What is Reserve?

Reserve enables anyone to launch and govern diversified onchain indexes called Decentralized Token Folios (DTFs). All DTFs are backed 1:1 by baskets of digital assets, governed onchain by customizable decentralized governance, and can be permissionlessly minted and redeemed 24/7.

DTFs can serve a wide variety of purposes, from stablecoins to diversified investment portfolios. Reserve's long-term goal is to transform diversified digital asset baskets into a new foundation for money itself.

By collateralizing currencies with broad, transparent portfolios (including stocks, bonds, gold, real estate, and more), Reserve aims to enable decentralized, inflation-resistant currency capable of scaling globally.

We believe that open exploration and competition can surface the most effective basket compositions and governance models—for both resilient money and diversified investment vehicles. For this reason, the Reserve protocol is entirely permissionless, allowing anyone to deploy a DTF with their preferred collateral basket, governance system, and revenue distribution.

Watch this introduction video to know exactly why we built Reserve protocol:

Key components

Reserve supports two primary types of onchain indexes, Yield DTFs and Index DTFs. Each is tailored to distinct strategies and use cases:

Yield DTFs

Yield DTFs autonomously manage yield from their underlying collateral, automatically harvesting and distributing earnings according to governance-defined rules. They also incorporate a protective layer of overcollateralization provided by staked Reserve Rights (RSR) tokens, offering enhanced security against potential losses.

Index DTFs

Index DTFs focus on efficiently managing diversified indexes with handfuls to hundreds of tokens. Their lightweight design eliminates the need for complex collateral management, enabling the creation of large, transparent indexes with broad market exposure and efficient, decentralized governance.

You can think of Yield DTFs like DeFi yield harvesting mechanisms with built-in overcollateralization, and Index DTFs like streamlined, decentralized ETFs built for scale. While Yield DTFs are engineered for robust, diversified yield strategies, Index DTFs are optimized for passive diversification, making it easy to launch and maintain broad market baskets with minimal overhead.

Our long-term goal

Reserve's long-term goal is to enable a new kind of money that just works: naturally tracking the aggregate value of all the world's assets to maintain stable, inflation-resistant value.

Taking a look at the history of currency reveals that, whenever a major world empire gives way to the next one, the value of the currency that the empire issued tumbles. Besides this phenomenon having happened with currencies such as The Dutch Guilder & The British Pound, recent speculation by Ray Dalio states that “the US dollar is not destined to remain the world’s reserve currency”.

Bloomberg reported that “His concern — shared by BlackRock Inc.’s Larry Fink, among others — is that swelling U.S. budget deficits will eventually irk big buyers overseas. You easily could have a 30 percent depreciation in the dollar as the Fed has little choice but to monetize the national debt.”

This is the reason why the Reserve community intends to enable and encourage the creation of asset-backed currencies that aren’t pegged to the US dollar, but to the aggregate value of the global economy. In the very long run, the best outcome for cryptocurrency isn’t just to extend an existing currently-stable asset class, but to create something new that is equally stable in the short run, and much more stable in the long run.

The value of the US Dollar continues to depreciate as time goes on.

We think it’d be really neat if there was a stable currency that kept its value with no inflation for centuries. Think about it. What if you could earn some money today and set it aside for your grandchildren, and when they spent it 100 years from now, they got to buy something just as valuable as what you could have bought right now? That’s not how fiat currencies tend to work, even the best ones like the US dollar.

The way we think this cryptocurrency should be built is by backing it with a diverse and well-structured basket of many different tokenized assets that will hold its overall value for a long time. These could include all kinds of precious metals, commodities, debt & equities.

With a sufficiently diversified basket of assets backing this new currency, its value might be able to follow the global GDP, which, during the world financial crisis of 2008 only dipped ~2%.

However, there are two major challenges that we expect to face on this journey:

1. Right now, most financial assets like equities, commodities, and derivatives don’t exist on Ethereum - they aren’t tokenized. Yet. We imagine a world where nearly everything gets brought onchain and is available for use in DTF baskets. The way the Reserve platform is built, anyone can launch a DTF and try out any basket.
   
   We don’t know what will be tokenized, on what timeline, and what the regulatory limitations will be for how tokenized assets can be used around the world. This is out of our hands – the Reserve platform is a way of building asset-backed coins that can be used as currencies, not a tokenization project. If you’d like to get a sense of the state of real-world asset tokenization, check out the overview on rwa.xyz.

2. We believe that the decentralized governance systems for cryptocurrencies that exist today do not meet the requirements that the governing of a world reserve currency would need. The simple token voting mechanism that is the most prevalent today is ultimately flawed, and the cryptocurrency community as a whole will need to evolve these mechanisms in order to get them to a place where they are truly fair & sufficiently decentralized.
   
   While the Reserve core team intends to work on improving decentralized governance systems, community input & cooperation between different projects will be crucial.

All that being said, we are extremely excited to start working on this part of the project together with the Reserve community and anyone else willing to join in. As more and more assets get tokenized, and decentralized governance systems evolve, we’ll be able to create more and more robust stable cryptocurrencies - and while we’re getting there, we’re building the platform to make it spendable everywhere you want in parallel.