RD-USD | Reserve DEX Swap Stable Dollar

Ideas & suggestions
1

Instead of creating a new swap from scratch, the Reserve Stable Token (RD-USD) could be integrated into existing decentralized exchanges (DEXs) through partnerships.

This approach would enable the Reserve project to tap into an already established user base and infrastructure, while enhancing the existing swap’s ecosystem by offering a secure and reliable stablecoin backed by liquidity from vetted projects. By providing a stable token that represents only securely backed projects, we could build trust in the digital currency space and add value to both new and existing decentralized exchanges.

Concept Breakdown:

  1. Partnership with Existing Swaps:

Instead of building a separate swap platform, Reserve would partner with existing popular DEXs, such as Uniswap, SushiSwap, or other promising platforms.

These DEXs could then adopt the Reserve Stable Token (RD-USD) as their primary or auxiliary stablecoin, giving them access to a stable currency that is backed by the liquidity of projects that have been raised and vetted through the Reserve process.

  1. Reserve Stable Token (RD-USD) Backing:

R-USD is unique in that it is backed by liquidity pools from all projects that have raised funds through Reserve-approved protocols.

When projects raise funds, they must lock liquidity as collateral, which directly supports RD-USD. This means that every RD-USD in circulation is backed by a diversified pool of project liquidity, ensuring that the stable token remains secure, trusted, and less vulnerable to the risks associated with centralized or poorly collateralized stablecoins.

  1. Benefits of Using RD-USD for Swaps:

Trust and Security: The stable token is fully backed by locked liquidity from legitimate projects, which reduces the risk of rug pulls and provides an additional level of credibility for the DEX using RD-USD. Whenever a project has RD-USD as a trading pair, it represents security.

It also represents the possibilty of staking RSR on promising projects paired with RD-USD

Decentralized Backing: Unlike traditional stablecoins that are often backed by centralized assets (such as USD reserves held in a bank), RD-USD is backed by a diverse set of on-chain assets. This means that its value is inherently decentralized and tied to the health of the overall ecosystem of projects.

Sustainable Growth: As more projects raise funds and add liquidity to the pools backing RD-USD, the stablecoin itself grows stronger. This feedback loop benefits both the swap that adopts it and the projects that are part of the ecosystem.

  1. How Projects Use RD-USD:

Projects that wish to raise funds would partner with Reserve, and upon successfully raising funds, they must contribute a percentage of their liquidity to back RD-USD.

The liquidity provided would remain locked, creating a backing mechanism that adds inherent value to the RD-USD stable token.

This structure ensures that the projects backing RD-USD have a vested interest in the success of the token, which further enhances stability and market confidence.

  1. Revenue Streams and Incentives for Partners:

Transaction Fees: Swaps using RD-USD could collect transaction fees as usual, but with the added benefit that the transactions utilize a more secure and stable currency.

Early Access to Projects: By adopting RD-USD as a stablecoin, partner swaps could gain early access to projects that are looking to raise liquidity, which adds an element of exclusivity and early mover advantage for users of those swaps.

Profit Sharing for Liquidity Providers: A portion of the fees generated by using RD-USD could be distributed back to RSR stakers and RD-USD liquidity providers, creating an incentive for both the Reserve community and the swap’s existing user base.

  1. Value for RSR Holders:

Over-Collateralization: RSR holders would play a role in the over-collateralization of RD-USD, adding an extra layer of security. They could earn rewards from the appreciation of project tokens that are allocated to the protocol.

Early Allocations: By partnering with multiple swaps, RSR holders could also receive early allocations from projects launched on partner swaps, giving them preferential access to high-potential opportunities.

  1. Ensuring Stability and Trust:

Liquidity Lock Requirements: All projects that raise funds via Reserve must lock liquidity, and this locked liquidity serves as collateral for RD-USD. This guarantees that all projects involved have a long-term commitment and reduces the risk of instability.

Deflationary Mechanism: If a project implements a deflationary model, it contributes to the overall growth in value of the backing collateral, indirectly benefiting the holders of RD-USD and RSR stakers.

  1. Potential for Growth:

Scalable Integration: The concept is highly scalable, as Reserve can partner with numerous DEXs, thereby expanding the use and adoption of RD-USD across multiple ecosystems.

Interconnected Liquidity Pools: As RD-USD becomes more widely adopted, it could also serve as a bridge between liquidity pools on different DEXs, effectively creating a more interconnected and liquid marketplace.

Key Benefits of Reserve Stable Token Integration:

  1. Enhanced Security and Trust: By backing RD-USD with the locked liquidity of vetted projects, users can have greater confidence in the stable token’s value and security.

  2. Broader Adoption without Building from Scratch: Instead of needing to build a new swap and compete with established players, Reserve can leverage existing infrastructure, reducing costs and speeding up adoption.

  3. Value-Added Partnerships: Partner swaps benefit by gaining a secure, deflationary-backed stablecoin that can improve user trust and provide a unique selling point.

  4. Support for New Projects: Projects raising funds gain access to a trusted stablecoin and an established swap for liquidity, reducing entry barriers and increasing their visibility.

