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Infrastructure

Reserve

Reserve Protocol - stable coin backed to USD with the collateral portfolio

Rating: 3.6

Official contacts
Location: Oakland, CA, USA
Web-resources:   Whitepaper Website
Social networks:
Product source tracking: N/A
Details Description Risks Full analysis Team

Detailed review

Stage of product development
WP released on 16th of January


Token description
ICO date
TBA
Token price
N/A
Platform
N/A
Blockchain
Ethereum
Token distribution date
N/A
Consensus method
Escrow
N/A
ICO currencies
USD
Bounty camping
N/A
Markets
N/A
Token functions
1. Reserve - Stable coin 2. Share token – right to get a part of project's proft
Risks
MARKET

- High competition between stable coins

- Market glut of crypto projects, product doesn’t meet real business’ demand which is going to be the main driver in the industry

- Bad timing for further products (Decentralized Phase & Independent phase): Gartner Hype Cycle

PRODUCT

- Sharp decrease of collateral value – no dividends for share token holders

- Bad valuation for Share token – lack of demand

- The absence of exact product view – potential pivot (usual for startups)

BUSINESS MODEL

- Potential losing of money from bad investment in collateral

- The model tries to be less dependent on technology, than competitors' ones - that is the problem many new projects try to overcome - as a good stablecoin must avoid human intervention

FINANCES

- High valuation, according to gossips (over 50M USD)

TEAM

- Bloated staff (might be too big team for startup, but not critical)

- The absence of experienced portfolio managers, which is important for their collateral part of business

Full analysis
Market

According to Gartner Hype Cycle nowadays blockchain technology is on the «Trough of Disillusionment» stage, as there are a lot of negative results from last year projects which shows that blockchain isn’t ready enough to change the world. And the next cycle is «Slope of Enlightenment», when technology is going to be used in real business cases, providing useful and applied services. Reserve’ initial product is stable coin: first of all, there are some really strong projects with the same product - USDT ($2bn MCap), USD Coin ($325 mn Cap), TruesUSD ($210 mn Mcap), Paxos ($137 mn MCap), Gemini Dollar ($93 nb MCap), Dai ($73 mn MCap). 

So, there is high completion on this market, and this product is useful only in the cryptoworld, you can’t find high demand from real business for such supply, so they follow «Trough of Disillusionment» stage. Their further idea of creating decentralized and independent token to solve national currencies problems is looking global.

Product

Reserve Protocol is a project which initial product would be usual stable coin backed to USD, then they want to create a decentralized stable coin still backed to $ with connection to other types of assets, finally team wants to release independent coin with its own purchasing power, focusing on emerging markets.  

Reserve introduce 3 types of tokens:

  • Reserve token – stable coin = $1.00, the main product
  • Reserve share token – usual volatile crypto, its value based dividends from collateral assets growth and Reserve’s earnings (valuation model is similar to stock, in my opinion it is unsuitable model for crypto market)
  • Collateral token – its price based on real assets portfolio using for Reserve token support

The competitive advantage of this stable coin is that they have collateral in addition to money in the trust. Collateral would be consisted of real assets such as bonds, commodifies.  That’s may be important for users as they can be sure that Reserve token isn’t empty.  

Business model

Fees are on transfers from Reserve, profit from the collateral portfolio.

Commissions are the usual business for stable coins as it depends on the number of transactions. But the other inflow source is their investment business, which is unusual and risky. Can’t say if they have big knowledge in investment as they are not positioned as hedge-fund but it is still in their business model.

Finances

The project notes that there is a big number of different individual and institutional investors it means that they have enough money to start creating their product. Investors include Peter Thiel, Coinbase. But to complete their collateral idea Reserve need twice more money than usual stable coin project, for example, if they want to place 50mn tokens they need 100mn USD, as it must be 50 mn$ on their bank account and 50 mn $ for collateral. Also, Reserve team has to develop or adopt current Blockchain platform which is high expense. Info about their plans about fundraising is absent.

Team

There is a really big team. Also, they continue to hire new people as we can see on their site. Most of the team have a great experience – Google, IBM, Cisco, Top Universities. CEO is a serial entrepreneur, CMO has big experience in startups, 4 of them were acquired.

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