RSV adoption model

Protocol Discussion Protocol Economics
#1

I put together an experimental forecast of RSV adoption based on some info I got from the web about digital transactions. It’s more geared towards South America as I don’t have the figures for Africa and the rest of the world, but I’ve born in mind the size of PayPal so I don’t go overboard.

I’ve only created the price of RSR as a function of the burn rate to create the required RSV - it is not factoring in speculation and market forces. I am also assuming that to mint 1 RSV you need $1 worth of RSR, so if RSR is 10c then you need to burn 10 to get 1 RSV - please correct me if this is wrong.

There are 4 forecasts - Base, Middle, Bull and super-bull.

All comments welcome - Hopefully I’ll update this as more information becomes available.

File available for download here : http://s000.tinyupload.com/index.php?file_id=00561398033715910560

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#2

This is really great - love thinking through this kind of thing. I read through the delphi report too; I’ll have to go back when I have more time to compare their core assumptions in more detail. But figured I’d respond as a first pass…

Curious on two points:

  1. the 20B tokens unlocked happens after mainnet so Y2 right? Your model is showing Y6, unless I’m missing something.

  2. since growth assumptions are made on top of the base 420M, this number is crucial - I am not sure on the biz txn and other noncash variables but if these are already captured in the 10K userbase then it’s double counting? I see the AirTM comp at 4000 DAU and $9M in monthly volume which is where the 2250 comes from, but it just sounds incredibly high - I have to assume this is close to 100% of each (likely high income) users’ transactions? Not sure if you have more context for the AirTM numbers.

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#3

Hay Mallo, thanks for posting! Just wanted to chime in and say yes, this is right – you can expect auctions of RSV that are paid for in RSR to clear at ≈1 RSV in RSR per RSV sold by the protocol.

So, technically it’s not “minting” RSV, in that the user is purchasing RSV that is held by the Reserve smart contract already. But your economics are right here.

I haven’t gotten to look at your whole spreadsheet in detail, so don’t have anything to add on the scenario analysis for now.

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#4

Indeed – the seed investor, team, and advisor tokens will begin unlocking at the launch of the full Reserve protocol, which is the same time that RSR arbitrage functionality will come online.

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#5

Hi, thanks for the feedback!

I replied to Phil at the table in telegram, but to explain the 20Bn unlock Y6 - it’s just an arbitrary decision by me to release more RSR into supply as the overall went below 40Bn. I have factored in the team release after mainnet in Y1 figures.

The thoughts behind the 270M were simply a scaling of users, so 4000 users transacting 9M per month would mean 10,000 users would increase that by 2.5 = 22.5M. Obviously the team will have better info on that and when transactions come on-line we’ll all know the volumes and we can adjust the model further.

I haven’t factored in 3rd party engagements - which could be other apps using the protocol, loan systems, longer term smart contracts etc. I’m sure once the power of Reserve is realised then many different applications for it will be created.

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#6

At what adoption level (RSV Market Cap and/or average RSV Daily Volume) do you think would be good to launch mainnet?
I guess it also depends on the number of RSR holders at the time.

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#7

Interesting article on adoption of Zelle, Venmo and Squarecash and the importance of building the moat around your product, either through regulatory compliance or network profile. Also potentially piggy-backing (a) large company(ies) in our sector with a need for payment on and off ramps.

2020-10-28 15_20_01-screenshot

The more I think about it, the more comes up - with individuals able to combat inflation and create a stable store of wealth, their ‘credit rating’ or loan leverage becomes greater, thus allowing them to think about long term finance and all that comes with it. Not just as individuals, but if enough individuals and companies are protected from inflation then investment into that country as a whole.

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#8

New file here : http://s000.tinyupload.com/index.php?file_id=50858524536569477082

I don’t seem to be able to edit my original post. I have reduced the burn rate of RSR as the RSV pool is not created from RSR. The numbers of RSR burned now are only via arbitrage to keep the peg of RSV.

I have looked at what volumes of trading keep a stable coin at peg - Tether. I’ve found a number of academic papers with mind numbing formulae, but nothing to say what volumes of arbitrage are required to keep it pegged. The graphs suggest between 1-2%, but large market movements unpeg in the short term (like COVID for example).

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#9

Some additional information on similar apps with year on year growth, revenue and users (where available). Then a bit of analysis based on that and what could be considered an average transaction value and average annual transactions per user. The rest drops out of that. This is more a bottom up than top down of the previous model as it’s based on users and transactions than percentage of available market. I’ve plugged in the Delphi numbers (bull case) but it can be manipulated for anything. Interesting to see RSR burn would be very high if the price is low (could be up to 1Bn in year 2 if price reasonably low). Release of uncirculating RSR will also be a key factor.

File is hosted here : File