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Coin Report #57: Reserve Rights

Welcome to the 57th Coin Report. In today’s report, I will be assessing the fundamental and technical strengths and weaknesses of Reserve Rights. This will be comprised of an analysis of a number of significant metrics, an evaluation of the project’s community and development and an overview of its price-history. The report will conclude with a grading out of 10. I hope you enjoy the read!

Introduction

This is the second of my subscriber-exclusive Coin Reports, with Reserve Rights winning the June poll. Each month, I will run a poll and publish a Coin Report on the winner the following month, available only to those of you that are subscribed to my premium content. (I am aware this report is a couple of days later, but there was quite a lot to research here!)

Keep your eyes out for the next poll, which will be hitting your inboxes soon.

I hope this report will prove objective where it must be and fair on more subjective matters. For those who’d like to learn a little more about Reserve Rights prior to reading this report, here are some primary links:


Fundamental Analysis

General:

Name: Reserve (Reserve Rights)

Ticker: RSR

Algorithm: ERC-20 

Sector: Stablecoin

Exchanges: Huobi Global, Bilaxy, Hotbit, MXC, Gate.io, Kyber Network, Huobi Korea, Fatbtc and Uniswap

Launch Overview

Reserve began development as a stablecoin project in early 2019 having been conceptualised in 2018, with protocol design opting for a dual-token model, where Reserve (RSV) would act as a stablecoin and Reserve Rights (RSR) would facilitate its stability.

The team raised funding for development via a seed round in late 2018 that raised $4.96mn in exchange for 12.39% of the total supply of Reserve Rights, which is set at 100,000,000,000 RSR. Thus seed investors were allocated 12.39bn RSR at $0.0004 per token. Further funding was raised via a private round for 1% of the total supply, raising $2mn at $0.002 per RSR. In May 2019, Reserve launched a public token sale that raised $3mn for 3,000,000,000 RSR, all of which was sold in one day. As such, the team has raised $9.96mn in total across three rounds, with Reserve Rights being created on the ERC-20 standard for token allocation. Of the remaining tokens, 56bn RSR is allocated to a Foundation wallet, which requires a four-week unlock period for the team to transfer tokens out from.

The Reserve mainnet is pending launch.

Price-History Overview

As Reserve Rights as a token has only been traded since June 2019, there isn’t a great deal of price-history available, but I will cover what I can in the Technical Analysis section. For now, it will suffice to say that the all-time low is 18 satoshis, having formed in late December 2019. The all-time high formed at 155 satoshis in July 2020. Against the Dollar, the all-time low formed at $0.00125 in March, with the all-time high coming in at $0.0142.

Project Overview

Reserve is quite simple in its purpose, though somewhat complex in its nature. At its core, Reserve is a dual-token stablecoin protocol, seeking to provide a token that is pegged to the US Dollar firstly via centralized collateral, followed by a second phase that functions in a decentralized manner, followed finally by an independent stablecoin that is stable in its real purchasing power.

As stated on its website:

We’re building a universal store of value.

We believe that everyone’s money should be secure. Billions of people around the world don’t have a safe place to store their money. Banks in some countries can’t be trusted, and some governments inflate their own currency to pay off debts, hurting citizens in the process.

With a few exceptions (e.g. money laundering, terrorist financing), we believe anyone in the world should be able to transact with anyone else. This requires low-friction, cross-border transactions, which are hard to do with our existing financial systems.

The Reserve project aims to solve both of these problems with a stable, decentralized currency that can’t be abused by a government because it is globally distributed outside of anyone’s control, and thus nearly impossible to shut down.

I look forward to evaluating its progress in this respect.

Let’s begin with some Metric Analysis:


Metric Analysis:

Below are listed a number of important metrics, all of which are accurate as of 2nd August 2020. For anyone reading this who has yet to read a Coin Report, it might be worth reading this section of the first report, where any potentially unfamiliar terms are explained. For any terms or metrics specific to this post, I will provide explanations besides the figures.

