Lodge AMA with Nevin Freeman, Founder of Reserve
This article is a summary of the AMA between the Reserve Community and Nevin Freeman, founder of Reserve in our Telegram Group, on August 15 2023.
Community Question 1— We haven’t seen you in the Lodge for a while, what have you been up to recently?
Nevin | Reserve
I’ve been doing a lot of legal and administrative work behind that scenes. Basically, as the project grows there are risks and challenges we have to make sure to attend to so that they don’t get out of control and cause problems. This work usually doesn’t lead to any exciting public result, since often if it is done well there result is just that nothing goes wrong, so it’s usually invisible. The OFAC license was a rare exception, where we got to announce publicly a project of this type that I’d spent a lot of time on. I feel like that’s a useful example, where you can see the value now that it’s out there, and can also see that it wasn’t the sort of thing we could talk about while it was underway. My main project right now is similar in that I don’t describe it publicly, but in this case even once it’s over there won’t really be anything to announce, and if it goes well, nothing notable will even happen. Sort of annoying, but these things must be done.
One thing I can mention is that recently we did a lot of work to restructure Rpay on an administrative level, which I was involved in. Pretty soon they will make an announcement and explain more about that new structure, why it it what it is, how it relates to some upcoming plans, etc.
Another recent thing I got to be involved in was the brand update and new website launch, which I oversaw and influenced quite a bit. That was fun.
As of now, Gabo is the leader of Rpay tribe and Thomas is the leader of the protocol tribe, which frees me up to work on things that I’m specially suited to handle. I don’t do very much management — those two people are at the top of the main hierarchies of coordinated people. Instead, I am often doing work as an individual or as part of a team I’m not leading, though I do sit in on many meetings and provide feedback, advice and nudges several times a week. One thing I do manage directly is the film team. And I have been shooting some video with them (as have others) that is basically educational material about the project.
Community Question 2— A few rapid fire questions —
a) what is Reserve Protocol and what problem is it solving?
b) What are RTokens?
c) What does the RSR token do? How to stake it, and what is the APY?
Nevin | Reserve
Those are pretty big and pretty foundational questions. I kinda think most people here know the answers, but I suggest looking at the amazing new home page for anyone who doesn’t!
For (a), I spent a fair amount of time trying to distill this into a few sentences for the site as you might have seen on the homepage, so lemme borrow from that text:
Reserve is a cryptocurrency project. We want money that doesn’t inflate like USD, but isn’t volatile like Bitcoin. Our approach is to bundle stocks, bonds, gold, real estate and more into an index, and use that as money. Imagine buying a bag of groceries and paying with a tiny slice of all the world’s assets!
But we aren’t building that currency directly; we built the Reserve protocol, which lets anyone create a token backed 1:1 by a collection of other tokens in a few minutes, without writing any code. Deciding what you want to back your RToken with is the hard part, and it costs a few hundred dollars in transaction fees to create one. This hassle and cost can be worth it, since you can turn a profit by creating, governing and promoting RTokens.
Until everything is tokenized — which we hope will happen but has many regulatory hurdles standing in the way — the protocol is best used for rolling DeFi assets together to create yield-bearing USD stablecoins and other composite assets. As more assets are tokenized, we envision many competing asset-backed currencies, with some actually being used as money. If the world really likes asset-backed currency, perhaps it could replace the fiat standard.
For (b) I guess I can do the same thing:
Assets launched on the Reserve protocol are called “RTokens.”
Creating an RToken is surprisingly easy; you can do it without writing any code. Once you create one, anyone can mint it by depositing the basket of ERC20 collateral tokens you’ve defined. RTokens are fully redeemable for their underlying collateral at any time.
The long-term goal behind the RToken design is to be able to create stable asset-backed currencies independent of fiat money.
This is from the RToken Primer section of the site, which if you page through you will get more detail from:
For c:
Reserve Rights (RSR) is an ERC20 token common across all Reserve tokens (RTokens). RSR can be staked on a particular RToken, where it has two roles:
Staked RSR receives a portion of the RToken collateral’s revenue in exchange for being the first capital-at-risk in the case of collateral default.
Staked RSR proposes and votes on changes to the RToken’s configuration.
