 is coined as a decentralized stablecoin. A stablecoin is a currency that bridges the gap between cryptocurrencies.){kind=link}
- Reserve Rights Token’s main aim is to diminish inflation as much as possible.
- Reserve Rights Tokens (RSR) play a major role in stabilizing the value of Reserve Tokens (RSV).
Reserve Rights Token (RSR) is coined as a decentralized stablecoin. A stablecoin is a currency that bridges the gap between cryptocurrencies and fiat currency. What makes stablecoin stable is its association with a reserve asset like gold, which is developed to maintain cent on-chain collateral backing of Reserve Tokens.
As per the whitepaper, the Reserve Rights token aims to maintain stability, profitability, and proper decentralization. The paper further states that the existing cryptocurrencies are highly volatile which results in reduced usefulness of that currency. Cryptocurrencies are one of the best ways to increase the effectiveness of money across the world. Still, the central issue for people not using cryptocurrencies is its highly volatile market.
To tackle this issue, The Reserve Project has initiated developing a stable cryptocurrency. One of its objectives is to get rid of hyperinflation. The platform’s revenue model follows the process of charging a spread, which is a fee that the users will be liable to pay upon investing.
The main aim of the structure of the Reserve Rights blockchain is to offer a database, with the help of which, it becomes easy for users to exchange digital money without worrying about security. Further, the official website dictates that it also aims to create a digital currency with solid stable purchasing power, it states that these currencies will not be affected by the value of the national currency and will be independent of state-issued currency.
How Does RSR Work?
Reserve Tokens accommodate themselves on Ethereum. The only role of the Reserve Protocol is to maintain the value of the stablecoin. Since its value is associated with the US dollar, it is stabilized at $1.
To maintain the stability of the Reserve Token (RSV), Reserve Protocol buys more Reserve Stablecoin if the value of the Reserve Token falls below $1. On the other hand, if the value of the Reserve Stablecoin rises above $1, then the Reserve Protocol sells the excess Reserve Stablecoins to bring to a stable value of $1. When there is an excess supply of Reserve Tokens, then the number of Reserve Rights Tokens is reduced and vice versa.
What is the Significance of Reserve Rights?
Reserve Rights help the Reserve Protocol achieve its goal of stabilizing the Reserve Tokens. It can be said that the dual token system of the Reserve protocol provides value to the Reserve Rights Token. With the assistance of the Reserve Token, it helps in reducing hyperinflation, provides a stablecoin, and develops a robust mechanism.
Stablecoin has a broad spectrum of assets that back its operations and helps comply with all government norms and regulations. Since Reserve Rights and Reserve Tokens are interlinked with each other through stabilized processes, they reduce inflation and hyperinflation to their lowest degree.
Conclusion
The dual-token system is coming to prominence by reducing the volatility of the market, this instills trust in an investor. Though Reserve Rights is being challenged by other stablecoins, it continues to grow by focusing on achieving its goals.
