Reserve Rights Token

What is Reserve Rights (RSR)?

Reserve Rights is the governance token of the Reserve Protocol. The Reserve Protocol allows for the creation of asset-backed, yield-bearing, and insured stablecoins atop the Ethereum blockchain.

Reserve is an alternative take on the various stablecoin protocols in existence, although it has a similar goal: to provide highly scalable, decentralized, and stable money.

Reserve’s original whitepaper presented arguments for why a stablecoin should initially implement an exchange-rate peg to a fiat currency. It argued that a basket of assets could be used later, using off-chain collateral tokenized by diverse users. The Reserve ecosystem includes the Reserve Rights token, a stable US dollar-pegged cryptocurrency called RSV, and the Reserve mobile app. This combined solution allows easy access to spendable, digital US dollars for residents of countries with high inflation.

Reserve’s app already has hundreds of thousands of registered users, including 100,000+ weekly active users. It is an accepted payment method for over 15,000 merchants in Venezuela, Argentina, Colombia, Panama, and Peru.

When Was Reserve Rights Launched?

Reserve Protocol was launched in 2019, and its whitepaper was published the previous year. The Reserve Rights whitepaper was authored by Taylor Brent, Daniel Colson, Matt Elder, Henry Fisher, Nevin Freeman, Jesper Ostman, and Elizabeth Van Nostrand.

The Reserve Protocol has grown significantly since its launch, and the team behind it has expanded to over 200. This includes engineers, developers, and legal and compliance staff working to advance Reserve as an open stablecoin platform that promotes economic prosperity.

The RSR token was launched in an Initial Exchange Offering on the Huobi platform, with 3% of the RSR supply up for grabs. Private investors had previously sold 1% of the 100 billion token supply, and 2.85% were released as project tokens. This amounted to an initial circulation of 6.85 billion RSR.

Who are the Founders of Reserve Rights?

The Reserve Protocol was founded by Nevin Freeman and Matt Elder, the project’s CEO and CTO, respectively.

Freeman is a seasoned entrepreneur, having previously founded Paradigm Academy, MetaMed Research, and RIABiz. Elder, meanwhile, is an engineer who has previously worked for Quixey and Google.

Reserve states that its institutional backers also play an active part in the project and credits them with shaping the project’s trajectory as much as the core team. These backers include Coinbase, the Digital Currency Group, GSR, NEO Global Capital, and Fenbushi Capital, among others.

Notable individual investors in Reserve include YCombinator President Sam Altman and Paypal and Palantir founder Peter Thiel.

How Does Reserve Rights Work?

The Reserve Protocol allows anyone to create stablecoins backed by baskets of ERC-20 tokens on Ethereum. These stable, asset-backed currencies launched on the Reserve Protocol via its smart contracts are called RTokens.

These RTokens are minted by depositing the entire basket of backing collateral, so the RToken trades at the market value of this backing basket. If it deviates in either direction, arbitrage traders can return it to equilibrium.

The RTokens can be insured, meaning that there is a pool of value to mitigate losses in case the collateral tokens default. This insurance is provided by RSR token holders, who stake their RSR in particular RTokens.

In the case of a collateral default, these staked RSR tokens can be seized by the protocol in a mechanism based on on-chain price feeds. This seizure is independent of governance or any human choice, executed purely by code.

RSR token holders are incentivized to stake the user-created RTokens because they can generate revenue. Revenue can be generated in many ways—from yield via collateral token lending or other means.

This revenue is important because, without any sort of incentive, it’s unlikely that the RToken will receive any RSR staking. That would leave it without insurance in the case of a collateral default.

Additionally, RTokens can be configured individually, including their governance. This governance can also update the collateral basket’s make-up. When this happens, the protocol makes on-chain trades to establish the new basket composition.

What Makes Reserve Rights Unique?

Reserve isn’t the only protocol that allows users to mint custom assets, but one of the key differentiators is that Reserve is permissionless. This means that anyone can engage the protocol and deposit collateral to create RTokens without requiring permission from any individual or entity.

Using RSR tokens for insurance is also a unique way of implementing them. Incentivizing RSR holders to insure individual RTokens is a mechanism that’s simple and intuitive but rarely seen in other protocols.

Collateral default is a risk, especially given how volatile assets are nowadays. However, the risk of default and RSR seizure is offset by the reward that RTokens can pay their insurers.

How is the Reserve Rights Network Secured?

RSR is an ERC-20 token deployed on the Ethereum blockchain. As such, it relies on Ethereum for security and the accuracy of account balances.

Ethereum is one of the most secure and decentralized blockchain networks in the industry. Although it’s only behind Bitcoin in capitalization terms, Ethereum now utilizes that same market value for its security through proof-of-stake.

Proof-of-stake is secured through a system of economic incentives and disincentives. Ethereum’s validators have to lock up a minimum of 32 ETH in the protocol, a not inconsiderable sum. Many lock up a lot more.