This can be found in the section of the docs that’s all about RSR:
As for yields, RSR staking yields are always visible on Register:
Here you can see eUSD rates: https://register.app/#/overview?token=0xA0d69E286B938e21CBf7E51D71F6A4c8918f482F.
eUSD has a ≈20% APY right now!
Here’s a little more on how to stake:
And for more detail on what staking really means (important to understand because there is some risk involved), see:
Community Question 3— Based.
Speaking of bases: wen Base and how does that affect things for us?
Nevin | Reserve
I’ve learned the hard way not to try to answer the wen questions 😔
But during our discussions about it in Paris (we had lots of team working sessions during ETH CC) the protocol team shared some preparations they were making for Base, and when the team discussed the challenges of fracturing liquidity across L2s it seemed like the conclusion was that it’s worth the cost and hassle in order to offer more options. So I do think it’s probably coming.
As for how it affects things to have the protocol on any L2, Base included: the idea is that you’ll be able to bridge your RSR and stake that bridged RSR on L2 instances of the protocol that implement L2-native RTokens. Main benefit obviously being lower gas fees for RToken users (and stakers), making RTokens there more usable as money. Also gives access to whatever assets/yields are on those L2s.
Community Question 4— Can we expect any new major RToken to launch soon?
Nevin | Reserve
Actually, I was wondering the same thing. Can we?
That’s up to you guys, since the founding team has committed not to launch any RTokens. (We did that in order to force ourselves to actually build the infra for others to launch them — I could tell that if we let ourselves do it, it would be easy to cut corners and not really build for others.)
Once we open this back up for others, I’d like to hear from anyone who is planning to create one.
I realize that for some this may feel like the founding team copping out. But over time, I think people will begin to see the wisdom in this strategy.
If we just made the ones we thought made sense, everyone else would just sit around and wait, and never learn how to do it or try their hand at it. This way, we not only force ourselves to build the tools for your to do it, we also force you to learn those tools and this leads to a more robust ecosystem that’s not only dependent on us.
Now, my answer here is a little cheeky, because the core team does have folks that are in touch with potential deployers, so they may actually know of RTokens that might come out soon. But to be completely honest, I’m not part of those conversations and am not personally aware — I often find out right when you guys do on Twitter that one is coming or just dropped.
Community Question 5 — Probably not what everyone was expecting with the question, but I unironically love it because it encapsulates how you guys wanna run things!
What is your relationship with Ondo Finance? What other plugins are being prepared for the next generation of RTokens? Can we see stuff like tokenized gold, oil,… anytime soon?
Nevin | Reserve
We are friendly with Ondo, but no special relationship. I really like their project and I think they respect Reserve as well.
I think this is visible on GitHub but it’s hard to parse, so I asked the team and here’s the list of what’s coming up for collateral plugins developed by the protocol engineering team:
- sDAI
- Comp v3 USDC
- Curve LP staked (for base)
- Aave v3 stables
- Morpho v2 aave
- cbETH
- stargate
PAXG is my favorite gold token, and I think the issue is that it has transaction fees which make it hard to play with DeFi generally. I seem to recall that the Tether gold token has a similar issue that prevents it from being used on Uniswap, etc. I’m not sure if there’s a plan in the works to handle that or not. As for oil and other tokenized assets, that’s a question for the broader market — we aren’t pursuing any tokenization directly, just assuming that it will happen over time. We recently were thinking about what we could do to accelerate tokenization, and decided that in the near-term, the best strategy was to just wait, and in the meantime, devote our resources and attention to things the Reserve project specifically needs.
Community Question 6— Can you tell us what is happening with eUSD and Moby? Seems like they have not been very active recently. Their utility tokens is the only token integrated as a payment in the Signal app — Would it not make more sense to have eUSD, and can we expect that?
Nevin | Reserve
Their priority has been getting fiat ramp liquidity for eUSD, which they have the most control of within Moby. As you might have seen, they just announced a new ramp:
It’s really hard to get such fiat liquidity up and running right now given all of the banking challenges for crypto, so I was impressed with this move. But we’ve still yet to see it start being used, as it’s brand new. We’ll see.
As for integration of eUSD into Signal, that’s up to the Signal team so I can’t comment on that authoritatively, but I do personally agree it would make a lot of sense, and I won’t be surprised if they do integrate eUSD.
