RSV vs RSR: A Primer
As Reserve prepares to have one of its tokens listed via a Prime Offering on the Huobi Global digital asset exchange this month, it’s important that prospective participants understand the basics of the protocol.
Key to understanding the protocol, is a firm grasp of the two tokens that underpin it. These tokens are the Reserve stablecoin (RSV) and the Reserve Rights token (RSR). While both assets are ERC-20 tokens, they have entirely different functions.
RSV: The Reserve Stablecoin
RSV will be a hyper-inflation-proof stablecoin designed to retain price parity with the U.S. dollar, enabling people to use it as a replacement for fiat currency. The stablecoin offers all of the benefits of blockchain technology, namely cheap, instant and frictionless money transfers to anywhere in the world, with fewer intermediaries and no volatility.
RSV will be fully backed by collateral and kept in Reserve’s vault – a smart contract containing a pool of other blockchain assets used to collateralize the token.
The RSV stablecoin can be used to preserve savings that might otherwise deteriorate from hyperinflation, facilitate cheaper remittances to low-and-middle-income (LMIC) countries and enable a more reliable merchant payments ecosystem in emerging markets. RSV will initially have a target value of $1.00, before eventually going off of the U.S. dollar peg and transitioning to a basket of on-chain and off-chain collateral assets.
RSR: The Reserve Rights Token
RSR is a utility token used to keep RSV stable at its target price of $1.00 and vote on governance proposals. This digital asset provides capital to bootstrap the Reserve network and offers token buyers the opportunity to purchase newly minted RSV, which will allow them to profit through arbitrage trading. Unlike RSV, RSR is inherently volatile and is the token that being offered in the upcoming Prime Offering.
RSR is crucial to the Reserve ecosystem because it helps recapitalize the network when the value of vault collateral depreciates. Additionally, if RSV grows in circulation and usage, the circulating supply of RSR is expected to decrease. This is because only RSR token holders may participate in arbitrage opportunities in the Reserve Protocol, which requires payment in RSR.
At times, the Reserve protocol may target a collateralization ratio greater than 1:1. When this is the case, scaling the supply of RSV requires additional capital in order to maintain the target collateralization ratio. To accomplish this, the Reserve protocol will mint and sell RSR tokens in exchange for additional collateral assets.
A Prime Offering
The Prime Offering is scheduled for May 22, 2019. The Prime Offering will allow non-U.S. Huobi Global users and Huobi Korea users with the opportunity to buy the RSR token at a significant discount, before it is released in the open market.
Ultimately, Reserve believes that its protocol will result in a stablecoin that balances decentralization, scalability and stability, paving the way for the most feature-complete, global cryptocurrency on the blockchain.
To learn more about Reserve and the upcoming Prime Offering, please join the conversation on Telegram.
U.S. citizens and those located in the U.S. (collectively, "U.S. people") are not allowed to participate in the Prime Offering on Huobi. Prime Offering participants are prohibited from selling RSR to U.S. people or acquire RSR for the benefit of U.S. people indefinitely.