-way bridges to enable complete interoperability of the Reserve token across all major smart contract platforms.

The Reserve token will initially have a target value of $1.00, but is designed to go off of the peg from the US dollar in the long term.

The Tokens

The Reserve Protocol interacts with three kinds of tokens:

1. The Reserve token (RSV) — a stable cryptocurrency that can be held and spent the way we use US dollars and other stable fiat money.
2. The Reserve Rights token (RSR) — a cryptocurrency used to facilitate the stability of the Reserve token.
3. Collateral tokens — other assets that are held by the Reserve smart contract in order to back the value of the Reserve token, similar to when the US government used to back the US dollar with gold. The protocol is designed to hold collateral tokens worth at least 100% of the value of all Reserve tokens. Many of the collateral tokens will be tokenized real-world assets such as tokenized bonds, property, and commodities. The portfolio will start off relatively simple and diversify over time as more asset classes are tokenized.

How the Reserve Token is Stabilized

If demand goes down for the Reserve token, prices are expected to fall on secondary markets. What happens then?

Suppose the redemption price of Reserve is $1.00. If the price of Reserve on the open market is $0.98, arbitrageurs will be incentivized to buy it up and redeem it with the Reserve smart contract for $1.00 worth of collateral tokens. They’ll continue buying on open markets until there is no more money to be made, which is when the market price matches the redemption price of $1.00.

The same mechanism works in reverse when demand goes up. If the price of Reserve on the open market is $1.02, arbitrageurs will be incentivized to purchase newly minted Reserve tokens for $1.00 worth of either collateral or Reserve Rights tokens (the latter only if there is an excess pool of Reserve tokens available), and immediately sell them on the open market. They’ll continue selling on open markets until there is no more money to be made, which is when the market price matches the purchase price of $1.00.

How the Reserve Protocol is Capitalized

The Reserve Protocol holds the collateral tokens that back the Reserve token. When new Reserves are sold on the market, the assets used by market participants to purchase the new Reserves are held as collateral. This process keeps the Reserve collateralized at a 1:1 ratio even as supply increases.

At times, the Reserve Protocol may target a collateralization ratio greater than 1:1. When this is the case, scaling the supply of Reserve tokens requires additional capital in order to maintain the target collateralization ratio. To accomplish this the Reserve Protocol mints and sells Reserve Rights tokens in exchange for additional collateral tokens.

We see a whole lot of utility in stable crypto

Protect Your Money

Reserve enables people and businesses in countries with high inflation to protect their money by moving it out of broken currencies into a stable digital currency.

Send Money Across Borders

Reserve makes it cost-effective to send money across borders. This enables people to send money home to their families, and businesses to pay international suppliers in a stable currency.

Easily Accept Payments

Reserve Rights Defi Coins allows businesses to accept payments in a stable digital currency, enabling them to easily pay their international suppliers, while also keeping their money out of inflation-prone local currency.

Frequently Asked Questions About Reserve Rights