The Mission
We’re building a universal store of value.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.
With a few exceptions (e.g. 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 hard to do with our existing financial systems.
The Reserve project aims to solve both of these problems with 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 Protocol will contain a substantially centralized fiatcoin, 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:- The centralized phase — where Reserve is backed by US dollars, which are held by a trust company.
- 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.
- 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, we 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.
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:- The Reserve token (RSV) — a stable cryptocurrency that can be held and spent the way we use US dollars and other stable fiat money.
- The Reserve Rights token (RSR) — a cryptocurrency used to facilitate the stability of the Reserve token.
- 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.
What Happens When the Collateral Tokens Depreciate
Collateral tokens are somewhat volatile. While we may be able to select a portfolio with minimal downside risk, the reality is that drops in the collateral tokens' value will happen. When this happens, the Reserve Protocol will sell newly minted Reserve Rights tokens for additional collateral tokens and add them to the backing.
Video
Reserve is a stable, global currency (a stablecoin) and a digital payment system for people and businesses in countries with high inflation.
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 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.
Roadmap
More information:
Website: https://reserve.org/
Telegram: https://t.me/reservecurrency
Twitter: https://twitter.com/reserveprotocol
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