Metrics:

General:

Price: $0.0112 (99 satoshis)

Circulating Supply: 6,849,999,000 RSR

Total Supply: 100,000,000,000 RSR

Exchange Volume: $8.916mn ($6.436mn excluding wash)

Network Value: $76.48mn (6781.50 BTC)

Maximum Supply: 100,000,000,000 RSR

% of Max. Supply Minted: 100%

Network Value at Max. Supply: $1.116bn

Exchange Volume-to-Network Value: 11.66% (8.42% excluding wash)

Category: Midcap

Average Price (30-Day): $0.0094

Average Exchange Volume (30-Day): $5.836mn ($4.21mn excluding wash)

Average Network Value (30-Day): $64.689mn 

Average Exchange Volume (30-Day)-to-Network Value: 6.51% excluding wash

Volatility* (30-Day): -0.1508

Average Daily On-Chain Transactions (30-Day): N/A

Average Daily Transactional Value** (30-Day): N/A

NVT*** (30-Day): N/A

% Price Change USD (30-Day): +73.9%

% Price Change USD (1-Year): +325.6%

USD All-Time High: $0.014

% From USD All-Time High: -20.4%

Premine % of Max. Supply: N/A

Premine Location: N/A

Liquidity (calculated as the sum of BTC in the buy-side with 10% of current price across all exchanges): 12.4 BTC**

Liquidity-to-Network Value %: 0.18%

Supply Available on Exchanges: 103,617,495 RSR**

% of Circulating Supply Available on Exchanges: 1.51%

*Volatility is calculated by taking the average price over the given time-period, calculating the difference between it and the highest price and it and the lowest price over that same time-period, and multiplying those figures together. The closer to 0, the less volatility during that period, and vice-versa. Read this for more on volatility.

**There is also ~$360k of liquidity available on Uniswap.

 

Supply Emission & Inflation:

Block Reward Schedule: All RSR in existence, but all investor and team allocations locked until mainnet launch. Around 6.85bn is currently in circulation, but ~56bn is in a Foundation contract address that can be unlocked with a four-week delay by the team as and when necessary.

Average Block Time: N/A

Current Block Height: N/A

Annual Supply Emission: ~37,000,000,000 RSR, or 36,630 BTC at current prices (assuming mainnet launch in next 365 days and all expected vested tokens are unlocked in that period – excluding the slow wallet as these tokens cannot be accounted for)

Annual Inflation Rate540.15% (only for the year during which the investor and team allocations are unlocked – following this, annual inflation (supply joining circulation) will likely be significantly less).

Circulating Supply in 365 Days: 43.85bn RSR

 

ICO:

The following details were taken from here and here.

ICO Period: 22nd May 2019

Total Coins: 100,000,000,000 RSR

Coins Available For Sale: 3,000,000,000 RSR

Coins Sold: 3,000,000,000 RSR

Total Raised: $3mn

Average ICO Price Per Coin: $0.001

Further Details: 12.392bn RSR sold in seed round at $0.0004, equating to 12.39% and vesting over 6 months post-mainnet. Private round sold 1bn RSR (1%) at $0.002. Total raised across seed, private and ICO = $4.96mn (seed)+ $2mn (private) + $3mn (public) = $9.96mn. Token distribution as pictured below:

distribution

Distribution:

Address Count: 10,945

Supply Held By Top 10 Addresses: 83.92%

Supply Held By Top 20 Addresses: 90.06%*

Supply Held By Top 100 Addresses: 96.7%

Inactive Address Count in Top 20 (30 Days of No Activity): 20**

*Excluding addresses #6 and #11, which are Huobi-owned and total 1.84bn RSR. Also, this figure does include the #1 address of ~56bn RSR, which is dubbed the “slow” wallet but can be accessed by the team with a four-week delay on any unlocks.

**All of the top 20 non-exchange addresses were either smart contracts or balances that had not been touched in over 400 days, thus likely all team and investor allocations.

 

Analysis:

There’s quite a lot to unpack here, but because there is no masternode network nor staking functionality and there is no real use in attempting to navigate the on-chain transactional data (which is embedded with exchange transfers and other speculative transactions) due to the lack of a mainnet at present, the load is lessened somewhat. Nonetheless, there are some intricacies here that need covering.

