Today, while there are numerous successful protocols in the crypto world, only a limited number have access to fiats. This makes both fiat currency and cryptocurrency parallel in implementation. Not that it’s so bad, but it can get better.
Fiat currencies, also known as federal currencies, are held and controlled by the federal governments of countries. One major issue arising with fiat currency is inflation, and this causes these currencies to lose value, hence, instability in value.
The instability in the price of fiat is primarily due to centralized control of the currency, subjecting it to incorrect and really unstable price values.
The rise of cryptocurrency in the past decade and, more recently, decentralized stablecoins have emerged to salvage this problem. Stablecoins are cryptocurrency coins whose prices are pegged from fiat currency values.
The Reserve Right protocol is a decentralized cryptocurrency platform established to stabilize cryptocurrencies’ high instability and volatility. It is aimed at creating a balanced value of its USD-pegged stablecoin, the RSV. The protocol was built and hosted upon the Ethereum blockchain.
The protocol provides a substitute for the centralized fiats and issues a safe way to have stabilized money. It is permissionless and makes available multiple fiat networks to operate autonomously. The stablecoin is reinforced with many digital assets. Its purpose is to ensure seamless transfer for users within the blockchain.
More than providing stable finance, Reserve Rights aims at providing a trustless, Defi banking app that’s not affected by the government. The protocol aims to achieve inter-blockchain use of its token across blockchains that support smart contracts in the long run.
The reason is that the chain of the high volatility of cryptocurrencies has been a consistent bother to the crypto market. Reserve Rights strives to minimize this, as high volatility limits the market growth of any cryptocurrency.
The protocol provides a balanced platform for transactions, the availability of deferred payments, and the ability to store price value.
The major challenge that RSR attempts to solve is volatility. Volatility in cryptos has affected the expansion of the crypto market as an exchange medium. Merchants are scared of accepting cryptos with the fear of losing their profits due to a market downturn.
The Reserve protocol avails the crypto market, a stable exchange medium, a store of value, and a standard of ‘differed payment.
New users that are no familiar with the decentralized economy may find it difficult to join. Presently, they need a third-party exchange before they can access the market.
The Reserve Protocol adopted ‘fiat on/off ramps’ into their main protocol. This mechanism has made it possible for new users to enter the system without ‘third-party’ Dapps.
However, the next important challenge the Reserve Protocol influenced is servicing the ‘unbanked.’ The team wants to address the inability of the local banking institutions to reach out to people with limited access to main financial services. They want to provide a robust but reliable merchant ecosystem to these people, especially in developing countries.
The Reserve protocol was created in May 2019 by a team of highly credible professionals. The co-founders are Nevin Freeman (CEO Reserve.org) and Matt Elder (CTO Reserve.com). Nevin is also the co-founder of Paradigm Academy, MetaMed Research Inc., and Riabiz.com.
Matt Elder is a former Engineer at Google, IBM, and Quixey. He currently is overseeing the protocol’s architectural implementation as the Chief Technological Officer.
The Reserve protocol has its headquarters in Oakland, California, USA, and a development team of over 20+ people.
The Initial Exchange Offer (IEO) funding of the protocol was carried out on the 22nd of May 2019 on the Huobi Exchange. At the end of the IEO, the protocol’s team received $3,000,000, and 3,000,000 tokens were circulated.
The Reserve Rights protocol has three major features that are interesting to look at. We’d talk more about them in the forthcoming section, but for this purpose, we shall outline them for you briefly. They are:
Now, let’s looks at the phases in which the RSR protocol was created to work in:
The semi-centralized stage was meant to happen in 2019. The objective was to have the tokens centralized, backed with the USD, and collateralized. In short, the stablecoin RSV has to be pegged to a USD. This phase was VERY similar to the utilization of USDT (Tether). A real US Dollar value backed up each of the RSV tokens supplied. However, the development team paused this phase for the second phase.
