We all know that the world is moving in the direction of a cashless society, all the payment systems of the world are transforming into a digital economy, majority of the money is being exchanged electronically through payment apps, debit cards, credit cards, or some other applications.
This is the plus point of money, but it also has some serious drawbacks.
Many monetary systems in the world are failed to provide transparency and trust to their people, some of them don’t have even stable currencies which causing a shortage of medical and health supplies, and many other problems to them.
But the most important problem facing such countries is hyperinflation.
Reserve saw this problem and to solve the issue of hyperinflation, reserve develops a stable coin and a protocol which consists of two tokens, RSV and RSR.
What is Reserve?
But the approach of Reserve is a little different from the rest of the stable coins available in the market.
It keeps various types of stable coins (currently it has three and plans to add more in the future), commodities, and securities in its vault in a properly maintained ratio to back RSV tokens.
Reserve also develops an app, based on reserve protocol(we'll discuss it in detail) to fight hyperinflation, and currently operates in Venezuela, Argentina, Colombia, and Panama.
So if people think that their fiat money has been broken, then they can protect their money from being devalued by exchanging it with RSV stablecoin through this app, this will be helpful for such countries which have very high inflation rates.
By using this app,
They can send their money to loved ones without being worried.
This also helps the local market to buy goods and services,
Businessmen now can accept and distribute payments to their employees.
If you want to see how cryptocurrencies work in real-world, solving real problems, you can look up to Reserve app.
Reserve is based on four token systems, but two are main, RSV and RSR.
This is a simple stable coin token, a stable coin means its value is attached with the US dollar on 1:1 form, Reserve has temporarily pegged it with the US dollar.
It will unpeg it from the US dollar soon when RSV stabilizes purchasing power by itself.
RSV is like a US dollar in digital form,
you can trade with it; or
you can purchase goods and services with it.
Unlike other stable cryptocurrencies, it is backed by a changing basket of digital assets.
This means that it is not attached to the US dollar for its backing, instead of that it is attached with many other stable coins and for every RSV token, Reserve bought these stable coins and keep them in a basket as collateral which is a result, maintain RSV’s value.
In 2019, at the time of their launch, USDC coin, true TUSD coin, and Paxos are in their basket and the team of RSV has planned some more stable coins like Binance USD and DAI, along with some other commodities to add in its changing basket of assets.
RSR stands for Reserve Right token;
It is used to maintain the price of RSV tokens,
It is volatile in nature means.
The supply of RSR is depending on how RSV is performing in the world; they can reduce the supply of RSR when the system is doing well and increases when the system needs help.
It is also the governing token of reserve which means, it ensures the health of the protocol and the system.
RSV and RSR are like brothers with slightly different functionalities; they interact with the Reserve Protocol together and try to make RSV a perfect and solid stablecoin.
Understanding the Reserve Protocol
Reserve has a vault that has two sections, the first one has RSV tokens, and another has assets,
Reserve Protocol always tries to maintain the ratio of these two sections which in result provides stability to the price of RSV.
But in this vault, some events can imbalance the ratio, so maintain it, Reserve Protocol has some set of rules.
Rules of Protocol
1. RSV is always maintaining its value of 1 US dollar, but what if the price of RSV goes above $1, because of transaction fees and many other small amounts of fees.
So, to maintain its value Reserve Protocol will sell RSV tokens and buy some RSR tokens or some other assets (stable coins) which in result can downgrade its value to 1 dollar.
2. What if the price of RSV goes down from 1 US dollar, again to maintain its value to one dollar, it will purchase RSV in exchange for its assets, which will bring up the price of RSV to $1.
3. RSV also gets some transaction fees around 1% to make a transaction, so because of that transaction fee the ratio of the vault can be altered and there will be more RSV than the required ratio, so at this time RSR holders purchase RSV coin in exchange of their RSR coins and maintain that important ratio.
4. What if our assets in the vault go below the target range, on that case Reserve Protocol will sell its RSR coins and bought some assets to maintain the ratio.
Reserve began their journey by serving individuals who are facing a high level of inflation in some parts of the world.
It also helped 400 stores and freelancers by providing a stable digital currency which is helping them in various ways.
If you want to buy RSR you can buy or trade it on various popular crypto exchanges.
Currently, Reserve operates its app in Venezuela, Argentina, and Columbia available in the android play store. And they are going to add iOS support may be in next year.
According to some Venezuelan people, Reserve is an easy-to-use app that can provide them a way to buy and spend US dollars, which is quite helpful for them as compared to their own currency.
According to their CEO Nevin Freeman, this century is the century of cryptocurrency and by 2100, all the fiat money will disappear and the only crypto will rule the world.
I think this is over-exaggeration, and I am not buying that statement either, but one thing is sure, RSR has a very bright future, it has some real-world experience and sooner or later people will gonna notice.