Before we move on to more useful metrics, I’d like to quickly highlight Reserve Rights’ 30-day Volatility of -0.1508. This is the 14th-highest figure ever recorded in these reports and suggests that price has moved away from consolidation and thus is likely mid-cycle. We will take a closer look at this in the Technical Analysis section.

Now, let’s take a look at the remaining General metrics before moving on to the somewhat complex Supply Emission and finally Distribution:

Some of the most significant metrics to evaluate for speculators are those related to buy-side and sell-side Liquidity. I found Reserve Rights to have buy-side Liquidity of 12.4 BTC within 10% of spot price across all listed exchanges, equating to 0.18% of its Network Value. This is around average among prior reports, placing it somewhere in the middle of the pack.

Concerning sell-side Liquidity, Reserve Rights was found to have 103.62mn RSR available for purchase in the orderbooks across all listed exchanges, equating to 1.51% of its Circulating Supply; the 37th-highest figure among previous reports, placing it in the bottom third of figures. This is indicative of a particularly low desire to sell at any price on exchanges. It is also important to note that, off exchanges, Reserve Rights has ~$360k of liquidity via liquidity pools on Uniswap.

Now, let’s take a look at the volume-related metrics:

Reserve Rights was reported to have traded $8.9mn of Exchange Volume in the past 24 hours, equating to 11.66% of its Network Value; a particularly impressive figure. However, having looked at some of the exchange activity, there was a degree of wash trading here, and, having accounted for that, the figure is closer to $6.4mn, which equates to 8.42% of its network value; a still-impressive figure. More importantly, its Average Daily Volume for the past month was $4.2mn (accounting for wash), equating to 6.51% of its Average Network Value for the same period. There is clearly a great deal of speculative interest here, with the average figure coming out at the 14th-highest among prior reports.

Moving onto Supply Emission, as was discussed in the metrics section above, all of the expected RSR is currently in existence, as is common with ERC-20 tokens, where the maximum supply is created at genesis. However, with only 6.85bn circulating out of a total 100bn RSR, there is clearly a lot of supply yet to join circulation. Of this, 56bn RSR is currently locked in a slow-release Foundation wallet, where the team are able to unlock tokens as necessary with a four-week delay, visible on-chain. This supply can be excluded from our emission calculations for the forthcoming year as it is impossible to estimate a rate at which these tokens will be accessed but it is highly likely that they will not be used to any significant degree as the project continues to have funding from the initial token sales. As such, there remains ~37bn RSR to join circulation, comprised of team, advisor and investor allocations, and all of this does not vest until the mainnet launch, which is expected to occur within the next year. As such, we can expect up to 37bn RSR to be available for circulation before August 2021. Given this fact, the annual inflation rate for Reserve Rights for the forthcoming year is quite likely to be 540.15%. This is not attractive at all from a speculator’s perspective.

Finally, let’s take a look at Distribution:

I found that there are 10,945 holders of RSR, which is the 13-highest address count of all coins previously reported on (for which this data is available). With regards to concentration of supply, the top 10 addresses control 83.92% of total supply; the top 20 control 90.06%; and the top 100 control 96.70%. This is excluding addresses #6 and #11, which belong to Huobi and amount to 1.84bn RSR. It does however include the slow Foundation contract of 56bn, which is of course the #1 address, as these tokens are accessible by the team.

Within the top 20 non-exchange addresses, all 20 were inactive over the past 30 days, with the bulk of these either smart contracts or individual addresses that have not been accessed for over 400 days. These are all very likely to be team, advisor and investor allocations, hence the lock-up and inactivity, but this does not look particularly decentralised.

And that concludes this section on Metric Analysis. Onto the Reserve Community:


Community:

There are two primary aspects of community analysis: social media presence and Bitcointalk threads. I’ll begin with the former before moving on to the latter.

Social Media:

Concerning social media presence, there are four main platforms to examine: Twitter, Facebook, Telegram and Discord.

