Heres why RSR wont work

[Anonymous No.24504039]

here's the truth about RSR:

RSR has VERY LITTLE utility in the Reserve ecosystem besides DILUTING THE SUPPLY. The team has created a false narrative that you can make a lot of revenue through RSR/RSV arbitrage, which would create demand for RSR in the long run. But is it true? Lets dive in.

1) An excess pool of RSV has to exist in order for RSR holders to be able to arbitrage with RSR. How is this pool of excess RSV created? A) when the collateral for RSV appreciates in usd value ABOVE the collateral target B) from tx fees collected for RSV transactions (velocity). That means you as a RSR holder CAN’T arbitrage until the vault is optimized to produce revenue/gain value against usd and/or a significant amount of RSV is being transacted with, which both are expected to occur YEARS from now.
2) RSV has to trade above $1 in LARGE volumes for the arbitrage process to be in any way profitable, which is very unlikely to happen – if RSV does trade above $1 peg, it will be in small amount of buy orders (explained in next pg). Not to mention that the Reserve foundation will ALWAYS have a first actor advantage, depleting the pool of excess RSV tokens BEFORE any of the regular holders will have a chance to participate
3) Even if the protocol has accumulated a deep pool of excess RSV through collateral appreciation and tx fees, arbitrage with RSR would still ONLY be profitable if RSV trades above $1 and ONLY for the quantity of RSV that is being bought above $1. Why would anyone buy RSV above $1? Rational/educated market participants who move large quantities of capital WONT, because if they wanted to buy/use RSV they could instead just mint it for $1 worth of collateral tokens instead of buying from the market for a PREMIUM price. Thus, one would project that the quantity of RSV trading above the peg is minimal, resulting in a very low level of utilization for the potential excess pool of RSV, which means close to NO ARBITRAGE REVENUE FOR RSR HOLDERS.

[Anonymous No.24504055]

>continued...

Where does RSR then play a role? When the vault portfolio depreciates in value, the protocol will mint AS MANY RSR NECESSARY in usd value to INSTANTLY SELL on EXCHANGES for the deficient amount of collateral assets to get back to the target collateralization ratio. When new RSR gets minted, the circulating supply of RSR will be inflated, inherently lowering the value of previously existing tokens. Not only because there are now a huge amount of new tokens in the circulation, but also because the newly minted RSR were market sold as per the smart contract associated with the RSR/RSV arbitrage mechanism.

Example: if we have 100m RSV in circulation and the underlying collateral depreciates 5%, the protocol would need to mint and SELL $5 MILLION WORTH OF RSR tokens (in reality there would never even be enough buy orders on exchanges for that amount). When the current RSR market cap is only $16 million, vault deprecation would have a DRASTIC NEGATIVE IMPACT on the market price of RSR, making it EXTREMELY RISKY and unattractive to hold.

[IfmlHOdL No.24504058]

>>24504039
But its so classy.

[Anonymous No.24504101]

>>24504039
Fud fag

[eвгeний No.24504142]

> trade with low fees and without fees

[Anonymous No.24504159]

>100 000 000 000 supply

[Anonymous No.24504319]

>>24504039
>>24504055
Didn't read, Just bought 65k RSR

[Anonymous No.24504610]

>>24504039
Fucking reddit fud faggot. Stay poor.