  5. Incentives for RSR Holders: RSR holders benefit from a diversified income stream through staking, over-collateralization rewards, and early access to projects, encouraging long-term involvement.

Conclusion:

Instead of creating a new swap, Reserve Stable Token aims to integrate with existing decentralized exchanges through strategic partnerships. By offering RD-USD as a secure, collateral-backed stablecoin, Reserve provides value to partner swaps, projects, and users alike. Projects raising funds can back RD-USD, ensuring its value, while swaps benefit from a more trustworthy stable token. This integration model not only accelerates adoption but also aligns the incentives of multiple stakeholders, creating a sustainable and robust foundation for the future of digital finance.

If you’re interested in collaborating or exploring further possibilities for integration, feel free to reach out. Together, we can build a more interconnected and resilient economy for all participants in the DeFi space.

1 Like
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Thank you for putting up this post. Will try to offer some answers and context. First a question and a couple of FYIs…

What do you mean by "All projects that raise funds via Reserve "? can you say more about this? or share some illustrative examples?

Before I jump in too deep, are you familar with Revenue Generating USD (rgUSD) RToken deployed back around April 2024? It was a novel idea stablecoin that harvested 90% of its yield to redirect into liquidity pools with protocol partners. In short, I don’t think it worked because partners don’t prioritize $1M TVL or $1M of liquidity as a growth lever when they can find 10x partners (or more) for the same amount of work. To be fair, I do not have all of the particular details locked into memory and certainly will be wrong about some, so DYOR for chronicling specifics – its all contained keyword searching “rgUSD” the RToken Forums, the Reserve Discord and Reserve 𝕏 to learn more about that journey.

Also worth noting the RSD RToken that intended to use its yield to burn RSR. While this sounds “neat”, it did not have actual utility for stablecoin users over other more accepted and less risky stablecoins.

I will share more after receiving answer to the question above.

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Thanks for the response. The burning of RSR was a mistake, that wouldn’t even make sense. I actually was not supposed to have that attached.

Let me read through and I will send you back a thoughtful message and address it in detail.

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I haven’t heard of rgUSD no, I will look into it.

I will do my best with the knowledge I have.

I think what I’m essentially proposing is that if we’re going to create stable tokens and act as a stable token issuer while also providing over-collateralization for businesses, countries, and other entities, the potential reach and impact is enormous. Virtually anyone, from content creators to enterprises and nations, can benefit from having their own stable dollar, this we know for sure. It’s the amount of ways that really make it interesting. It’s basically intelligent money. That is a loaded statement, and i can’t possibly express what I mean unless in conversation.

When you offer a stable token service the benefits of integrating a swap, and a few other things I have ideated (which I would certainly love to get into dialogue) could be a huge part of the ecosystem, especially as we move into a world where digital currency and tokenization that’s connected to real world performances become the norm. As businesses increasingly engage with digital currencies in a transparent way, they will eventually all look to get onboard. Many of these businesses, I would assume at some point when involved in the digital space transacting USDC, whatever it is, will likely benefit seeking funding for growth, or just getting involved with a promising protocol like us. The trading of shares in a company is essentially where we’re at. There are countless ways this may look, and we are better off discussing how it may look now considering it is in those conversations innovation in many ways can arise. I know for example, any company with a willingness to allocate a percentage of their profits towards a deflationary protocol that adds a layer of customer acquisition for them, could create an attractive investment opportunity for RSR stakers but again, extensive conversation is needed.

An R&D department. One that is approached with a knowing because as much as I like to think we have to consider what we don’t know, I think we know. At least approaching it like that could pay off immensely, creating convenience for everyone.

When these businesses want to raise funds and contribute to the cryptocurrency ecosystem, RSR stakers will have first-tier access to invest in these opportunities, not necessarily using their RSR, but with new capital. The transparent nature of the stable token protocol ensures that these investments are secure and reliable, aligning with a broader shift toward deflationary tokens that resemble real-time stock in companies. As the world transitions to this model, more businesses will recognize the value of participating in such ecosystems.

By incorporating KYC and thorough vetting processes, consultants at Reserve can ensure that only legitimate projects are brought into the fold. Acting as a stable token provider while facilitating a swap ensures that the tokens are secure and transparent. This also positions Reserve to onboard businesses effectively, leveraging a large pool of investors and protocols ready to support their growth.

For example, a country with its own stable token could see great value in investing in businesses transitioning to digital currencies. Businesses that demonstrate growth potential would naturally attract such investors, further expanding the ecosystem. In this way, Reserve creates a platform where real-world assets, deflationary tokens, and stable coins intersect, offering powerful opportunities for RSR holders, businesses, and investors alike.

Please feel free to reach back out to me. If you can, have we heard anything about the Canadian money license yet? Either way, I would love to work at/with Reserve. I need a career change!

5

Thanks again for kicking off this discussion. Tackling your first 6 points in the original post:

1. Partnership with existing swaps

Usually setting up new swap pairs is pretty easy on permissionless platforms - its not a point of friction that i know of.

