The Reserve Protocol allows for the permissionless creation of asset-backed currencies. Its core objective is to end hyperinflation in a decentralized and scalable manner, utilizing cryptocurrencies like Bitcoin and Ether as well as yield-bearing collateral. The protocol is permissionless, enabling anyone to deploy a Reserve stablecoin (RToken) with their chosen collateral basket, governance model, and revenue distribution approach. ^[10]

Overview

Reserve is a protocol that allows the creation and governance of on-chain asset indexes called Decentralized Token Folios (DTFs). These folios are backed one-to-one by baskets of digital assets and can be minted or redeemed at any time through on-chain governance systems. DTFs are permissionless and configurable, enabling use cases ranging from stable-value currencies to diversified investment portfolios. The protocol supports two structures: Yield DTFs, which manage yield from collateral and include overcollateralization through staked Reserve Rights tokens, and Index DTFs, which provide simplified management of diversified token baskets without complex collateral mechanics. Reserve’s broader objective is to support asset-backed currencies that track the aggregate value of diversified global assets rather than a single national currency, aiming for long-term value stability through transparent, decentralized portfolio construction and governance. ^[1]

Features

Yield DTFs

Yield DTFs are on-chain asset baskets backed by yield-bearing ERC-20 tokens and deployed through the Reserve protocol on networks such as Ethereum, Base, and Arbitrum. They can be created permissionlessly, issued and redeemed at net asset value, and governed entirely on-chain. Collateral assets generate yield through mechanisms such as staking or lending, which is automatically harvested and allocated according to governance-defined rules. Yield DTFs may include overcollateralization provided by staked Reserve Rights tokens, which act as a first-loss buffer in the event of collateral default through predefined, rule-based processes. Revenue generated by the basket is periodically collected, distributed among DTF holders, RSR stakers, or other designated recipients, and reinvested through automated on-chain auctions that increase the redeemable value of the DTF or the stake backing it. Each Yield DTF operates under its own governance framework, which defines collateral composition, risk parameters, revenue allocation, and procedures for rebalancing or replacing assets in response to market changes or defaults. ^[6]

Index DTFs

Index DTFs are on-chain indexes that bundle multiple ERC-20 tokens into a single fungible asset using a lightweight framework within the Reserve protocol. They support permissionless minting and redemption at net asset value, operate without price oracles or specialized collateral modules, and can include a wide range of token types. Index DTFs are periodically rebalanced to target weights through autonomous on-chain Dutch auctions that source liquidity from decentralized exchanges and solver networks, with parameters such as timing and duration set by governance. Rather than relying on yield from collateral, they generate revenue through management and minting fees that accrue in newly issued DTF shares and are distributed according to governance-defined rules, including protocol-level allocations. Each Index DTF has its own customizable on-chain governance system, which determines asset composition, rebalancing mechanics, fee structures, and revenue routing, with all proposals, votes, and executions recorded transparently on-chain. ^[7]

CMC20

CMC20 is an on-chain index token that tracks the CoinMarketCap 20 Index, which measures the performance of the top 20 cryptocurrency assets by market capitalization as ranked by CoinMarketCap. It represents a market-cap-weighted basket of major crypto assets. It can be minted and redeemed at any time with on-chain settlement, with all underlying holdings visible in real time. The index provides diversified exposure across leading cryptocurrencies, including Bitcoin, Ethereum, and other large projects spanning layer-1 networks, exchange tokens, and decentralized applications, with periodic rebalancing to reflect market changes. CMC20 is designed to function as a benchmark-style crypto index and can be used directly within decentralized finance protocols without reliance on traditional fund intermediaries. ^[8]

Reserve Rights (RSR)

​Reserve Rights (RSR) is an ERC-20 token used within the Reserve ecosystem for risk management, governance, and protocol-level value flows. It has a total supply of 100B tokens. In Yield DTFs, RSR can be staked to provide overcollateralization, acting as first-loss capital in the event of collateral default, with stakers receiving a share of DTF revenue based on governance-defined allocations and their proportion of total staked RSR. Staked RSR is subject to slashing if losses occur, unstakes with a governance-set delay, and accrues rewards through increases in the staked-to-unstaked exchange rate as revenue is converted into RSR. In Index DTFs, RSR serves as the default vote-locking token, granting governance power over basket composition, fees, and rebalancing parameters, with optional participation in fee revenue. Separately, a portion of the Index DTF platform fees is used at the protocol level to market buy-and-burn RSR, reducing the circulating supply. Governance across both Yield and Index DTFs is conducted on-chain through proposal, voting, and timelock execution processes, with a standardized governor contract commonly used for Yield DTFs that supports delegated voting and parameter updates. ^[2]​

Tokenomics

​Reserve Rights (RSR) has a total fixed supply of 100 billion tokens, with 50.6 billion in circulation at launch. The remaining 49.4 billion tokens are held in the Slow and Slower Wallets. The Slow Wallet, controlled by ABC Labs supports RToken adoption initiatives with a hard-coded 4-week delay on withdrawal transactions. Organizational restructuring in January 2024 introduced Confusion Capital, overseeing funding for the Reserve Ecosystem, including Best Friend Finance and ABC Labs. Managing the Slower Wallet, Confusion Capital imposes stricter withdrawal restrictions, maintaining the 4-week delay and limiting withdrawals to no more than 1% of the total RSR supply every four weeks. This adjustment aims to minimize reliance on Confusion Capital's trustworthiness. ^[2]​

Web3 Dollar (USD3)

​USD3 is a yield-bearing stablecoin structured as a Decentralized Token Folio within the Reserve protocol. It is backed one-to-one by a diversified basket of yield-generating, USD-denominated stablecoin positions sourced from overcollateralized decentralized finance protocols. The underlying collateral consists of interest-bearing stablecoin assets, and the lending and borrowing conditions of those protocols determine returns. This design maintains a dollar-denominated value while aggregating DeFi yield through an on-chain, transparent structure without requiring holders to manage individual positions. ^[9]

RTokens

An RToken is a currency created on the Reserve Protocol, fully backed by a combination of ERC-20 tokens and shielded from collateral default through Reserve Rights (RSR) staking. Anyone can deploy a new RToken by interacting with the Reserve Protocol's smart contracts. This deployment process can occur directly through the Reserve Protocol's smart contracts or user interfaces built atop the protocol. Alongside facilitating RToken creation, this interface offers tools for exploring usage and statistics, minting, redeeming RTokens, governance, RToken earn opportunities, and staking RSR. RTokens deployers must specify the initial configuration, determining the assets backing the RToken, their respective weights in the basket, governance mechanisms, and various other parameters. ^[3]​

Governance

Most RTokens use Governor Alexios, a governance system for RTokens, which is based on the OpenZeppelin Governor. Governor Alexios enables RSR holders to make protocol decisions through proposal submission, voting, and execution. Using a delegation mechanism, RSR holders can assign voting authority to other addresses, facilitating streamlined participation and enhancing voter engagement. ^[2]