Reverse Reinvents Rewarding Stakers
Treasury and rebase protocols came out of obscurity in 2021, however each of these protocols over time has run into similar problems with how to sustainably deliver rewards to stakers.
Reverse Protocol delivers a solution by creating long-term value for RVRS holders through implementing Farming As A Service with a modified Treasury Protocol. This article looks at how Reverse Protocol has refined the concepts built by treasury protocols and why investing in Reverse is different.
Refining (3,3)
Reverse Protocol builds upon the concept of (3,3) pioneered in crypto by OlympusDAO. Reverse, like Olympus and Ohm-forks, encourages holders to stake their tokens with the protocol in exchange for additional RVRS tokens.
The concept of (3,3) for Ohm holders, however has a downside in that value for stakers only exists as a result of inflation of the token. In order to profit in rebase protocols, one must sell the token, which impacts the price negatively. This creates a mechanic whereby users purchase tokens at a price above the Risk Free Value (RFV) and then risk having the value of their tokens fall back to the RFV (or in some cases, below) by others taking profit.
This creates a classic bank run scenario.
Reverse on the other hand, utilizes its treasury to earn yield which is distributed weekly to RVRS stakers. This creates profit opportunities without sell pressure on RVRS. With RVRS, by selling RVRS tokens, holders lose their share of the yield distribution in addition to the staking rewards; this creates a disincentive to sell without eliminating the investor’s ability to take profits.
Furthermore, if you hold RVRS and someone else sells their RVRS, these RVRS are no longer staked and you then get their share of this distribution. In conventional rebase protocols when everyone sells, we have the (-3,-3) scenario, but in RVRS, when everyone else sells, your share of the weekly airdrop increases and thus your earnings increase. This protects RVRS holders from a bank run through realizable value and not just the promise of value, e.g. receipt of ownership of a treasury.
In addition, Reverse employs sustainable trickle buybacks and dynamic control of bonding emissions to protect and grow the capital value of RVRS during market downturns and when the price is declining.
On the other hand, if the market is buying RVRS, the price goes up. Whilst the purchase and staking of RVRS creates a short term reduction in airdrops for everyone, the long term effect is that future bonding will bring in more assets per RVRS, thus in the long run, rewarding stakers with an increased share of a larger treasury and larger airdrops.
Whilst (3,3) may not be a new phenomena in crypto, through the combination of these mechanics, Reverse takes it to another level through implementing staking incentives in the form of airdrops that both reward holders and at the same time, protect capital and yields.
Turning Treasury into Treasure
Treasury and reserve protocols rely on the treasury to back the tokens, which means that these massive treasuries, collectively representing billions of dollars of assets, sit idle.
Each RVRS token on the other hand isn’t backed, but instead represents a share of the Reverse treasury (The Reverseum). This allows Reverse Protocol the freedom to deploy the treasury assets to earn yield through various De Fi protocols and then use this yield to create value for RVRS stakers through compounding, buybacks and weekly UST airdrops.
The Reverseum strategies are decentralized, designed by the community, and voted through Community Governance by RVRS holders.
The Treasury Strategies are cross-chain and most funds are held in Multi Signature Wallets governed by trusted Harmony Dev’s and well-known Community Members.
The treasury assets are made up of stablecoins as well as blue-chip crypto and speculative growth assets suggested by the community.
Reverse takes the massive treasury potential of Ohm and other treasury protocols and utilizes it with Farming As A Service (FAAS) principles and through community led strategies, employs this potential in various high-yield De Fi protocols to create sustainable value and long-term growth for RVRS holders.
Balanced High Yield Treasury
Reverse is a community-governed crypto fund, founded upon the principle of delivering value to RVRS stakers through deployment of the treasury. The Reverseum contains a diverse basket of assets, deployed in cross-chain strategies put forward by community governance, to earn yield for stakers.
The Reverseum is primarily focused on productive assets to deliver reliable value to stakers and is mostly invested in stablecoins earning yield, such as UST looping and stablecoin liquidity providing and as such, exposure to broad market movements is minimized.
However, there is also opportunity to rapidly grow the treasury and further reward stakers through speculative yield farming and capital growth assets, which allows the Reverseum to capitalize on DeFi strategies crowdsourced and refined through community led treasury governance.
Whilst downside is largely limited by a majority exposure to stablecoins earning a relatively stable yield, there is the potential for significant upside through the deployment of a part of the treasury assets into speculative growth and yield-bearing crypto to earn profit.
This combination and balance means that RVRS continues to deliver value even in a bear market, where the value of the stablecoin rewards are significantly higher in terms of the value of the RVRS token, whilst in a bull market, the investment in crypto can be realized into significant capital gains for both distribution and treasury growth.
Conclusion
Reverse is innovating in the treasury protocol space through the integration of Farming as a Service and community governed treasury strategies. This innovation allows Reverse to create realizable value for stakers in the form of UST airdrops and at the same time, to preserve and grow the value of RVRS through refined game theory inspired mechanics.
