An Overview of Decentralized Stablecoin Platform Reserve: How is Decentralized Currency Creation Achieved?

Decentralized Stablecoin Platform Reserve: How is Currency Creation Achieved?

The Reserve protocol aims to authorize any entity to easily launch decentralized synthetic assets backed by a basket of predefined ERC-20 tokens on Ethereum. These assets are called RTokens in the Reserve protocol ecosystem. Sam Martin, a researcher at Blockworks, analyzes and interprets the concept, characteristics, and adoption status of RTokens in an article.

When creating Reserve, the core team put forward two arguments: 1) more assets will be tokenized in the future, and decentralized governance needs to be developed; 2) RTokens allow anyone to freely mint, exchange or deploy. The RToken deployer has many configurable parameters to choose from, including management structures, issuance and redemption throttles, and revenue shares. The synthetic assets created by RToken have multiple attributes that RToken deployers deem important, including being pegged to fiat currencies, yield-bearing tokens, and highly decentralized tokens.

eUSD is the largest RToken in scale, deployed by Mobilecoin and implemented on its mobile application Moby for cheap, secure, and private payments. The income generated by the collateral supporting eUSD is all transferred to RSR stakers, so during the March period of USD depreciation against CAD, eUSD has the smallest depreciation.

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Recently, the Reserve team announced a $20 million investment in the Curve, Stake DAO, and Convex ecosystems to support RToken liquidity and shift the incentive mechanism to the RToken pool. With deep liquidity, strong pegs, and large-scale adoption, LPs’ yields on Curve surged at the end of June. There is a potential flywheel effect here: the growth of RToken supply brings more underlying support income, which incentivizes RSR holders to invest, and ultimately, the demand for RSR will lead to price increases and higher RToken stability guarantees. Currently, only about 4% of the circulating RSR supply is staked. If there is significant growth in adoption of any current or future RToken deployments, we expect demand for RSR to sharply increase as investors seek a relatively safe passive income form.

Reference: https://app.blockworksresearch.com/research/reserve-protocol-decentralizing-the-creation-of-money

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