A major hindrance to the mass adoption of blockchain technology and the use of crypto tokens as fiat currencies is the sector’s volatility. The crypto industry, however, is geared towards boosting mass adoption, with several projects such as the Reserve Protocol and its multi-token system. In this article, we are going to examine the Reserve Protocol, its tokens, and how they work to keep the platform stable.

What is the Reserve Rights Protocol?

The Reserve Rights Protocol is an Ethereum-based protocol designed to house a variety of decentralized stablecoins that are completely autonomous and non-inflationary. Launched in May 2019, the protocol utilizes a dual-token system consisting of two stablecoins: Reserve Stablecoin (RSV) and the Reserve Rights Token (RSR).

The Reserve Stablecoin (RSV) is backed by a basket of digital assets managed by the protocol’s smart contract. On the other hand, the Reserve Rights Token (RSR) is used to convert the RSV stablecoin to a dollar. The RSR token is used for more than stabilizing the RSV token; it is also used to vote on the governance of the protocol and other proposals within the ecosystem.

History of Reserve Rights Token

Nevin Freeman and Matt Elder founded the Reserve Rights Protocol. Freeman is the Reserve Protocol CEO and a well-established entrepreneur who has launched several businesses. Matt Elder is the protocol’s CTO and has admirable job experience, having worked for popular companies like Google, Quixey, and the Linux Standard Base.

After its initial launch, the protocol’s team experienced considerable growth and now consists of several members, including legal consultants, engineers, and developers. The platform has also gained support from prominent names like Sam Altman and Peter Thiel.

The team planned a three-phased plan for the protocol rollout. The first stage, called “The Centralized Phase,” consists of the protocol being backed by a small number of tokens that will be denominated in USD. The second phase, “The Decentralized Phase,” involves a basket of decentralized assets denominated in USD, backing up the token. Lastly, in the last phase, “The Independent Phase,” The Reserve Token is unpegged from the USD to stabilize the token’s purchasing power regardless of the dollar’s price.

How Does the Reserve Protocol Work?

The Reserve Protocol aims to develop a fully autonomous and borderless, inflation-resistant platform backed by real-world assets. It utilizes a dual-token system comprising the Reserve Token (RSV) and the Reserve Rights Token (RSR) to achieve that. The two tokens work hand in hand to ensure the RSV price remains pegged to the dollar.

The Reserve Vault is a major element that ensures the various parts of the protocol work accordingly. It can be likened to a car’s engine, as it is the main processor of the Reserve Protocol. The vault is in charge of storing assets and calculating and triggering transactions. As the name suggests, the vault safeguards the Reserve Rights Token (RSR), The Reserve Token (RSV), plus tokenized assets as collateral.

Furthermore, the reverse protocol ensures that the vault ratio of the reverse tokens and tokenized assets stays at 1:1, achieved by controlling the flow of the RSV token in circulation. For instance, if the price of the RSV token rises above a dollar, the vault sells off newly minted RSV to reduce the flow in circulation. However, if the RSV in circulation is excessive, the existing tokens will be sold first.

The vault is also called to action whenever the RSV token falls below the $1 mark on exchanges. When this happens, the Reserve Protocol purchases RSV tokens for tokenized assets within the vault. This reduces the supply while increasing the demand, returning the RSV token price to $1.

Features of the Reserve Rights (RSR) Crypto

The Reserve Protocol aims to solve the volatility of the crypto ecosystem. To achieve this goal, it has equipped itself with several features, some of which include:

Security

The Reserve Rights token is an ERC-20 asset built on the Ethereum network. It is protected by the Proof-of-Stake Consensus mechanism, which grants the platform an extra layer of protection.

Stablecoin

The Reserve Protocol’s utility token, Reserve Rights, is not backed by U.S. dollars like other stablecoins. Instead, it is backed by a basket of cryptocurrencies managed by the platform’s smart contract.

Decentralization

RSR is a decentralized toke, meaning it is not owned or controlled by one person or body. This feature grants the project extra security and ensures every decision is made to favor the protocol.

Reserve Protocol Token Structure

The Reserve Protocol makes use of a dual-token system. Each token is given a specific task that contributes to the smooth running of the ecosystem. The tokens are:

Reserve Rights Token (RSR)

The Reserve Rights Token is a stablecoin used to make payments on the Reserve Rights Protocol, a decentralized platform developed to issue and manage stablecoins. It is designed to be pegged to the US dollar and regulated by reserved assets owned by the Reserve Rights Protocol.

The RSR token serves two major functions in the ecosystem. First, it can govern the protocol and vote on proposals and updates within the ecosystem. Users who hold on to the RSR token are essential in keeping the platform decentralized and autonomous. Second, the RSR token ensures the Reserve Token (RSV) price remains constant.

Additionally, the RSR token can be used to reward users for certain reasons, such as the amount of revenue generated by the Rtoken, the portion of the revenue allocated to RSR stakers, and the portion of the total RSR staked on the RToken.

Reserve Token (RSV)

The Reserve Token (RSV) is a decentralized digital asset built to combat volatility. It is designed to function like regular fiat currency and helps tackle the hyperinflation and instability users face when dealing with national currencies. It is backed by a changing basket of assets, such as USDC, TUSD, and PAX.

Collateral tokens

Collateral tokens are tokenized assets held by the platform as collateral for its Reserve tokens. The platform currently consists of a few tokens, like USDC and PAX, but it aims to increase the number of such assets as it grows.

Reserve Stablecoins (RTokens)

The Reserve Protocol allows users to create stablecoins on the platform, referred to as RTokens. These RTokens are fully asset-backed by a combination of ERC-20 tokens and safeguarded by Reserve Rights (RSR) staking.

Users can easily create new Reserve stablecoins through the Protocol’s smart contract, which applies a group of factory smart contracts that allow users to deploy their smart contracts on the platform. Alternatively, users can use other interfaces that have already been deployed on the platform to create an RToken.

Reserve Rights Token Allocation

The Reserve Rights Token (RSR) has a current supply of 100,000,000,000 and is to be allocated in the following manner:

• Foundation: 58.6% of the total token allocation
• Partners: 5.0% of the total token allocation
• Team and Advisor: 20.0% of the total token allocation
• Current Funding: 16.4% of total token allocation

Conclusion

The Reserve Protocol’s token system aims to curb the volatility of the crypto market, encouraging more investors and the general public to adopt blockchain technology. The team behind the project is committed to achieving its goals and believes in its potential.

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