In this phase, the protocol begins to integrate other assets’ backing to collateralize the RSV tokens. And as more assets are pegged to the RSV tokens, it begins to track the values of USD. The pegging is algorithmically executed and no more backed up with USD again.
As the RSV reaches this phase, it becomes an independent currency on its own. Its value is no more pegged to the fiat USD anymore, and so it can’t be affected by USD.
Reserve Rights has a main processor called the “Reserve Vault.” This vault evaluates and implements transactions and also stores the values of digital assets. It holds all three Reserve Right tokens; the RSV, RSR, and collateralization token. The protocol balances the ratio of the tokens to the digital assets to a 1:1 ratio.
The vault balances any increase in the price of the RSV token over the dollar. It does this by selling out recently pegged RSV tokens into the supply. It also sells excessive RSV tokens from storage. These RSV tokens are traded for either RSR tokens or other digital assets in the platform.
Excessive RSV token affects the market demand, and inevitably, the price of the coin. Should the value of RSV get below $1 on any connected exchange, the vault repurchases the RSV token to balance it.
The cryptocurrency is filled with various stablecoins with over $777.24B worth invested in the crypto market. The Reserve Rights protocol has itself a rigid list of stablecoin competitors.
Ranging from Binance USD (BUSD), Tether (USDT), USD Coin (USDC), TerraUSD (UST), or True USD (TUSD), there are a wide variety of opponents for the Reserve Rights token. All of them have their stablecoins collateralized with USD.
The present competitors’ list for RSV:
Although the market cap of RS protocol is $420M, it still has a long way to go to dominate the stablecoin market.
The Reserve Rights development team decided to use a double token to achieve their set goals. These dual tokens are Reserve unique and native tokens referred to as the RSR and RSV. They are the only stable coin the network has, and they work jointly to give users of the Reserve protocol an efficient and safe UX.
They are ERC-20 tokens popularly known as the Reserve Rights Token (RSR) and the Reserve Stable coin Volt (RSV).
The Reserve protocol, in addition to the two token types above, also makes use of a third token called the Reserve Dollar (RSD) or collateral tokens.
RSR is the 2nd token in the Reserve Rights ecosystem. It’s a major tool in the current maintenance of the RSV value, i.e., facilitating its stability. In fact, it serves as the main token for governance in the Reserve network and guarantees the rate of collateralization and RSV peg. It has the following primary functions in the Reserve network;
The RSR, unlike the RSV stable coin token, is volatile and has been given to investors. The returns are used to fund the Reserve project. There is a max supply of one billion RSR coins and a total supply of approximately 13.159 billion (13,159,999,000) RSR coins in circulation.
Image Credit: CoinMarketCap
The RSR token also recapitalizes the protocol when the RSV depreciates and cannot collateralize fully the RSV token in existence. To this effect, the RSR token circulation decreases any time the RSV supply volume increases. This happens because only the RSR holders can exploit the buying and selling opportunities presented by the system.
This is the second token in the Reserve Right network. It is a stable coin that functions as a ‘borderless global’ currency. Meaning that anyone in all parts of the world can make payments, store wealth, and get paid using this RSV, just like the Facebook Diem. The RSV is among the stable crypto on can hold or spend just like the US dollars and other similar fiat money that are stable.
The token launch was done in 2019 and is supported by a group of assets that are tokenized like Paxos Standard (PAX), TrueUSD (TUSD), and USD Coin (USDC). The Reserve team planned to add more assets like commodities, securities, and other currencies to diversify the backing.
Initially, 1 RSV equals 1 USD. The protocol on maturity will become even more decentralized with the RSV value realized from the reserved collateral in the Reserve Volt. The RSV has three main functions thus;
The RSV token is aimed at maintaining parity for the main time with the U.S dollar. It will soon extend to maintaining a constant value as ascertained by the RSV token itself. This has been included already in the Reserve Protocol application used in Argentina, Columbia, and Venezuela.
