Reserve Protocol Community AMA #5

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This article is a summary of the Q&A between the Reserve Community and the core team in our Telegram Group.

Participants were our CEO Nevin Freeman, Head of Business Development Charlie Smith, Lead Protocol Engineer Taylor Brent and General Counsel Matthew Gertler.

The following text was edited for clarity.


1. General Update

Community
How is the team progressing in building a quality product? Would you happen to know when a final product may be ready?

Nevin Freeman (CEO of Reserve Protocol)
We’re going to be releasing a few iterations on the current app that start to automate the process of cashing in and cashing out in various currencies — right now the process is somewhat clunky. First iteration in some number of weeks, team still finalizing some UI decisions while engineers are coding the parts that have already been finalized as of now.

We also have a major revision in the overall architecture of the platform in development in parallel. That’s the release that will switch to users making on-chain RSV transactions. The timeline for that is longer and since it’s further out we don’t want to make any promises.

Overall I would say we have learned a ton of the key things we need to understand to get the product right, so I think we have an understanding of what the fundamentals need to be. But, I think we are still going to need to learn and figure out additional important pieces before we get to the point where we are really proud and a large population of users is really quite satisfied. So much of what we release and some of the things we spend time on outside of design and dev are focused on learning more about our current and potential future users.

Community
Do you have any concern that the team may not be able to deliver an ultimate product?

Nevin Freeman (CEO of Reserve Protocol)
I’m personally confident we can deliver a great product. I could be wrong of course — founders can be overconfident. But I try to stay rational about these kinds of things when the stakes are so high.

What I’m personally more concerned about is timing. I think about two risks there — (1) what if we run out of money before we get to a great product, and (2) what if the market is dominated by another option first. Right now I’m not concerned about #1. We have a solid cash runway that we are managing carefully, both in terms of the stable assets we’re holding and our care in what we spend money on. #2 is what I spend more time worrying about. I do personally believe that massive usage of stable crypto is going to develop sooner or later, and so even though I think we have special insight into how to facilitate that, others are having bright ideas and making progress as well. I’m less worried about the big companies than I am about other nimble teams like us, or maybe mid-sized companies that can still innovate and can make moves without massive regulatory backlash. It’s sometimes hard to not stress too much about these potential competitors, but I have concluded the best mode of operation is to focus on customers not competitors, as Bezos would say — the idea being that competitor obsession leads you to imitate things you don’t understand and often slows you down compared to understanding the customers and inventing what they need directly. Long winded answer but that’s my take.

Community
How do you scale Reserve without multiple global headquarters and a staff of +10,000? Is DeFi really ready for mass adoption with just one simple app as the interface?

Charlie Smith (Head of Business Development of Reserve Protocol)
One market at a time. We consider Uber’s aggressive scaling process from time to time. It started off very small, they spent a lot of effort getting the formula right, and then ran as fast as they could, hiring aggressively.

A lot of projects jump the gun and go for an ecosystem play before they’ve proven that ecosystem has any value. We want to make our own app a big success, drive substantial RSV adoption and then we think many people will be excited to build products with RSV and its users in mind.

Community
You guys raised around 10mil $? What’s the current monthly/quarterly burn rate and how will you generate profit in the future?

Charlie Smith (Head of Business Development of Reserve Protocol)
I don’t want to dive into the weeds here but I’ll say this. We have plenty of cash on hand, giving us a long runway. We’re being very deliberate about how we spend our treasury to focus on product development.

Community
How does Reserve benefit from doing business in hyperinflationary markets of Latin America, and how do you imagine the global expansion?

Charlie Smith (Head of Business Development of Reserve Protocol)

Community
What are the other projects working in a similar space to Reserve are you following most closely, hoping they don’t get ahead of you guys and dominate the market?

Charlie Smith (Head of Business Development of Reserve Protocol)
We’re well aware of what other projects are up to in the space, especially other stablecoin projects. Generally we try to obsess over our end users much more than the competition. I think Airtm is a good peer company of ours that we look at from time to time. Most other projects really aren’t focused on the same markets as us.

2. Reserve App

Community
Why did you chose Venezuela? Why did you decide to start there?

Nevin Freeman (CEO of Reserve Protocol)

Community
I heard the app will be expected to be migrated to on-chain transactions by this Fall, won’t that increase the delay for payments considering it’s still running on Ethereum?

Nevin Freeman (CEO of Reserve Protocol)
For that release, we are planning a transaction mechanism where the recipient is notified immediately once our server sees the signed transaction and verifies it’s valid. So at the grocery store, the little “beep” can happen right away. In ≈100% of cases the transaction will go through at that point. But, similar to the system of multiple check marks that we are all familiar with in chat, the user will receive further confirmation once it’s been mined, and probably also once it’s hit six or so blocks (for verification of very large transactions). This affords the convenience of instant payments for small normal transactions, with the security needed for larger ones, and all with the current ETH speed.

The transactions will also be able to be processed without the user having any ETH of their own, with a mechanism like the gas station network, but a slightly different implementation.

