Reserve Protocol Community AMA

First in a series of Community AMAs, this one found our core team in Buenos Aires where they had a meetup with the Argentinian community.

If you were too far away to join us, you can always participate in the next Community AMA by posting your questions in our Telegram group and tagging them with #AMA.

We are looking forward to answering all your questions!

The following text was edited for clarity.

Nevin answering your questions from a cafe in San Isidro, Buenos Aires.

Nevin Freeman (CEO of Reserve Protocol)
Hi all! I’m sitting in a cafe in Buenos Aires and had some time, so I’ve been working on answers to recent #AMA questions.

Community Question 1
I have a question. You always point out Argentina as a target market because of it’s 40% inflation-per-year (approx.). However, government allows the population to store their money in $ (even tho in day-to-day purchases they use pesos). That being said, why would Argentinian people rather store their money in RSV (an experimental stable-currency with 0 adoption at this time) over USD (well-known major world currency)? I know USD’s purchase power — or any other form of fiat money’ decreases drastically over a long period of time, since you can print it and is backed by thin air, but in functional terms, in the short-middle run, USD is an excellent store of value if you compare it to argentine peso. I would like to know which is the people’s incentive to use RSV over USD.

Nevin Freeman (CEO of Reserve Protocol)
We agree with your line of thinking here. In other cases where buying USD is harder due to stricter capital controls, the obvious advantage for RSV will be greater accessibility once online markets have enough liquidity (bootstrapping this liquidity in important regions is one of our top priorities as a project). But in places like Argentina, we’re not sure if access to USD in banks and forex houses renders RSV less necessary.

That said, we have heard some reasons why people here (I’m in Buenos Aires today incidentally) are interested in being able to buy digital dollars on their phones.

First, many of them don’t trust Argentinian banks. This stems from a history of banks restricting deposits, most notably in 2001. So self-custody of a crypto-asset which is ultimately backed by assets held in more trustworthy banking institutions in more reliable countries is interesting to those who understand how it works. There’s an education gap there, and we’ve been thinking about how we can explain the greater level of ownership of digital money to citizens here.

Second, since banks are often not trusted with USD deposits, people often store USD in cash at home. This involves protecting your savings physically, and occasionally transporting large sums in cash to exchange. Crypto can be password protected, and recoverable with backup keys shared with friends and family, making for a more secure form of money.

And third, as you know, crypto is transferable anywhere in the world P2P. If you imagine having your USD in cash (perhaps you do, not sure where you are from), that constrains you to only transacting with people nearby. Cash payment services like Pago Fácil help with this — you can buy something on Mercado Libre and then go to a shop within a few blocks to process the payment in cash. If you could use the same process to buy RSV, and your family members or business partners in another country could use the same process to sell it for local currency, RSV can be used for fast international payments even if you store your money in cash USD.

We have a meetup this coming Wednesday in Buenos Aires and we will be discussing these questions with people here. If you happen to be around, let’s follow up there! See:

Community Question 2A
What happens when Reserve becomes very trusted in 1–2 years and the peg holds very tightly? Or algos play the arb and there are no real gains to be made arbing RSR? Is the current utility of RSR the one all and be all utility or does the team have any ideas to add utility in the future if arbing proves to underperform the general stock market consistently?

Nevin Freeman (CEO of Reserve Protocol)
The amount of RSR that can be traded for RSV is a function of how much total RSV is in circulation and how high the velocity is. So if those numbers are high, the number of RSR taken out of circulation will be significant. We estimate 2–5% of the circulating supply of RSV per year will be purchased with RSR, which will then be burned.

Empirically, stablecoins always have some volatility, even when they are highly liquid. For example, USDT trades above and below 1.00 quite frequently. So even when macro demand is steady or even declining, RSV is likely to trade above 1.00 for periods of time, enabling arb opportunities.

Community Question 2B
Also, if RSV is trading at $1.02, what is keeping me from sending RSR to the smart contract for RSV and not selling that RSV on the open market? I could cash out my holdings without selling any on the market which is what I would want to do.

Nevin Freeman (CEO of Reserve Protocol)
There are (broadly speaking) two ways to “cash out” of RSV: you can sell it to someone else on the market, or redeem it for underlying collateral. If the underlying collateral you can redeem it for is worth $1.00, and the market is willing to pay you $1.02 for it, why not sell on the market?

Community Question 3A
Hi guys, I hold a big bag of RSR and always wondered these things in my head but never really ask, but I’m just curious.

1. Huobi was used for the long term prospects of RSR because of there footprints in different parts of the world, having trading desks OTC trades?

Nevin Freeman (CEO of Reserve Protocol)
We considered many factors when choosing to work with Huobi, and yes, one was their global reach, and specifically their Asian footprint. We have great connections in the Western world, and we aspire to have RSV present and accessible equally all around the globe.

Community Question 3B
Peter Thiel, Coinbase and the other big names that have stepped into this project… what roles are these guys going to play? Will they play a role or just sit on the side as investors?