Community Question 7— What’s the relationship with Num Finance? They are a finance company operating in LATAM, with their own stablecoins, and Reserve invested in them. So why would they not use RTokens instead of their own stablecoins?
Nevin | Reserve
Num is interesting because they create fiat-pegged stablecoins for currencies other than USD. We can see the need for that from Rpay users, so we thought the project made sense. I do think that at some point they will enable RTokens as collateral for their nuStables (which is a system that works like MakerDAO; you can deposit USD stables and borrow e.g. nuARS, which are Argentine Peso-pegged.)
So yeah, they will keep having their own stables, but may integrate RTokens as collateral options.
Community Question 8— Rpay, Reserve’s own payment app in South America had some issues with finding banking partners? Has this been resolved?
Nevin | Reserve
No. Focused on the US next, then will have more bandwidth to focus on Latam banking. (There are some efforts in the background along the way, but the Rpay team is making the [wise, IMO] choice not to spread themselves too thin.) This does really suck — Rpay utility has just fallen off a cliff in the meantime. I am optimistic about the team overcoming this challenge, but we won’t get to breathe a sigh of relief for a while.
Community Question 9— How about the search for licences in the US? What is Reserve actually applying for and why, what is the state of that?
Nevin | Reserve
The new approach in the US initially does not rely on Rpay having additional licenses other than being an MSB (money services business). Later on in order to improve the economics (i.e. pricing to the users) if things go well, it could make sense to get MTLs in each state. At the start, a 3rd party that has those licenses will be involved.
Community Question 10— Now that Reserve has reached “mainnet” as previously defined by the team, when can we expect RSR on more US-based exchanges? It is surprising to the community that Coinbase has not yet listed RSR.
Nevin | Reserve
It may be a strategic benefit to the project that RSR is not listed on any centralized US exchanges for now, since it reduces the likelihood of getting caught up in the fight happening between the SEC and the crypto industry. Multiple cryptoassets that we did not interpret to be securities were named in the Coinbase and Binance lawsuits as examples of securities, and may get caught up in those fights. (E.g. Dash! We were very surprised.)
In the long term I’m still excited about US listings and I care about the US having access to the Reserve ecosystem, but in the short term I actually think it’s a good thing for the project’s chances of success that they have not happened yet.
Think about it like smart contract bugs — if a project has a major bug and gets hacked, that can kill the momentum of the project, maybe forever. A major lawsuit could potentially do the same. So in the same way that we try as hard as we can to avoid shipping any code with bugs, we try as hard as we can to comply with all laws, so the project doesn’t ever suffer that kind of major setback. This does often mean doing things more conservatively than other projects, and it can be really frustrating for me to see others getting ahead in the short term by cutting corners, but I think this last bear market where a lot of more risky projects blew up financially or legally was a good reminder that this conservative strategy may have its place. I know it turned into a negative meme once number went down, but we do really try to think long term in every decision we make, and really do think that’s the right way to go about a project like this.
Community Question 11— Congratulations on the new website, its a major improvement over the last one.
Some community members have asked why there are no team pages on the website? In the age of on-chain madness, people are interested if the project is made by a lone dev from his basement, or of there a dedicated group of people behind it.
Similarly, some community members are wondering why you decided to exclude investor names from the website? Seems like this would significantly raise awareness to the project, and provide a trust-boost for potential RToken deployers.
Nevin | Reserve
As the project grows up, it’s important that we make the transition from a single team — which can be a single point of failure — to a broad ecosystem that is resilient, distributed, and ultimately much more powerful and capable than the initial team. (The initial team has its strengths, but we suck at some things! And there are some things we aren’t as free to do, given our position as initial creators of the idea, the code, the token, etc.) Think about all of the people and companies that do things to serve the Bitcoin ecosystem — from the devs to the wallets to the exchanges to the custodians, etc. This transition is cultural in nature; we must shift from the expectation that Nevin or the team will do everything to the expectation that many people from all corners are allowed and expected to do important things and that the Reserve ecosystem will become an industry where many independent businesses will thrive, rather than a project that a handful of people are mainly responsible for moving forward, as it was at the start.
