What are RTokens¶
RToken is the generic name for a stablecoin that gets created on top of the Reserve Protocol. RTokens are fully asset-backed by any combination of ERC-20 tokens and can be insured against collateral default by Reserve Rights (RSR) staking. Each RToken is governed separately.
Anyone can create an RToken¶
In a similar way as how anyone can create a new trading pair on Uniswap, anyone can permissionlessly create a new Reserve stablecoin (RToken) by interacting with Reserve Protocol’s smart contracts. The protocol applies a system of factory smart contracts that allows anyone to deploy their own smart contract instance.
Creating an RToken can be done either by interacting directly with the Reserve Protocol’s smart contracts or any user interface that gets built on top of it. The first user interface for these smart contracts will be released by LC Labs, a company connected to the Reserve core team that's helping with protocol development. Besides the creation of RTokens, this user interface will also support exploring usage and stats related to RTokens, RToken minting & redeeming, and RSR staking.
The Reserve Protocol applies a system of factory smart contracts that allows anyone to deploy their own smart contract instance.
When someone decides to create an RToken, they will have to define exactly what the initial configuration of that RToken will look like. This includes choosing which ERC-20 assets & back-up assets the RToken will be backed by, what weight each of these assets will have in the basket, but also how and by whom the RToken will be governed. There are also many more nuanced parameters that the RToken creator will have to conside
As RTokens are fully collateralized, they can be newly minted by providing the necessary collateral tokens. In a similar way, RTokens already minted can at all times also be redeemed for their collateral tokens. This minting & redeeming process can be done by interacting with the Reserve Protocol smart contracts (either directly or through a user interface).
Use cases of RTokens¶
The RToken platform is a tool to aggregate relatively stable assets together to create basket-backed stablecoins. Our intention in the long term is to facilitate the creation of an asset-backed currency that is independent of fiat monetary systems. We envision this becoming possible once enough asset types are tokenized.
We are laying the groundwork early, as not many assets are tokenized yet. Today, the main use-cases we see are (1) a more decentralized USD-backed coin, which reduces dependence on any one fiatcoin issuer, and (2) a single simple USD-based coin that packages the yield of DeFi protocols.
The main purpose of allowing and encouraging many RTokens is so that open exploration and competition can lead to the discovery of the best type of basket and governance system. There's a lot to explore, and it's better not to keep that under the control of the initial founding team. That said, we still anticipate a single dominant RToken emerging over time through that evolutionary process, and we think consolidation into one or two dominant options is a good thing, since simplicity and ubiquity are important for an asset to really be a currency.
We also can imagine fintech companies using the protocol to launch their own branded basket-backed stablecoins, though this wasn't the central intent of opening up the platform.
We don't expect lots of RTokens to be created right after protocol launch. Rather, we think that if one or two RTokens become large and known, that will inspire the creation of more over time.