Reserve is building a stablecoin that can’t be shut down and a network of decentralized fiat on/off ramps. This is how The Reserve Project briefly describes itself. They strongly believe anyone should be able to transact with anyone else (in a legitimate way). Where banks and governments have shown they cannot be trusted, Reserve believes their decentralized and stable cryptocurrency is up for the job.
Their mission doesn’t come without challenges. Reserve mentioned their current user base mainly consists of ordinary people and business owners in Venezuela. For those who have missed what’s going on there, Venezuela is seeing hyperinflation on their local currency, which led to many people converting their fiat to cryptocurrency.
Reserve already offers a fully working product with fiat on/off ramps, their user-base is growing, and their vision is not just to provide this in Venezuela but worldwide. They want to go beyond the basic transactions by offering card payments and various other features.
The biggest challenge is to convert people to using their product. Now that might sound very straightforward, but there are various barriers that make this more difficult:
The upside here is that The Reserver Project (and RSV currency) is decentralized, making it much harder for governments to prevent their citizens from using their products. This ultimately makes this all come down to marketing and mass awareness to further scale the user-base. Which is a phase many projects are currently at.
This review of Reserve Rights (RSR) was created for informational purposes. This article is not intended for promotion.
As often seen with decentralized projects, they don’t initially start fully decentralized. In fact, The Reserve Project and protocol currently operate in a centralized way. This is described as phase one, which will transition into phase two, where the Reserve is still stabilised against the US dollar backed by a changing basket of assets. Eventually, this will transition into phase three, where Reserve is no longer stabilised against the US dollar, making Reserve fully independent.
The below image, taken from the Reserve website, offers the best summary of what the Reserve Protocol is and how it works:
So summarized, the protocol uses excess reserve and tokenized assets to back Reserve and to keep RSV at a price of $1, making it a trustworthy stablecoin.
The Reserve Protocol uses two native tokens and also interacts with collateral tokens. We’ve basically covered what RSV is about. RSV is Reserve’s stablecoin, currently pegged against the US dollar while operating in a still centralized way. However, the protocol heavily relies on speculators and arbitrage takers. When the price falls below $1, users are incentivised to purchase RSV and convert it to collateral worth $1 each, whereas when the price is above $1, users can purchase RSV for $1 from the platform and sell it for a profit on the listed exchanges.
Charlie Smith, the head of Business Development at Reserve, explained the most straightforward way to see RSR is to compare it to BNB. To use the Reserve Protocol, a small transaction fee is charged, which will also generate yield. These funds are used for buybacks and burning RSR through the arbitrage mechanism. Which further decreases supply and increases demand.
RSR is also used as a governance token to enable token holders to vote on proposals.
That said, there are a lot of different layers to this project, and I would highly recommend browsing through their website for 30-60 minutes and really exploring in more detail what all of this means.
The Reserve Project is headquartered in Oakland, California, USA. Their team page gives a good overview of their current team members and their experience. Note: not all team members are shown on this page; some wish to remain anonymous, whereas some still have to be added to the page.
I’m mainly interested in their partners and investors. The Reserve Project has gotten massive awareness from people after announcing various investors in the past. Their page gives a complete overview of who is currently invested in the project and is basically helping to fund the collateral of the protocol.
This includes Coinbase Ventures, one of the top-tier exchanges located in the United States. As well as Peter Thiel, co-founder of PayPal. With the recent news about PayPal starting to accept cryptocurrencies, the space was thrilled, and various rumors of RSR being included in the supported list of cryptocurrencies on PayPal appeared. This resulted (partially) in RSR increasing in price and more speculators jumping on board. However, such news hasn’t been confirmed, and at all and the current PayPal phase, I think this is still unlikely to happen anytime soon.
I think it’s safe to say that The Reserve Project is a very ambitious one. There are over 30 stablecoins listed on CoinGecko, with Tether (USDT), USD Coin (USDC), and DAI (DAI) being used the most at the moment.
I’d see Maker (DAI) as Reserve’s most prominent‘ competitor’ of becoming the most adopted decentralized stablecoin. Both have already proven part of their word, and it’s all about scaling at this point. Reserve has very interesting backers who might enable them to go for mass awareness and eventually bypass DAI. That said, this shows huge upside potential for Reserve and, therefore, RSR. I firmly believe they could well play in the same league if they maintain and further increase their user-base at a high pace.
In an actual bull run, one may want to consider adding some RSR to their long-term portfolio. Full transparency, I held RSR a little while ago but sold it for ETH about a week ago. With the current market volatility, I’m hoping to pick RSR up again for a partial short-term and a partial long-term play against BTC.
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