Community
Is the Netflix integration in Reserve app confirmed ? Or just speculation?

Nevin Freeman (CEO of Reserve Protocol)
Glad to see the community is excited about the Netflix option.

We decided to roll out an experimental feature where you can cash out of RSV to a Netflix gift-card balance. It’s super simple — no agreement with Netflix or anything, just that you can essentially buy a Netflix gift-card from within the app so you can pay your bill. That’s useful since you can’t directly pay with Venezuelan Bolivares, so it gives normal people a nice and easy way to pay for something that many people use. We’ll see whether people use it or not, but it’s quite easy for us to offer things like this as experiments to see if they pick up, and if so we can streamline the process and promote them over time.

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Community
I heard there was an option for Amazon gift-cards last year but it’s not working anymore, what went wrong with that?

Nevin Freeman (CEO of Reserve Protocol)
Something about it was operationally expensive, but I think we may have recently found a way to add it back.

Community
I see you guys integrated BNB and FTT in the app.. what made you choose to integrate those two specific coins?

Charlie Smith (Head of Business Development of Reserve Protocol)
The companies sponsoring those tokens are ones we want to continue to strengthen our relationship with.

Community
After Argentina where next?

Charlie Smith (Head of Business Development of Reserve Protocol)
Expect more Latin american markets, the US…, we’re looking at Lebanon right now and several others.

3. RSV & RSR Tokens and Reserve Investors

Community
What’s the most important thing you working on right now, Charlie?

Charlie Smith (Head of Business Development of Reserve Protocol)
A couple things. I’m working on improving liquidity provision on the different trading pairs we have for RSV and RSR. I’m also working with a few parties on getting us into some additional markets.

Community
Will there ever be a transparency page for RSV adoption? I think we would all appreciate it a lot. Lots of newcomers have been asking about it.

Charlie Smith (Head of Business Development of Reserve Protocol)
For now we’re focused on improving our product and getting out these next versions. Once RSV transactions are moved on-chain it’s going to be a lot easier for you all to tell what’s happening in terms of user activity levels. I’ve thought before that a Reserve specific dashboard would be great.

Community
I have one question, it’s just about the 37% allocation that gets unlocked after mainnet. People were saying that investors are more incentivized to save it and use it for arbitrage. Can you please explain how?

Charlie Smith (Head of Business Development of Reserve Protocol)
It doesn’t get immediately unlocked at main net. It gradually vests over about a 6 month period after that event. For the most part I think our investors are taking a long term view on this and will want to continue to hold, especially if RSV usage is growing and they expect RSR supply to shrink in the future.

Community
Were their any qualifications to be a part of the seed investment group that got special prices in the private sale? I’m curious how you weeded out the short-term investors so that when mainnet launches they won’t dump.

Charlie Smith (Head of Business Development of Reserve Protocol)
I think our investor base speaks for itself. Coinbase Ventures, DCG, some of the high profile angels you’re all familiar with are very bullish on this space in the long term. I can’t tell you for a fact what they will do but my expectation is that most will be bought in for the long term.

An important point on this too is that our team is highly incentivized to ensure the RSR market remains healthy and grows over time. The future of project relies on RSR being an appealing asset to hold.

Community
Did investors like Thiel, Altman etc purchase RSR?

Charlie Smith (Head of Business Development of Reserve Protocol)
They purchased a claim on future tokens. Essentially yes but legally it’s a little more complicated. They will receive their tokens in the future.

4. The Protocol and Regulatory Concerns

Community
Hi guys is there any reason there’s nothing on Github ?

Taylor Brent (Lead Protocol Engineer of Reserve Protocol)
The next version of our App is in a closed repo, but you can see our deployed RSV contracts here:

Community
Can u address the future of the dollar peg after moving to non-USD assets as a value base?

Matthew Gertler (General Counsel of Reserve Protocol)
I will say that nothing is certain since things (technological, regulatory, etc) can change pretty quickly. That being said, I envision it going from a basket of USD stablecoins to a mix of USD stablecoins and other assets while keeping the dollar peg, then finally eventually getting off the dollar peg. How this works is unclear as there are technological and regulatory issues that need to be resolved before any of this can happen.

Community
Do you see the SEC getting involve in something like RSV? What about the OCC?

Matthew Gertler (General Counsel of Reserve Protocol)
I don’t think it would get involved with RSV. One of the factors of the Howey Test, which is the primary test to determine whether a token is a security, is an expectation of profits. Since stablecoins are not intended to increase in value, it would be difficult for the SEC to argue that people are purchasing RSV with an expectation of profiting

We’re really talking about FinCEN. The development company behind Reserve is a registered MSB with FinCEN. One of the requirements of being a MSB is allowing FinCEN to audit your system at any time and failures could result in fines and/or prison. I could see them getting involved whenever we get audited, but we’re comfortable that our AML/KYC program and our processes are strong enough to withstand scrutiny


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Reserve Currency

Reserve is a digital currency with stable, real-world value…

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