Reserve Rights is present on two platforms: Twitter and Telegram. To begin, let’s look at the various social metrics that I calculated from the Reserve Rights Twitter account:

Twitter Followers: 39,898

Tweets: 399

Average Twitter Engagement: 0.69%

Facebook Likes: N/A

Facebook Posts (30-Day): N/A

Average Facebook Engagement: N/A

As usual, I will be using RivalIQ‘s social benchmark report for evaluation purposes.

Twitter:

The Reserve Rights Twitter account has a large audience of 39,898 followers (especially so for such a new project), with its engagement rate for the past 30 days coming in at 0.69%. In RivalIQ’s report, we find that the average Twitter engagement rate across all industries is 0.045%, which means that Reserve Rights’ engagement rate is currently 15.3x greater. For the Tech industry, the average engagement rate is 0.027%, thus Reserve Rights’ is 25.5x greater. Relative to other coins, Reserve Rights’ engagement is 22nd-lowest, placing it in the bottom half of previous reports. That said, the audience is the 7th-largest, so this degree of engagement is actually not too bad.

Facebook:

there is no Facebook page for Reserve Rights.

Discord:

There is no Discord group for Reserve Rights.

Telegram:

There are 9,076 members of the Reserve Rights Telegram group.

Below, I have provided some key takeaways from the past week of activity in the group:

  • The group itself is one of the most active I have found, with hundreds of daily messages and constant discussion.
  • RSR isn’t currently available to US investors due to regulations.
  • Reserve Rights is potentially going to be added to Coinbase, with Coinbase Ventures one of the leading investors in the project.
  • An Android and iOS mobile wallet is expected either in Q4 2020 or in early 2021.
  • The Reserve app is available in Venezuela, Argentina and Colombia and recently support was added for Amazon Gift Cards.
  • RSR is expected to remain an ERC-20 token for the foreseeable future.
  • When on-chain transactions are added to the Reserve app, users will be able to track the total supply of RSV (it is currently estimated to be ~1.01mn RSV).
  • Overall, the community are vocal and engaged.

BitcoinTalk:

There is no active BitcoinTalk thread for Reserve Rights.

And that concludes my evaluation of the community. Let’s take a look at development:


Development:

For the following Development analysis, I will be evaluating project leadership, the website, the roadmap, the whitepaper, the wallets and finally providing a general overview:

Project Leadership:

There are 10 employees listed on the site, along with 5 advisors. There are currently 24 employees on LinkedIn. Moreover, the team are currently hiring a Software Engineer and are based in California.

More specifically, the listed team is comprised of:

The advisors to Reserve Rights are:

  • Garett Jones, Monetary Economist (Economic Policy Adviser to Senator Orrin Hatch)
  • Paul Atkins, Former SEC Commissioner
  • Santiago Siri, Founder of Democracy Earth
  • Ben Verschuere, Former Portfolio Manager at Thiel Macro
  • Gary Basin, Former Hedge Fund Founder

Website:

The website can be found here.

The website is well-designed and information-dense, with plenty of insightful pages on a number of aspects of the project, with clear navigation and a user-friendly appearance.

There are pages for the team (covered above) and current investors (including Coinbase Ventures, Peter Thiel and Sam Altman), but here we will focus on About Us and Our Vision. The Protocol is particularly helpful to understand Reserve but I cover this at length in the Whitepaper section.

There is also a detailed FAQ within the native blog, and a Medium blog that is more regularly updated.

But onto the rest of the website:

About Us

  • The mission is stated to be to build a universal store of value, with a stable, decentralised currency that operates independently of outside control.
  • At present, the primary users are individuals and business owners in Venezuela, who are able to save in dollars and transact using the Reserve app. The app allows the user to receive RSV via any preferred payment method and then utilise RSV for transactions between users.
  • This is just the first of a product and service suite that is expected to be built out globally.
  • Reserve will look to offer users means for conducting payroll, cross-currency transactions, card payments and more moving forward.
  • The focus is on countries where there is a real need for these tools, where citizens struggle to access banking or the global economy due to restrictions.