The Reserve Stable coin Vault is made to be entirely backed by collateral. This collateral is held in the Vault. The Vault can be referred to as a ‘smart contract’ used to hold and pool the assets collateralizing the RSV token. The Vault can be funded in two ways;
The RSV community decides through voting the upgrades and projects that will access these funds.
This is the third type of token. Though not written in the Reserve protocol white paper, the team mentioned it. The RSD would have been the first issued token, but the team bypassed it and issued the RSD. It is a ‘fiat–backed’ stable coin originating from the Reserve network.
The plan was to centralize and back the RSD by the U.S dollar in a 1:1 ratio with the same 1:1 U.S dollar peg. The team promised to give the RSD still, but since July 2019, they had barely made mention of it.
The RSD maintains a constant price in the ‘open’ market through giving out redemption and issuance of RSD for ‘fiat currency’ one RSD per one USD. The RSD has the usual characteristics of a typical ERC-20 token.
Reserve Rights Stable Coins are supported by a ‘basket’ of Cryptos managed by ‘Smart Contracts.’ This is unlike others in the same category. They are backed by the USD (U.S dollars) reserved in a ‘bank account’ that is controlled by the issuers of the stable coin or a reliable custodian.
Another unique feature of the Reserve right protocol is that its RSR token is minted and sold the RSV stablecoin anytime decreases from its ‘peg’ with the USD.
The funds gotten from RSR token sales are returned to the RSV ‘collateral pool’ to replenish it. But when RSV value is above one dollar, the excess collateral is used to bring down the RSV supply by buying and burning the RSR from the ‘Secondary market.’
The basket of assets is initially made up of Ethereum stable coins like True USD (TUSD), Paxos (PAX), and USD Coin (USDC). But the Reserve team has plans to upgrade to a basket that will include securities, commodities, fiat currencies, and even asset types that are more complex, like derivatives and synthetics.
When RSV token value rises above one dollar, the arbitrageurs benefit from the mechanism. They buy at $1 from the protocols ‘smart contract’ with RSR token and sell at the recent market price, taking the difference in the price as their profit. This is a major factor in attracting more buyers, and it is available only to holders of RSR tokens.
RSR (Reserve Rights) is a renowned token that presently ensures excellent liquidity. It can be bought and traded on many well-established crypto exchanges. They include;
Binance Exchange: This is best used in Canada, UK, Singapore, Australia, and many other countries in the world. People residing in the USA are not permitted to buy RSR.
Gate.io: This is among the reputable exchanges where RSR can be bought. It was developed in 2013 and is the best platform for residents of the USA. Other good exchanges or platforms for purchasing RSR are OKEx and Huobi Global, MXC, ProBit, Liquid, BitMart, etc.
Users can exchange the Reserve Rights token with many popular cryptos like Ethereum (ETH), Tether (USDT), and Bitcoin (BTC), including USD (the U.S dollar), on different platforms.
The Reserve team has a stable RSR token supply of one hundred billion (100 billion). The amount on circulation as of October 2020 was not up to 10% of this total supply. The Reserve team had hoped to change this fixed token supply after their mainnet in 2020.
Notably, the max token supply, though pre-mined, has a large portion of it still locked for different reasons. 55.75% of the total supply is locked in a slow wallet, ‘a smart contract’. These funds are released after a month’s explanation of the reason for the withdrawal by the Reserve team. They use a ‘public on-chain message to do the explanation.
Furthermore, the RSR token was launched initially with a total supply of 6.85 billion tokens in circulation. 2.85% are project tokens, 3% were shared among participants of Huobi Prime IEO, and 1% given to private investors. All the tokens meant for the team, the partner, advisors, and seed investors will go to them after launching the mainnet.
A hardware wallet is the best recommended option for storing RSR. It serves right for those who have plans to invest in the toke or hold it for a long time.
The hardware wallet stores the crypto offline, known as cold storage. This makes it difficult for ‘online threats’ to access the held tokens. Though, wallets that support Reserve Rights like the Ledger Nano X or the Ledger Nano S should be the best option.
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