Reserve Unofficial Update
All Clear, first RToken and staking is live, nothing much really…
Make no mistake, this Friday is a double Crunchie Friday! Welcome all!
So — it would be hard to not notice that we’ve finally hit protocol real-world use, trusted for large quantities of volume through the protocol.
I’ve decided to basically make this an ‘All Clear — RTokens — Staking’ edition where we walk through what’s gone on and how and where to stake.
- Memory lane (well ok I’ll allow myself that indulgence)
- All clear
- eUSD / governance and register
- Staking 101
And that’s it — we’ll get back to other news next week, but for the time being lets just enjoy the moment. Go on, take a deep breath, hold it for 3 seconds and breath out slowly. Now take a moment to enjoy what some have waited about 3.5 years for. Feels good, doesn’t it?
Memory lane
Will we get some engagement from the big hitters now we’re all go?
All Clear
So after some frenetic activity after the mitigation review, updates to the contracts were made, testing was done and 2.0.0-candidate-4 was created (which is now in master). And boom — that’s it — deploy.
Reserve announced and this means anyone can now use https://register.app to create their own RToken from a basket of yield-bearing collaterals.
So it’s time to get out there and spread the word and get people interested. People like…
Which is why I ever-hopefully mention Niall Ferguson and Nassim Taleb in my tweets.
So, this means the protocol is live and things can happen. Almost simultaneously we get….
eUSD
Yahoo news reported
With Register.app showing everything on-chain, a surprise volume of market cap hit eUSD
And there was much excitement. Then it went up again.
So lets have a look round Register shall we?
Well as above you start with the overview Mcap, staked RSR and yield (none yet — early days) and Tx volume as per RSV. Transactions appear on the right…
It’s all on etherscan — this is the beauty of DeFi — no hiding places : https://etherscan.io/address/0xa0d69e286b938e21cbf7e51d71f6a4c8918f482f
Next up we have the basket and backing in a handy diagram :
The diagram shows 4 inner colours equally divided showing the number of collateral tokens and their split — 4 and 25% each. The outer black ring is the staked backing value as a percentage of the Mcap — so here staked value is 61% of mcap. This can rise and fall dependent on how many choose to stake, which will probably depend on rewards.
Next is graphs (ooh graphs) and most recent staking transactions. Again, they are listed in total :
We can see that 58M RSR is locked into staking
Nice.
I’ll skip the staking bit for later where we’ll go in depth.
Auctions is next — we have not had any, and I’m told that the person who runs auctions pays gas for them — so be wary!
I’m certain we’ll have run some by next week.
Governance next — this is where you can find out who has most votes, create proposals and delegrate your vote (to someone you trust to do the right thing).
We can check the wallet address of the big votes allocation :
And we can see they hold 81M RSR as well as other tokens — I’m told this is the Reserve governance wallet — I’ll double check. An interesting nuance here is that as staking gets more (and mcap), then to have a decent amount of votes, this entity will need to stake more RSR to have the same relative percentage of the total vote. And they are unlikely to ever unstake. A billion mcap token might reasonably expect $50-100M of RSR to have a decent say in governance. At time of writing that would be 15 billion for $75M. With no new RSR being minted, that’s compelling.
So, onto settings and roles :
We have all the settings available when the RToken was created, as well revenue distribution and addresses of all the contracts.
So transparent.
The governor address shows everything that has gone on :
That concludes the tour of Register.app for non-staking settings.
Staking
Yes you can!
Let’s do a bit of background then we’ll have some screenshots.
As we saw before you can have a look at the makeup of the basket and decide if you think it looks safe. Safe? Am I not just staking? NO.
*** YOUR RSR IS AT RISK WHEN YOU STAKE ***
What? No-one mentioned THIS. Well they did, but anyway.
If all or part of the collateral of an RToken defaults, then the value of that default is made up by selling staked RSR on the market to make it up.
Example :
Collateral 25% of 4 assets. Lets say USDT drops the peg to 90% enough to trigger a default. There is an Mcap of 1,000,000 and there are 10,000,000 RSR staked on the RToken. So we lost 2.5% of the backing (10% of a quarter of the mcap), so we need to sell $25,000 of RSR and everyone gets the same haircut. Thems the risks.
There is also a lock in period — I think 2 weeks to start with, so you can’t take your RSR out if you see a default coming.
Ok, so lets have a look at REWARDS!
We can backtest a basket using the backtest tool :
Where you can replicate the basket and see what performance looks like — this is eUSD backtested (by me!)
We can see that it outperforms USDT in compound. Currently offering a BASE rate of around 2.5–3% yield. This is not YOUR yield — oh no. Read on….
We look at how much of said yield is split between RToken holder (or any ERC20 address) and stakers. Staker beware!
This is a good distribution. However, an RToken returning base 10% with 50% to stakers would still be better — NEARLY. Because there’s more to it again… read on.
The yield from an RToken is given to all RSR staked evenly. Simple example — RToken yields $10,000 and 1,000,000RSR is staked. Each RSR gets 1c as rewards (in RSR actually), so if you stake 100RSR, you’d get a dollar in RSR as rewards. Not bad.
If in that example RSR was 10c (keep it simple for now), then you’d put $10 of RSR in to get $1 of RSR out, which is 10% return. Simples.
Now we come to the last part of our moving feast — market cap. As market cap grows, rewards grow. If staking stays the same, more rewards go to stakers and interest rate goes up. Niiiice.
Let’s have a look at all that together :
So we can see that 2.5% from the RToken actually turns into 4.1% yield to a staker. Wow — we win. Let’s have a look at another. When staking amount is less than mcap value, rewards are GREATER than base rate.
This is unlikely, but you never know — 100% backed by stakers. Therefore — staking rewards are EQUAL to base rate.
Lastly, madness
Over-backed RToken — staking rewards are LESS than base rate :-(
There’s a % relationship to the base and staking rate — for example % backed is 50%, the staking rewards are 2x base rate. So there you go.
As more RTokens appear, you can tell from the black circle and base rate quickly what you’re going to get roughly.
By the way — now RSR has utility and earns mony passively, we can associate a price to earnings ratio. Base on earnings, a multiplier of future value of rewards can be calculated, much like the stock market will do to a stock. Compound, for exmple has a ratio of 208x
Crypto values things higher than stocks — Microsoft is 28.31 for example. Nevermind, I’ve gone 35 as super conservative in my examples — and you can see that RSR will become more valuable as RTokens have higher mcaps.
eUSD also now has a greater mcap than Stably.
And we haven’t even started yet.
Let’s dream a bit and pop in a larger mcap — maybe achievable in a year
So we have the same staking %, but we have locked 5.6Bn RSR — which in reality now would be over 10% of supply. And auctions are buying $18.75M RSR a year. $360k RSR bought per week. And no minting.
How to stake
Ok, just get on with it.
- Go to https://register.app
- Choose your preferred rtoken and click on it
3. Click on stake + unstake
4. Attach your wallet by clicking top right
5. Put in the amount you want to stake:
6. Press + Stake RSR
7. Click allow use of RSR and sign the transaction (you can do this from your Ledger) Then click begin stake… (I have not done that part yet, but you’re there basically).
8. Enjoy passive RSR.
So there you go — there are other things I would normally include like RWA and other things of note, but lets leave those for another time and just enjoy the future of money.
