What is Reserve Protocol?

We 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. Some countries also limit their own citizens from accessing foreign currencies. Some countries are seen as too high risk by global financial institutions, so their citizens are either not allowed to have accounts, or their accounts are highly limited and frozen so often that it’s hard to just do normal business.

Reserve is building a a better currency in terms of economic stability and performance than the US dollar. We are developing a system capable of promoting greater monetary stability and able to protect the product of our users effort and talent. Wherever hyperinflation happens, people can easily switch to our financial infrastructure, so lives and economies can keep running smoothly.

With RSV we are building the most accessible, economically strongest, and most robust-to-attack currency that we can make, and aiming to over time convince a large portion of the world to replace other currencies with it. Users want the benefits of cryptocurrency (easy international payments, no annoyances involving traditional centralized finance characters, seizure-resistant store of value…) and the financial properties of existing assets. Stablecoins provide that.

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Dollar pegged stablecoins (and eventually stable non-USD-denominated cryptoassets) can be used to run entire economies. And because transactions are peer to peer, they are very different from a regulation perspective than normal digital money. They are both:

  • not regulated – i.e. when I transfer some RSV to you, no company or person in the world is responsible for tracking that transaction or knowing our identities, at least from the US legal perspective,

  • harder to regulate – e.g. governments that control bank rules in order to stop their citizens from buying foreign currencies will have a harder time controlling these P2P transactions.

So what is Reserve Protocol? Reserve Protocol is a decentralized dual token asset backed stablecoin system supported by a network of decentralized fiat on/off ramps. The stablecoin scales supply with demand and is built to maintain 100% or more on-chain collateral backing. Our goal is for Reserve to be an immune system for hyperinflation, where any country that has gone into a hyperinflationary cycle has mass-switched to using Reserve in order to avoid that.

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How/where can I buy rsr token? What is the difference btwn the rsr & rsv?
Thank You

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The Reserve stable coin is a necessity in this current world. This project has the potential to positively impact the lives and economy of millions of people. I am proud to be a Reserve holder and part of this wonderful project.

Thanks, .
But I still have not been able to buy any RSR stable coins. Some sites have difficult processes. Is RSR coming up for offer on Coinbase soon?
Please advise.
Thank You
Deeh283

That’s a good question. You should write to the developers about it. I’m sure that they’re already doing the best they can to have RSV and RSR accessible on all platforms. RSR is already available on Binance witch is a huge step forward. My guess is RSR is soon to come on Coinbase… I hope. :crossed_fingers:

Thank you for your speedy reply. I hope on to coinbase soon.

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Buy eth on an exchange like Coinbase, move it to a Coinbase wallet or another wallet such as MetaMask. Go to Uniswap.org, connect your wallet and trade your eth for the RSR token. I’m sure you can find good Uniswap tutorials on YouTube. I believe boxmining On YouTube has a good one. A lot of exchanges do not allow US citizens or citizens of certain states on their exchange. I think anyone can use uniswap and a random wallet.

Question, when the RSV token becomes pegged to a basket of tokenized assets will it still be a goal of the arbitrators to move RSV toward $1 USD? If I want to use RSV as an item that stores value and as an exchange of value with a stable worth shouldn’t RSV correspond to the value of items in the consumer price index? In other words if I go to McDonald’s and use one RSV token to buy something on the value menu I should be able to buy the same value menu item in a year with 1 RSV token. Even if McDonald’s increases the price of their value menu items due to USD inflation, say to $1.28 USD. Will my 1 RSV token be worth roughly $1.28USD when converted to USD/the same cost of the value menu item (excluding outside factors such as scarcity of ingredients and the improved productivity of the manufacturing process of the item). If my RSV token is not following the consumer price index or the value of a basket of items but instead is pegged to 1USD isn’t it a becoming devalued by the standard inflation of USD? In other words are you trying to achieve a stable number relative to 1 USD or a long term stable value of exchange? A long term stable value of exchange would fluctuate In USD along with the value of the chosen standard basket of items. Sorry for the lengthy question but I would like to understand how value is maintained in the token.

Probably belongs here: Tokens and Arbitrage

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.

This community is kinda small at the moment.
May i ask where can i get updates from reserve team?
also would you say it is still a very early stage for Reserve Protocal?
Big future from my point of view.
Appreciate it

Website (http://reserve.org/)
Twitter (https://twitter.com/reserveprotocol)
Website Latin America (https://hola.reserve.org/)
Twitter Latin America (https://twitter.com/holareserve)
TG Announcement Channel (Telegram: Contact @ReserveAnnouncements)

  1. Excess RSV are generated as soon as there is new protocol revenue available, after this, they get stored in the vault, which means they are not minted on the fly just before selling them, unlike when you buy with collateral, in that case they are minted on the fly and immediately sold afterwards, as a single atomic transaction.
    (a) Yes.
    (b) Yes.

