Huobi Global today said it has teamed with Oakland, California- based Reserve to sell Reserve Rights Tokens in a sort of initial coin offering.
Reserve, founded in 2018 with a high-profile team that includes former members of Google LLC, Tesla Inc., OpenAI, IBM Corp., the Machine Intelligence Research Institute, Impossible Foods Inc. and The Jane Goodall Institute, has established Reserve or RSV. That’s a “stablecoin,” or token whose value tied to a standard currency, that’s intended for people in countries with high inflation.
The startup is pitching big, claiming that “it will change the economic situation in nations around the world” with RSV by offering an alternative.
Reserve cites Venezuela as an example of a country where its fixed cryptocurrency could be useful. In Venezuela’s case, a corrupt socialist government has produced an inflation rate estimated to be 1.3 million percent in the 12 months up to last November.
Where Reserve differs from traditional stablecoins is that it’s technically not a stablecoin as most would traditionally see one, but it has a similar goal. It does not hold a reserve of hard currency backing its value, instead using a “reserve stabilization protocol” that’s explained in a white paper published May 7 as a process of maintaining the value of RSV.
That stabilization involves Collateral Tokens, a form of smart contract, and Reserve Rights Tokens, the latter being what Huobi is offering for sale. The short version of the complicated stabilization process is that Reserve can issue Reserve Rights Tokens to stabilize RSV if it goes above its determined price, theoretically $1.
“The Reserve Rights Token is designed to maintain the stability of Reserve’s USD-pegged stablecoin Reserve token (RSV),” Huobi said in a statement. “The overall project’s mission is to build a universal store of value – particularly in regions with unreliable banking infrastructure and/or where inflation is a major issue.”
Describing the sale as an initial coin offering isn’t quite right since the Reserve Rights Tokens, while tradable, only exist as a right to purchase RSV. It could be suggested that the offering is closer to an Initial Exchange Offering, but that’s not quite right either.
Putting aside its complex model and its co-founder and Chief Executive Officer Nevin Freeman not only trashing existing stablecoins but also suggesting they’re all going to fail, Reserve can’t be knocked for ambition. Reserve’s backing would suggest others have bought into the ambition as well.
Investors include Peter Thiel, Sam Altman, Coinbase, Digital Currency Group, Neo Global Capital, Rocketfuel, Blocktower and Distributed Global, among others.
The sale of the Reserve Rights Tokens will debut on Huobi toward the end of May.
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