I realize that people don’t often step up to do things for the common good without any special compensation for themselves, and I expect most of this distributed work to be done by people who are making money by doing so. That takes flywheels starting to get going e.g. RTokens getting big enough that they become attractive businesses in and of themselves, which others want to copy and compete with. So some bootstrapping is appropriate. But eventually I believe it can run on its own momentum.
We chose not to include reference to the people working full-time on the project on the reserve.org site in order to begin encouraging this cultural shift. I’m glad you guys noticed it and asked this question, for example! And for people who join the Reserve ecosystem in the next couple of years, I think the cultural effect may be even stronger.
If the project can earn awareness and trust based on its actual performance, I believe that awareness and trust is worth 10x more that the kind you get from a big name being involved. Early on, it makes sense to rely on signaling because you have no track record. But as the track record develops, I believe letting it speak for itself can actually be much more powerful.
Credibility from associations is fickle in crypto. When number is going up, Peter Thiel is a genius who showed us the way to the premise land. When number is going down, Peter Thiel is an evil VC who screwed us all over. But even when number is going down, the protocol being live and working and the market cap of RTokens continuing to grow is objectively a good thing that nobody can misinterpret and be upset about.
Many decisions about what to put on the website and generally what to say publicly account for not only the next bull market but also the next bear market after that, now that we have experienced the craziness of that cycle a couple of times. Essentially, we are doing our best to strategically develop the culture of the Reserve ecosystem to be built on sound fundamentals that will be powerful and healthy over time.
Community Question 12 — What do you think will be next big thing for Reserve? What are the largest outstanding issues/tasks Reserve needs to implement/solve? Can you share anything about what the team is working on and what can we expect in the next 6–12 months?
Nevin | Reserve
The answer is easier for Rpay: US launch. Biggest immediate challenge: getting product-market-fit in the US, and then banking in LATAM.
For the protocol itself, it seems like it’s many little things rather than one big thing.
Collateral plugins, gas optimizations, Curve pool incentives, educating people on deploying RTokens, getting more audits, talking to DAO treasuries, hopefully deploying on L2s, and so on.
Biggest immediate challenge: getting over the hump of being a “new and risky protocol” — by actually reducing the risk gradually, and helping people see that this is happening.
Biggest long-term challenges remain: governance design and tokenization of everything.
Community Question 13— You recently compared Reserve to a teenager in terms of its development. What does Reserve need to accomplish to become an adult? What are the milestones you would like to see the project achieve in the long term?
Nevin | Reserve
To be an adult, I think people need to see RTokens making a lot of money. I believe this will lead many to want to create, govern, and distribute them.
It’s like Ethereum when there were just a few smart contracts written and nobody had ever heard of it, compared to Ethereum after DeFi apps started to do their thing. There’s no stopping it now. If that happens for Reserve, it will be able to “move out and live on its own.”
As I said above, longer-term milestones than that are sufficiently solid and decentralized governance, and enough real world assets being tokenized that true asset-backed currencies are possible. But those things aren’t needed for the project to reach this “adult” phase I’m talking about.
Community Question 14 — Where do you see Reserve on the road to an inflation resistent currency? What are the largest outstanding issues/tasks Reserve needs to implement/solve for this vision? What keeps you up at night?
Nevin | Reserve
Well as I always say: governance and tokenization are the biggest challenges. The core team does some work on governance, but we intentionally made governance modular so that people can try anything with different RTokens, and if RTokens take off there may be a lot more innovation outside the core team than within it.
The risks of smart contract bugs or unintended legal compliance issues are the two biggest things I worry about in the immediate term. Longer term, I worry about whether there will be organic demand for RTokens in the next bull cycle, how governance design will progress, how tokenization regulations will progress, and how Rpay will do as it expands.
Community Question 15— Are marketing efforts being intentionally held back until after the banking issues get resolved?
Nevin | Reserve
For Rpay, certainly. For the protocol itself, no.
Community Question 16— Are you currently with a beard or without beard?
Nevin | Reserve
Community Question 17 — Finally, do you like rigatoni pasta?
Nevin | Reserve
I’m gluten-free due to an annoying digestion issue, but as far as pasta shapes go I am a fan, yes 🤠
Alright, thanks everyone for hangin out for a bit. I’m on to my next meeting — a Q&A between Gabo and the Rpay team about some things they’re planning where I will get to ask Gabo one of my question about their upcoming plans 🙂
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