Nevin Freeman (CEO of Reserve Protocol)
In general, investors tend to provide key insights, intros, deals, and recruits, without being very operationally involved. This is true of our investors too, they have provided all of these kinds of help to the project many times already, but at the end of the day we have to hustle to innovate and make things happen. A lot of our key special knowledge, connections within and outside of crypto, and some of our future strategies, came from investors.

Community Question 3C
Nevin Freeman is only 30 years of age? If that’s true, I’ve seen the Youtube video of him on stage with 2 other people - I think MakerDAO CEO? And I remember him speaking and the other 2 closely listening. Just based on body language I got the feeling Nevin really surprised them, and they were caught off guard. Nevin is very bright, he is young, and his goals are huge… does he strongly believe it will all come into play in the long run? Or there is still too many factors to see if RSR can actually fully function as a decentralized currency?

Nevin Freeman (CEO of Reserve Protocol)
Haha, I appreciate the compliment 🙂 I’m 31. I personally believe RSV will be the #1 cryptocurrency and RSR will be up there, but as we’ve stated in many of our public materials, there are of course several ways this could end up not coming to pass.

Community Question 3D
For some projects exchanges are not needed to function in order to be successful, the tech will speak for itself. But for RSR I feel like exchanges are everything… is the team aware of this? Do they think of this? It would be extremely beneficial to have more liquidity.

Nevin Freeman (CEO of Reserve Protocol)
Yep, we’re very attuned to this. In addition to crypto exchanges, we also highly value consumer-friendly fiat onramps.

Community Question 4
Why doesn’t the whitepaper mention the RSR burn mechanism? I see people writing here that RSR is burned when used to purchase assets from the smart contract, but it is not written in the whitepaper. The mechanism behind Reserve tokens is stated but not Reserve Rights.

Nevin Freeman (CEO of Reserve Protocol)
The mechanism for using RSR to arb RSV is described in the paper, and the side-effect of this mechanism is burning of RSR. I agree that it could be more clear, but for now the community understands pretty well how it all works, so it’s low on our long to-do lists to clarify.

Community Question 5
Are you planning on integrate a referral system in the app, same way as PayPal did, to facilitate the adaptation of your solution until the network’s user base is solid enough?

Nevin Freeman (CEO of Reserve Protocol)
Yep, it’s already built 🙂 We aren’t activating it right at the start since we want to keep our userbase small while we hone the product, but it’s even visible in the app, you just get a message saying that it will be activated soon.

Community Question 6
Is Reserve’s goal, at this point, almost utopic because of:

  • Regulation pressure on US based crypto startups.
  • Hyper-inflationary countries trying to protect their centralized currency system.
  • Need of a very wide user base to prove the whole system works (a lot of marketing effort needed).
  • The very long term approach.
  • A whole new concept of stablecoin that has yet to prove it works.
  • A potential challenge to the global economic system.

Taking into account all these points, and beyond the fact PayPal founders had a similar idea in mind, which were the main drivers or points (tangible facts so to speak) that really convinced the investors about Reserve?

Nevin Freeman (CEO of Reserve Protocol)
We found that different investors were convinced by very different aspects of the project. Some understand stablecoins on a deep technical level, and were convinced by our descriptions of how others would fail and how our protocol avoids all of those issues (explaining this concretely takes a lot of words, but if you read all of our public material you will be able to see what I mean). Others were more convinced by our emphasis on understanding and operating in markets outside of crypto trading. As you probably know, we are emphasizing the development of new markets for stablecoins, not only competing with USDT within crypto trading.

But early investors on a project like this ultimately are judging the team. Not all problems are solved at seed stage, so they have to make a bet that we can figure them out. Several of our early checks from people like Peter and Sam, and funds like Distributed Global came along with comments about how they thought we could be the ones to make it happen. As for why concretely they thought this, I think it comes down to how detailed our thinking tends to be.

Community Question 7
If Reserve is based and operating out of US and dealing with US sanctions countries and small businesses/ merchants/ integrators in Venezuela; does that make Reserve Protocol subject to ‘’regulatory issues’’ / other legal issues?

Nevin Freeman (CEO of Reserve Protocol)
As of today, sanctions only apply to a corrupt subset of Venezuelans. We have processes in place for making sure we do not deal with any of these parties. In the event that blanket sanctions were to be applied to all Venezuelan citizens, this would hamper our US operation from serving anyone from Venezuela. However, RSV is a cryptocurrency that is purpose-built to not stay under our control, so Venezuelan entrepreneurs will be free to offer the purchase and sale of the token just like everyone else in the world.

Nevin Freeman (CEO of Reserve Protocol)
Alright, those were the ones our CMs had collected which I decided to answer today. If you have more questions for me and the core team, you can continue to tag them with #AMA and we will aim to answer them in spare moments like this!

📕 You would like to know more about Reserve? Read about our protocol, study our whitepaper or take a look at our roadmap.

🔊 Looking for the latest news? Follow our Website, Twitter, and Blog for updates.

Reserve Protocol Community

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Reserve Currency

Reserve is a digital currency with stable, real-world value that helps scale prosperity by enabling everyone to protect and use their money globally.

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