What is Reserve Rights Token (RSR) and how does it work? A comprehensive guide

What is the Reserve Rights Token?

Over a decade ago, Bitcoin was created, leading to the emergence of various coins and blockchain protocols. However, the industry has been grappling with scaling issues, hindering widespread adoption. Launched in May 2019 through a successful initial exchange offering on the Huobi Prime platform, the Reserve protocol aims to address these challenges with a dual-token stablecoin platform designed to scale the industry for global usage.

The protocol's whitepaper notes that the volatility of existing cryptocurrencies limits their utility, whereas a stablecoin would be more widely accepted as a store of value, medium of exchange, and standard of deferred payment. The Reserve protocol operates with three tokens: the Reserve stablecoin (RSV), the Reserve Rights token (RSR), and collateral tokens. Collateral tokens are other assets held by the Reserve smart contract to back the value of the Reserve token stablecoin.

RSV, launched in 2019, is backed by a basket of tokenized assets and maintains a 1:1 parity with the US dollar, making 1 RSV equal to $1. The goal of the Reserve stablecoin is to provide a reliable ecosystem for developing countries and facilitate cheaper remittances. The Reserve vault, representing the smart contract platform, holds RSV. In contrast, the Reserve Rights token is a utility token that allows holders to vote on governance proposals. Unlike RSV, RSR is volatile and is used to stabilize RSV at $1.

How does Reserve Rights Token work?

The Reserve tokens are based on the Ethereum blockchain, and the primary goal of the Reserve protocol is to introduce a novel method for users to preserve the stablecoin's value. Since it is pegged to the US dollar, it must maintain its value of $1.

If the RSV token falls below $1, the protocol will purchase more RSV to raise the token's price back to $1 on exchanges. Conversely, if the value exceeds $1, the protocol will sell newly minted or surplus Reserve stablecoins for either tokenized assets or RSR, aiming to reduce the stablecoin's price to $1.

The RSR token's role is to replenish the market if the assets held by the Reserve protocol decrease, jeopardizing the guarantee of existing RSV. Therefore, an increase in the RSV token supply results in a decrease in the amount of RSR available.

Who founded the Reserve Rights Token?

The Reserve Rights token was launched in 2019 and was founded by Nevin Freeman, who serves as the CEO of the Reserve project. Nevin is a successful entrepreneur, having co-founded three companies. The project's other co-founder is Matt Elder, who acts as the CTO. Matt has previously worked for Google, the app search engine Quixey, and the Linux Standard Base.

Since its initial exchange offering (IEO) on the Huobi Prime platform, the Reserve protocol team has expanded significantly, now comprising over two dozen members, including developers, engineers, and legal and compliance staff. The platform has also received substantial support from notable investors, such as Coinbase Ventures, Sam Altman (the president at seed money startup Y Combinator), and Peter Thiel (the co-founder of PayPal).

What sets Reserve Rights Token apart from others?

The uniqueness of the Reserve protocol lies in its stablecoins being backed by a basket of cryptocurrencies, managed through smart contracts. This differs from other stablecoins, which are usually backed by fiat currencies like the US dollar held in a bank account controlled by the stablecoin issuer.

The current cryptocurrencies backing the stablecoin include Ethereum, USD Coin (USDC), True USD (TUSD), and the Paxos Standard (PAX). However, there are intentions to expand the range of collateral tokens to include a broader variety, potentially encompassing fiat currencies and securities.

Another distinctive aspect of the Reserve protocol is that its Reserve Rights token is utilized to adjust the price of the stablecoin if it deviates from $1, thanks to its arbitrage mechanism.

What is the underlying value of Reserve Rights Tokens?

The token derives significant value from its utility within the dual-token system, which supports the Reserve protocol in achieving its objectives. The RSV token serves three main purposes: combating hyperinflation, establishing a resilient ecosystem, and providing a stablecoin.

The Reserve Rights token and the Reserve stablecoin are interconnected through arbitrage minting and stability mechanisms, offering effective solutions to inflation and hyperinflation. Stablecoins like the Reserve stablecoin are ushering in an era free from inflation. Additionally, the diverse asset backing of the stablecoin helps shield it from government regulations and governance decrees.

How many Reserve Rights Token (RSR) coins are currently in circulation?

