Reserve Rights (RSV) – All you need to know

What is Reserve Rights?

Reserve Rights is the governance token of the Reserve app. Reserve has created a stablecoin – a cryptocurrency with its price fixed to the value of an asset – as an alternative to fiat currencies. The Reserve Rights coin is like the Robin to the stablecoin’s Batman: while it has its some value of its own, it exists to support that stablecoin.

It can do this because the stablecoin has a target value of $1. As soon as the price moves from that value, the Reserve Rights coin is used to either buy new assets, or buy the stablecoin, to bring the price back to $1. The prospect of a crypto alternative to regular currencies has enticed some big names on board, so Reserve is backed by a group of investors headed by Peter Thiel, the founder of Paypal.

How does Reserve Rights work?

Reserve Rights works by making sure the value of the Reserve stablecoin always stays at $1. When it deviates from that number, Reserve Rights springs into action. Either Reserve buys more assets with the RSR coin, releasing more onto the market, or sells its stablecoin to Reserve Rights holders at $1, removing them from the market and creating the demand to bring the price back down.

Arbitrage opportunities exist because Reserve sells the stablecoin to RSR holders when its value goes above $1, so they can immediately turn around and sell it on the open market at $1, pocketing the difference. This means there’s always an incentive to buy when the price goes up, and the resulting demand settles the value back to its $1 point.

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