Our Vision

  • Many domestic currencies are unreliable, with at least a dozen experiencing over 20% annual inflation, making it extremely difficult to save and transact with stability.
  • Citizens can be prevented from counterfeiting money but governments that issue the currency cannot be prevented from doing so, leading to devaluation and impoverishment of those nations.
  • Reserve is thus intended to go off the dollar peg, as the dollar itself cannot be expected to be perpetually stable and Reserve is aiming for the retaining of real purchasing power as opposed to a simple $1 peg.
  • Reserve is currently on the Ropsten testnet.

Overall, the website is very useful for a potential new user or investor, with detailed sections on all relevant components.

Roadmap:

There is no cohesive roadmap available for Reserve Rights.

The only available roadmap is a historical one, as pictured below:

roadmap

 

That said, I was able to find this Q3 2019 update on the blog, and the team do provide regular updated on specific developments there.

Nonetheless, it is a shame that there is no readily-accessible resource for new users to learn about the present and future goals of the Reserve team.

In the Q3 2019 update linked above, it is mentioned that:

  • The Reserve app has been launched in Venezuela
  • RSV (the stablecoin token) is live, with a v2 for the token that went live in October (though it is clearly stated that this is not the mainnet for the Reserve protocol, which will follow as and when it is ready – discussed below)
  • The team are loathe to release detailed progress updates and other such details due to competition
  • It will take time to scale the app to reach the millions in Venezuela they are targeting

In the October Tech Update, it is mentioned that:

  • The v2 RSV token is live, where RSV v1 was originally being used in the Reserve app but has now been replaced by a more decentralised token, which is backed by a basket of on-chain collateral assets held in the Reserve Vault smart contract. This comprises TUSD, PAX and USDC, with each RSV redeemable for 1/3 of each asset. This anchors RSV at $1.
  • RSV v2 allows for RSV Issuance, where collateral can be locked up to issue new RSV directly; RSV Redemption, where RSV can be traded for collateral tokens; and Vault Rebalancing, where holders can submit proposals to the Reserve Manager smart contract to rebalance collateral composition.
  • In the future, RSV will be functionally linked to RSR, price oracles will be implemented and governance will be decentralized.
  • Certik scored RSV v2 a 98/100 in its technical audit.

Update: I found a brief expected timeline within the Telegram group for the coming year that can be summarised as follows:

  • August 2020: Major upgrade for the Reserve app with fiat on/off ramps.
  • Q4 2020: RSV self-custody and on-chain transactions – currently transactions are not reflected on the blockchain because they are centralised but following this upgraded they will become visible, with users retaining custody of RSV.
  • Q4 2020: Gradual scaling and marketing campaigns.
  • 2021: The Reserve Protocol mainnet launch, which will allow for RSR arbitrage.

Whitepaper:

The 26-page whitepaper can be found here. It was last updated on September 19th, 2019. The document itself is more of a theoretical paper with over half of its pages dedicated to the use-cases for stablecoins and the challenges they face and with very little detail on Reserve Rights itself. I have provided my key takeaways from the latter sections of the document on the Reserve Protocol below, as I believe they are useful, but it would have been great to have found more clarity on the utility of RSR, its tokenomics, emissions, distribution etc.

  • The Reserve protocol can be implemented into any smart contract platform and could operate on its own chain but benefits from being located where liquid collateral can be found.
  • Interoperability is expected.
  • The end goal is for the Reserve token to be off the $1 peg, independently retaining real purchasing power.
  • Each iteration of Reserve will be more decentralised than the previous.
  • There is a dual token model, with Reserve (RSV) being the stablecoin and Reserve Rights (RSR) facilitating stability.
  • Collateral will be held in smart contracts to back the value of Reserve (RSV).
  • Arbitrage will ensure Reserve remains redeemable at $1.
  • Reserve will be capitalised by collateral, where the assets used to purchase RSV are held in smart contracts at 1:1. Reserve may target greater than 1:1 collateralisation at times, selling RSR for additional collateral to do so.
  • When collateral is devalued, RSR will be sold to add collateral for rebalancing.
  • Eventually, ownership of RSV will represent a fractional ownership of the collateral vault, thus allowing the dollar peg to be removed with Reserve maintaining stability independently of it.
  • The Protocol comprises the Reserve Manager, which keeps the Reserve stable at $1, the Vault Manager, which manages collateral assets, The Market Feed for data tracking, and The Auctioneer, which runs the market operations.
  • RSV and RSR are mintable, burnable ERC-20 tokens.
  • Reserve Rights will be involved in network governance.
  • When RSV’s market price is below $1, the Reserve Manager buys RSV using Vault assets and burns them.
  • When RSV’s market price is above $1, the Reserve Manager auctions RSV, either from an excess pool of Reserve tokens sold at $1 or by minting new tokens that are sold for vault assets.
  • Over time, the vault will be significantly diversified across asset classes, issuers and jurisdictions.