These bonds, or stakes, can be confiscated from the validators if they do not behave according to the protocol. If they do, however, they stand to earn rewards proportional to their stake. This mechanism of economic reward and punishment ensures protocol safety.

What is the Use of RSR?

The RSR token is the native token of the Reserve protocol and is mainly used to insure the various RTokens deployed by users on the platform.

Once staked to an RToken, the RSR staker receives a portion of the RToken collateral’s revenue as compensation for playing the part of the insurer. If collateral defaults, the staked RSR is the first capital used to redeem the loss.

Staked RSR can also be used to make proposals on changes to the RToken’s configuration and vote on them. This allows RSR to play a major role in governance.

Of course, RSR token holders can decide to stake their tokens on RTokens they want and even split their balance to stake on multiple RTokens. Holders can also simply “hold” and not stake at all.

Once they stake their RSR, token holders receive an ERC-20 token corresponding to their staked position on that RToken. These new tokens are transferable and fungible. This is important because unstaking RSR comes with a certain delay.

This delay is configurable but would make RSR illiquid. This is mitigated by the creation of tokens to represent stakes, meaning that RSR holders can effectively transact their RSR without having to wait out these delays.

Staked RSR earns rewards based on three factors:

• The amount of revenue generated by the RToken
• The portion of revenue that governance has directed to RSR stakers
• Your proportion of the total RSR staked on that RToken

Who Controls Reserve Rights?

The Reserve team is organized into an interesting structure composed of Tribes, Guilds, and Squads.

“Tribes” is the name given to the projects under Reserve, and co-founder Freeman leads the RToken Tribe. This project group develops and promotes Reserve’s smart contract protocol, including decentralized governance.

The other Tribe is RPay, led by Gabriel Jimenez. This Tribe is in charge of Reserve’s app and operations in Latin America. RPay has made strides in this market, especially in Venezuela, which remains stricken with hyperinflation.

Reserve has 15 Guilds, which refer to employee skill sets rather than working groups or objectives. Rather, these are the domain of Reserve’s Squads.

How Much RSR Is In Circulation?

Reserve Rights has a total supply of 100 billion RSR tokens. Of this, just over 42 billion RSR are currently in circulation.

This token supply has already been premined, but much of it has been locked away for a variety of reasons. A large proportion—almost half of the supply, in fact—was locked in a smart contract called the “slow wallet.”

Tokens from the slow wallet are released by the Reserve team. However, they do have to make a public on-chain message stating the reason for the withdrawal, and tokens are released a full month after the operation is initiated.

According to Reserve’s website, 8.3 billion RSR currently belongs to seed investors, strategic partners, team members, and advisors.

How Do You Buy RSR?

You can buy RSR from a variety of cryptocurrency exchanges, both centralized and decentralized. RSR was first launched on the Huobi platform, which remains a strong provider of liquidity for Reserve Rights.

RSR is most often paired with stablecoins like USDT, but it is also possible to buy RSR with fiat currencies like USD, KRW, INR, and others on some exchange platforms.

Is It Possible to Buy Reserve Rights Instantly?

Yes, buying RSR on a cryptocurrency exchange is almost always instant. Most exchanges allow you to maintain an account and provide custodial storage of tokens, so buying them is just a matter of shuffling internal balances around.

Withdrawing RSR may be another matter. This can take some time if the exchange needs to run KYC (Know Your Customer) and AML (Anti-Money Laundering) processes, and only after being given the green light will your RSR tokens hit the blockchain. It should be smooth sailing from then on, and Ethereum completes transactions in mere minutes.

How Do You Store RSR?

One of the main disadvantages of storing cryptocurrencies on an exchange is that you can’t use them in the way they were designed. You won’t be able to stake your RSR in support of RTokens that catch your eye and participate in their governance from an exchange account.

To do so, you’ll have to store your RSR in a Web3 wallet. Luckily, RSR is an ERC-20 token, and there are plenty of wallets that support it. Ledger and Trezor are two of the most common hardware wallets for RSR, and hot wallets like Trust Wallet and Metamask also get the job done.

Reserve Rights Energy Consumption

Reserve Rights is one of many hundreds—if not thousands—of popular protocols on the Ethereum blockchain and can’t be accused of being particularly energy-hungry.

Besides, Ethereum has also cleaned up its act. As of September 2022, Ethereum completed its much-awaited merge from proof-of-work to proof-of-stake. This transition saw network energy consumption drop by 99.95%.

Is RSR a Good Investment?

Reserve is a protocol that tackles the issue of stable assets in a different way than most and is already solving real-world problems with its stablecoin and app in Latin America.

As double-digit inflation (or worse) starts to spread across the world, the Reserve’s long-term goals start to become more profound. Tokenization of real-world assets is a conversation that is starting to hit the mainstream, and Reserve is ahead of the curve with its RSR token central to its future.