Reserve

Other

Reserve is a protocol that allows for the permissionless creation of asset-backed, yield-bearing stablecoins.

Risk Rating
Best
Protocol Code Quality
Protocol Maturity
Protocol Design
Summary
What we like
Reserve enables the permissionless creation of assets ("RTokens") backed by a community-defined basket of assets.
What we like less
The RSR governance token serves as the platform's overcollateralization mechanism. RSR also has low liquidity on-chain, which may hinder its ability to provide protection to RToken holders at scale.
What it means for you
Reserve offers a unique opportunity for the DeFi community to coordinate and earn revenue from the creation of stable assets. By participating in the Reserve ecosystem, you can benefit from the creation of personalized RTokens that suits your specific needs and preferences.
Podcast
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Degen Responsibly
Reserve: Using DeFi in the Fight Against Inflation
Our guest today is Thomas Mattimore, who heads the Platform team at Reserve Protocol. Reserve is on a mission to help people fight inflation through DeFi. They are building a protocol and an app that abstracts away the complexities of yield farming in a decentralized and transparent way. In this conversation we explore, how Reserve works, what makes them unique, and how this model is helping users in Latin America have access to USD-denominated savings. We also dive into how Reserve uses its built-in mechanisms to mitigate risk and align economic incentives.  ----- Degen Responsibly is a series of live talks by Exponential DeFi and a guest protocol. In these conversations we explore some of the latest and greatest projects in DeFi, what makes them unique, their builders but also talk about the risks and what to watch out for. Our goal is to help investors make better informed decisions and help them save time as they do their own research. ----- Learn more about us at exponential.fi and follow us @exponentialdefi ----- Information provided here is presented for educational purposes only and does not consider financial advise or any offer or solicitation to buy any of the tokens or invest in any of the pools mentioned throughout the podcast.
Information
Exploit/Hacks
None
Info
Key Metrics
  • TVL: $70.6M (Rank #80)
  • TVL Ranking by Other: #0
  • Blockchain: Ethereum, Base
  • Chain TVL
    • Ethereum: $57.52M
    • Base: $13.12M
Risk Assessment
Best
Protocol Code Quality
Protocol Maturity
  • Latest protocol version launched in 2023; maturity over nine months reduces technical risk as smart contracts are sufficiently battle-tested
  • Top 10% by total value locked reduces risk
  • Core contracts require on-chain voting for parameter updates
  • Low voting power concentration reduces risk
Protocol Design
  • No death spiral concerns
  • Robust controls to mitigate oracle price manipulation
  • This protocol is susceptible to risks related to yield optimizers which deploy custom strategies to automatically manage user funds
Things to know about Reserve

How Reserve works

Reserve is a platform that enables anyone to create and use assets (RTokens) that are backed by a community-defined basket of crypto assets. Reserve consists of two main components: the Reserve protocol and the Reserve Tokens (RTokens). The Reserve protocol is the set of smart contracts that governs the creation, redemption, and adjustment of RTokens. The Reserve protocol ensures that every RToken is fully backed by a basket of collateral assets, overcollateralized by the RSR governance token, and yield-bearing from the fees or interest generated by the collateral assets. The Reserve Tokens (RTokens) are the index assets that are created and used on the Reserve platform. Each RToken has its own name, symbol, peg, collateral basket, governance system, and revenue model. For example, one RToken could be pegged to the US dollar and backed by a basket of USDC, DAI, and ETH, while another RToken could be pegged to a basket of commodities and backed by a basket of tokenized gold, silver, and oil. Users can create their own RTokens by depositing the required collateral assets and RSR tokens into the Reserve protocol. Users can also redeem their RTokens for the underlying collateral assets and RSR tokens at any time. Users can also trade or transfer their RTokens with other users or use them for various transactions and services in the DeFi ecosystem.

What happens in the case of a collateral default

The Reserve protocol always aims to be fully collateralized, though this may not always be the case. In the case of a collateral default, Reserve has several mechanisms to recapitalize the system. First, the protocol would immediately raise a default flag through its default checking mechanisms. The protocol will then proceed to sell as much of the faulty collateral as possible through auctions and use the proceeds, plus any excess collteral, to purchase the predefined emergency collateral (specific to each RToken). In the event that this is still not enough to cover the shortfall, the protocol will recapitalize using RSR tokens staked in the respective RToken contract.

How you make money on Reserve

You can make money by either holding the RToken to earn its underlying yield or stake RSR tokens to overcollateralize a RToken and earn fee share. For example, a RToken may split its revenue distribution such that 95% goes to RToken holders and 5% goes to RSR stakers.