Wallets:

As RSR is an ERC-20 token, it can be stored on all wallets compatible with ERC-20 tokens, including hardware wallets, web wallet and desktop wallets, as well as a number of mobile wallets.

And that concludes my fundamental analysis of Reserve Rights.


Technical Analysis

RSR/BTC

RSRBTC

RSR/USD

Looking at both the RSR/BTC and RSR/USD chart, one thing becomes apparent immediately: the token is in the midst of its first bull cycle.

Looking at RSR/BTC, we can see that following early trading in June 2019, RSR formed a tight range between the all-time low at 18 satoshis and range resistance at 28 satoshis; a range that lasted several months. However, in February 2020, price broke above range resistance, rallying to a then-new all-time high at 60 satoshis in early March, before retesting range resistance (and the 200dMA) as support, consolidating for a further couple of months, and experiencing bullish continuation from June. Price has since flipped the 60-satoshi resistance as support, rallying to new all-time highs at 155 satoshis, but having come off significantly since, dropping over 50% until new support was found at 70 satoshis late last month. Price has since bounced but is certainly in no man’s land at present. Looking at it, it appears that 155 satoshis was perhaps the euphoria of the first wave of a larger cycle, and thus we may come back to retest 60 satoshis as support, or price may start printing higher-lows from here and resume the uptrend. I personally would not want to be a buyer right here given the price-action, but a retest of 60 satoshis would be a decent opportunity for those looking to buy.

If I’m honest, however, I don’t particularly feel as though the tokenomics support the current price; it is already valued at $77mn based on current circulating supply, which itself will be inflated significantly over the coming 12-18 months. By the end of 2021, we can expect 43bn RSR to be in circulation, giving it a valuation of  almost $500mn. Fully diluted at its maximum supply, Reserve Rights is already valued over a billion dollars at current prices. Personally, this isn’t my sort of speculative prospect. Now, that is not to say that intra-cycle and long-term there isn’t plenty of upside to be had, but I believe there are far better opportunities available from a speculator’s perspective. Again, this is to say nothing of the development quality of Reserve, which we have already covered above, but I am talking specifically about its price, tokenomics and risk/reward.

And that concludes my evaluation of Reserve Rights.


Conclusion

This report is now approaching 5,000 words, and it is time to draw it to a close.

My final grading for Reserve Rights is 6 out of 10.*

*On the development front, it is clear that Reserve is worthy of an 8 at present and likely higher once the mainnet is fully launched and network effects begin to grow the user-base of the stablecoin, but as this report is not development-specific – and according to my grading framework – I can only give Reserve Rights, the token, a 6.

Here, you can find my grading framework, for reference.

Lastly, here is a link to a Google Sheets file with any significant data from previous reports compiled for cross-comparative purposes. I will keep this updated as I continue to write these reports.

I hope this report has proved insightful and that you’ve enjoyed the read! Please do feel free to leave any questions in the Comments, and I’ll answer them as best I can.


 

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This Post Has 2 Comments

  1. mkiisk

    Nik,

    Do you also have the premium content reports on the cross-comparison report, or no? Or you just don’t update that sheet anymore?

    Best,

    1. Nik

      Hey, I’m actually away from home at the moment so haven’t managed to get the sheet updated but it will be done on Sunday. I’ll also have the the infographic for this report out then.

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