Authored by: @hetty-rowan
It is that day of the week again.
Time to dive deeper in the big jungle of the cryptocurrencies and pick one of the many to take a closer look.
This morning I was thinking about which token I would check out today, and decided to take a look on Twitter to see which tokens I saw passing by. There are so many of them that I sometimes don't know where to look anymore, and besides that I still have the hope to 'discover' a project, which has great potential for 'mooning'. Anyway, I saw quite a few tweets on Twitter mentioning a number of tokens that I didn't know at all. And that always piques my curiosity, one of those tokens that was talked about was the RSR token, and what I saw was that there is a lot of trust in this token. And that people expect (or is it hope?) That this token will rise very soon. I dare not make a statement about it. The card recently looks very good… I noticed that immediately when I went to look up the token on Coinmarketcap. And there is a significant progression, in October this token was still good for place #89 on Coinmarketcap, today it is good for place #68. That is a nice increase. And if this continues, a lot of beautiful things could be expected from the RSR. Time to take a closer look. Let's go for it!
A project with great ambition, with a clear mission, and an objective that would provide a solution in countries where high inflation is currently the daily harsh reality. If The Reserve Protocol succeeds in achieving their goal, this protocol can help many people in the world to make their daily lives much easier, and give people all over the world access to a currency that makes it possible to take their lives to a higher standard. Even in countries where it is virtually impossible at present to earn an income that will allow you to provide for your daily living expenses.
So we are going to talk about The Reserve Protocol.
To fully understand The Reserve Protocol we need to talk about two tokens here. Two tokens? Yes there are two tokens, and both are an important part of the Reserve Protocol.
The tokens are:
- Reserve Token (RSV)
- Reserve Right Token (RSR)
Then there are the “Collateral Tokens”, which are necessary to fully understand what this project does. But otherwise irrelevant because they are not offered by Reserve Protocol as a Reserve Protocol token.
Well… now that I've mentioned this. First, let's take a look at what The Reserve Right Protocol is and what it wants to do.
Nothing's gonna stop it!
The Reserve Project (Protocol) is building a stablecoin that cannot be stopped, and a network of decentralized fiat on / off ramps. They are convinced that everyone should be able to trade (legitimately) with anyone. Where banks and governments have shown they cannot be trusted, Reserve believes their decentralized and stable cryptocurrency is up to the job.
Their mission presents enormous challenges. Reserve indicated that their current users are mostly normal people and entrepreneurs in Venezuela. If you have been living under a rock recently, and have missed the many messages about the situation there, I would like to refer you to the many blogs of Venezuelan bloggers. I can't describe it here in detail, so very shortened: Venezuela is seeing massive hyperinflation on their local currency. Among other things, this has led to many people converting their fiat into cryptocurrency.
Reserve already offers a fully working product with fiat on / off ramps, the number of users is growing enormously and their vision is to provide this not only in Venezuela, but worldwide. They want to go beyond the basic transactions by offering card payments and several other features.
The biggest challenge is getting people to use their product. That may sound very simple, but there are several barriers that make this more difficult:
Some countries do not allow their citizens access to foreign currency.
Reserve Protocol writes about this;
“Some countries are considered too high a risk by global financial institutions, so their citizens may either not have accounts or if they do, these are often so limited and frozen that it is difficult to do business normally. ”
The benefit of this is that the Reserve project (and the RSV currency) is decentralized, making it much more difficult for governments to prevent their citizens from using their product. This ultimately all boils down to marketing and mass awareness, to further increase the number of users. That is a phase in which many projects are currently in.
What are the Reserve Protocol tokens for?
As said before, we are dealing with Reserve Token (RSV) and Reserve Right Token (RSR). The RSV, is intended to be a so-called stablecoin and is believed to have a value of $1. At the time of writing that is exactly correct when I look at coinmarketcap. This token is intended to use basically exactly the same as a US dollar. It is therefore a token that is really designed as a means of payment.
Now it's getting interesting
The Reserve Right Token (RSR) is more interesting. This token is used along with the various collateral tokens to keep the RSV at a constant value of $1.
As soon as the demand for the RSV token falls (the stablecoin variant), it is a logical consequence that the price on the exchange will fall. Since this includes a stablecoin, that is of course not an option. To keep the price stable, the following happens:
Suppose the repurchase price of RSV is $1.00. If the price of RSV in the open market is $0.98, arbitrators are incentivized to buy up and exchange the tokens with the smart reserve contract for $1 of collateral tokens, such as RSR or collateral tokens. They keep buying in open markets until there is nothing left to earn, which is when the market price matches the $1.00 price.
This mechanism also works the other way round when demand increases. If the price of RSV in the open market is $1.02, arbitrators are incentivized to buy newly mined RSV for $1.00 in collateral or RSR, and immediately sell it in the open market. They will continue to sell in the open market until there is no more money to be made here too, which is when the market price matches the purchase price of $1.
How the Reserve Protocol is activated
The Reserve Protocol contains the collateral token that support the Reserve Token (RSV). When newly mined RSV are sold on the exchange, the assets used by market participants to purchase the new reserves are held as collateral. This process keeps the reserve collateral at a ratio of 1: 1 even if the supply increases.
Sometimes the Reserve Protocol can aim for a ratio of more than 1: 1. When this happens, scaling up Reserve Tokens supply requires additional capital to maintain the target ratio. To achieve this, the Reserve Protocol currency and sells RSR tokens in exchange for additional collateral tokens.
What happens if the collateral tokens decrease in value
Collateral tokens are somewhat volatile. While we may be able to select a portfolio with minimal downside risk, the reality is that the value of the collateral tokens may decline. In the event that this happens, the Reserve Protocol sells newly coined RST tokens for additional collateral tokens and adds them to the backup storage.
Price history RSR Token
The RSR token is thus tied to a large-scale project and not a purely stand-alone token. Despite that, it has its own course, which has seen a significant increase in recent months. The market cap currently stands at $399,295,822 USD which is good for position #68 based on the market capitalization of the coin. Currently, there are 9,349,999,000 RSR in circulation out of the total available 100,000,000,000 RSR.
Reserve Rights price today is $0.042705 USD with a 24-hour trading volume of $281,134,638 USD. Reserve Rights is up 8.32% in the last 24 hours.
Reserve Rights offers a great project and has the ambition to tackle a real problem. The protocol has proven that it works and has good prospects for the future. Time will tell how far they will get with their ambitious project.
As far as I could tell, confidence in the RSR has increased significantly recently and a fair amount of market volume has also been added in recent months. It just might be a hidden gem… but as always, I AM NOT A FINANCIAL ADVISER. And if you think this is an interesting project to invest in, DO YOUR OWN RESEARCH.