Reserve Rights has a maximum supply of 100,000,000,000 RSR tokens, with 50,600,000,000 RSR currently in circulation. Although the RSR token was initially launched with a fixed supply of 100 billion tokens, the Reserve protocol team has indicated that this supply could be subject to change.

The Reserve Rights token was introduced with a circulating supply of 6.85 billion tokens. Of this, 3 billion tokens were allocated to users participating in the Huobi Prime IEO, 2.85 billion were released as project tokens, and 1 billion RSR were distributed to private investors.

Other technical data

According to the project's website, the initial operation of the protocol will be centralized. The Reserve team explains that as the network expands, portions of the protocol will transition to on-chain operations as control is relinquished by the founding team. Ultimately, the network aims to achieve complete decentralization.

To achieve this goal, the project is planned to undergo three phases:

• Centralized phase: Initially, the project will be supported by a limited number of collateral tokens, each representing a tokenized US dollar.
• Decentralized phase: In this stage, the Reserve token will be stabilized by a changing basket of assets in a decentralized manner while still maintaining a price peg to the US dollar.
• Independent phase: The final phase involves the Reserve token no longer being pegged to the US dollar and maintaining stability regardless of fluctuations in the US dollar's value.

How does the Reserve Rights Token network ensure security?

The Reserve Rights token, being an ERC-20 asset on the Ethereum network, currently relies on the Proof of Work (PoW) consensus mechanism for security. This mechanism is supported by a network of Ethereum miners.

However, PoW is known for its time-consuming and energy-inefficient nature. Ethereum is in the process of transitioning to a Proof of Stake (PoS) consensus mechanism, which is expected to bring about cheaper and faster transactions on the network. Unlike PoW, where miners solve mathematical problems to process transactions and earn rewards, PoS relies on an algorithmic consensus mechanism that selects a node to validate transaction blocks.

How to use the Reserve Rights Token?

The primary challenge that the RSV and RSR tokens aim to address is volatility, a significant barrier to the widespread adoption of cryptocurrencies, which many crypto assets struggle with. This volatility makes merchants hesitant to accept crypto payments due to the risk of market downturns, while users are cautious about investing heavily in a single coin out of fear of significant financial loss.

The introduction of the Reserve protocol aims to resolve these issues by offering a stable store of value, a medium of exchange, and a potential preferred method of payment.

How to choose a Reserve Rights token wallet?

RSR, being an ERC-20 token, can be stored in any wallet that supports Ethereum. The choice of wallet depends on your intended use and storage needs.

Hardware wallets like Ledger or Trezor offer the highest security by storing cryptocurrencies offline. They require technical knowledge and are more expensive, making them suitable for storing larger amounts of RSR by experienced users.

Software wallets, available as smartphone or desktop apps, offer a free and easy-to-use option. They can be custodial, where the service manages and backs up your private keys, or non-custodial, using secure elements on your device. Software wallets are less secure than hardware wallets but more convenient, suitable for smaller amounts of RSR or novice users.

Online or web wallets are free and easy to use, accessible from multiple devices via a web browser. They are considered less secure than hardware or software wallets as you trust the platform to manage your RSR. Selecting a reputable service with a strong security record is crucial. Online wallets are best for holding smaller amounts of RSR or for frequent trading.

Kriptomat offers a secure storage and trading solution for RSR, combining enterprise-grade security with user-friendly functionality. Buying, selling, or trading RSR is quick and easy on their platform.

Reserve rights token mining

The entire RSR supply was created in advance, but the majority was locked and is being gradually released, eliminating the need for ongoing RSR mining. RSR operates on Ethereum, which currently employs the Proof of Work (PoW) consensus mechanism. However, Ethereum is transitioning to Proof of Stake (PoS), a more efficient system that will enable faster transactions with lower fees. Unlike PoW, which demands substantial computing power for each transaction block, PoS is less energy-intensive.

In summary, the Reserve protocol's dual-token system aims to elevate the cryptocurrency market by minimizing volatility, thereby bolstering merchants' and investors' confidence. Despite its recent launch in 2019, the Reserve project has made significant progress and holds substantial potential, with its team expressing confidence in meeting their objectives.

The protocol is facilitating cost-effective remittances, curbing inflation, and fostering trust among businesses. Additionally, it is listed on various exchanges and features a mobile payment application.

Although it faces stiff competition from other stablecoins, the Reserve protocol is expanding its reach by maintaining a steadfast focus on its ultimate product.