Reaching interesting “minimum viable pool TVL” and incentives does have a cost though, which I’ve noticed path of least resistance is two partners co incentivize equally in a social contract. ABC Labs have tested this and I believe that’s also the conclusion.

Most important here: thus far those DEXs (and CEXs!) want to be Switzerland for token swaps including stablecoins and do not want a “primary or auxillary” stablecoin. re: swap volume fees of the most popular tokens 1st order effects are more valuable to the DEX than 2nd order effects of “vetted through the Reserve process.”

2. Reserve Stable Token (RD-USD) Backing:

This sounds like a really cool design, but seems more risky for the user, using non bluechip, and greater smart contract risk LP assets as collateral. One rationale I can come up with for the users of this proposed asset-basket would be if this had a much higher yield profile paid to the users, or some benefit to another ecosystem or app. Otherwise it just seems like more risk. Said another way, if it were a >9% yield RToken stablecoin, there will likely be takers, but at 5 or 6% there are plenty of safer options.

3. Benefits of Using RD-USD for Swaps:

Love the idea of backing with more decentralized onchain assets. Problem is many of those assets have suboptimal TVL and liquidity compared to DAI or PYUSD – so more risky. However if RD-USD were a >$100M TVL stablecoin, with onchain collaterals having sufficient exit liquidity, this could be a very interesting foundation to build on. But getting to the $100M TVL requires a different growth plan. Imo the mechanism behind rgUSD was similar, but suffered the same bootstrapping problem. Perhaps the rgUSD and RD-USD ideas are actually a ‘Phase N’ part of a stablecoin growth strategy, once minimum viable TVL has been achieved. By the way TIL a major (“top 10”) CEX won’t look at new stablecoins without $1B in TVL (this threshold was $200M ten months ago, so its growing). Not all have that high bar, and there can be outlier exceptions, but directionally its correct.

4. How Projects Use RD-USD:

When a project is (1) raising money, (2) building the product, (3) launching and (4) hoping to get product market fit, there is not much room for more risk and complexity. “Man who chases 5 birds catches none.” Project founders want to be chasing the fewest, most juicy and easy-to-catch birds, first. So RD-USD would need to be a lever for growth, that’s faster and lower cost than other strategies. Would it be?

5. Revenue Streams and Incentives for Partners:

Material revenue streams from RToken only occur at large TVL, after solving the bootstrapping problem. For example a $100M TVL RToken with a 5% yield basket that shares 80% of that yield (net 4%) to 10 partners would get $400k each per year. But what if its only a $10M TVL RToken? $400k revenue stream divided by 10 = $40k each. In investing and partnerships its not uncommon to ignore pennies for picking up dollars. Often same work investment.

Perhaps the rgUSD and RD-USD ideas are actually a ‘Phase N’ part of a stablecoin growth strategy, after minimum viable TVL is reached, which is throwing off good rev streams to share with partners. .

6. Value for RSR Holders:

RSR holders can get better returns on RTokens USD3 or eUSD. I have not seen evidence of RSR holders seeking early investment allocations. In fact I am a tad surprised that only ~5 billion RSR tokens out of ~51 billion circulating are staking to get yield. This is indeed an opportunity but some would say staking RSR looks less risky than seeking speculative investment allocations in other projects.

A few notes on your 2nd post:

Agree really cool if “virtually anyone, from content creators to enterprises and nations, can benefit from having their own stable dollar” and I cover that in this lengthy thread.

Imo everything in crypto is R&D (currently). What is considered “standard” or “mainstream” today, in a world with < 1% of Earth using crypto on a monthly basis (yes that’s where we are), will be mostly outdated by the end of this decade. Imo we are are still where the mid 90s internet ecosystem was—which took till mid 2000s to achieve 10% of Earth using on a monthly basis. Reserve protocol contributor https://www.abclabs.co/ has “labs” in its name for a reason. Btw look there for job postings!

For career change and breaking-in to any project I breadcrumbed the blueprint here and here. Just read between the lines. Free pro tips for anyone willing to do the work.

Hope at least a smidgen of this was helpful. Good luck and feel free to drop into the Reserve Discord to go deeper. Lots of ways to contribute and get on the radar. Its a non linear path thats best carved by you.

1 Like
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Timely and relevant post

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Man, that was the most informative and extensive response I’ve read in a while. It addressed each point articulately and thoroughly. I’ll look into the things you mentioned, starting with reading between the lines, maybe stumbling upon and following a few breadcrumbs along the way. I completely agree with your perspective on how early we are in this space, and how quickly everything changes or will change. This is why I deeply appreciate the Reserve community and the project itself, the standard they set for themselves as a community, and what it truly means to represent decentralization.

They started tackling the biggest issue known to man, inflation, early on, and just as important as anything else when it comes to growth is the communication and the standard they have set for everyone involved with them and their project. The demand for clear communication, ideating with a sense of purpose, and working together no matter where people are, is all something truly worth committing to and finding purpose in.

With that said, I’m about to go over everything you sent me and review what we’ve done so far.

Thanks

James