  2. RSR holders have exclusivity to buy excess RSV from the protocol because they also take a risk by holding the token, so there has to be an economic incentive to compensate for the risk. During a significant market crash, like during a major global financial crisis when a significant number of collateral assets go down in price, the vault ratio could fall sharply for a period of time (maybe a few weeks), and in that type of situations the protocol is expected to mint and sell new RSR to compensate and replenish the vault with more collateral to defend the vault target. This will have a temporal impact on the price and this is the risk RSR holders need to be compensated for, they are compensated for helping defend the vault target.

  3. The collateralization ratio is the set goal for RSV backing, and it’s meant to be 100% at the very minimum, but it could probably be higher initially. The protocol uses a variable called vault target that refers to the same value. There’s also vault ratio which represents the current backing ratio at any given point in time depending on the market value of the collateral held in the vault. If collateral assets go down in price so will the vault ratio and vice-versa .

  4. The vault ratio equals the total market value of the vault, divided by the circulating supply of RSV, assuming the peg is 1 USD. If it’s not 1 USD then the supply has to be multiplied by whatever the peg is.

  5. “Excess RSV” are RSV generated from protocol revenue, this revenue is stored as RSV in the vault, ready to be sold for RSR whenever it is profitable for holders to buy and resell it.

If the revenue is coming from RSV transfer fees then no minting is needed because fees are collected in RSV, so they are just stored in the vault as RSV. If the revenue comes from collateral appreciation then this extra collateral value is used to mint new RSV that then is stored in the vault.

The reason RSV is burned when redeeming it for collateral is because that’s how the price goes up again when it’s under the peg, by reducing supply.

Stablecoins mantain their peg by adjusting supply one way or the other, so that it always matches fluctuations in demand. If demand goes up supply has to go up too, if demand goes down supply has to go down, that’s how the peg is maintained. We adjust supply by giving people incentives to do arbitrage, with collateral or with RSR. Traditional stablecoins like USDT do it by adjusting supply manually themselves, they just mint and burn tokens depending on how much is getting bought or sold from them, these mints are backed by the USD they receive from selling them which is store in traditional bank accounts.

  1. The minimum Reserve Rights token auction price is a parameter that will be set at mainnet launch.

  2. I think I’m not competent enough to talk about the possible macroeconomic implications of full collateralization if RSV supply reaches a massive number, but keep in mind that in the long term RSR governors could decide to adjust the vault target variable if that ever becomes a problem, and it could end up being the case that having a lower than 100% collateralization ratio isn’t even something to worry about once adoption is massive and countries start adopting RSV as legal tender, because in that case people and big financial entities would trust it enough to even dismiss any possibility of a bank run, which is very much the current situation of the US dollar, which isn’t backed by anything really.

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If the system is collateralized 100% then bank runs are very unlikely, and even if they happen maybe due to some external factor, every RSV holder will be able to successfully redeem all their RSV for their nominal value precisely because each RSV is fully collateralized and there is enough collateral in the vault to give back to them.

If a big economic crisis happens that crashes the market value of the vault and not enough RSR can be minted to compensate for it (the amount that can be minted is limited) then the vault ratio can fall significantly.

Let’s say it falls to 70%. In that case the protocol rather lowers the collateralization ratio of each RSV to 70% temporarily, instead of trying to keep it at 100% which could cause a bank run because it can only guarantee that 100% to a limited number of RSV holders. If the collateralization ratio of each RSV is 70% then RSV holders will rather hold and wait until the vault recovers than redeem it with a loss.

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When Reserve app users exchange bolivar for USD, wouldn’t the value of Bolivar that is now owned by Reserve erode away?

How does Reserve manage inflation risks of currencies?

Hi Seb.

We don’t handle local fiat directly but rather use vetted liquidity providers in each country that take care of that for us. Our app serves as an intermediary between our users and these vetted liquidity providers. This is very similar to a P2P market like localbitcoin but it’s safer and faster as we take on the task of picking the market makers and assigning transactions on behalf of the users automatically based on certain conditions. This allows us to offer a seamless experience to our users that can swap RSV for local fiat and viceversa in a matter of a couple minutes without thinking too much about it.

On the liquidity providers side, there’s certainly a risk for them to get affected by the fast depreciation of an hyperinflationary currency like the Venezuelan Bolivar and the way they not only hedge themselves from that risk but actually make money in the process is by expanding the exchange spread according to the level of risk perceived. The higher the risk the bigger the spread between the sell and buy price is going to be. This means they will end up making money faster than what they lose.

As inflation rates move all over the place all the time is normal to see spreads spike during moments of high exchange rate volatility, which happens from time to time.

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