A New Stablecoin Turns Heads
A new coin stablecoin is not anything to write home about. Tether and TrueUSD are gaining trust in the crypto world, even if they are probably not fully backed by a real 1:1 peg with fiat. But, the announcement of Reserve is an eye-opener not so much because of what it is, but who is backing it.
Reserve is backed by Peter Thiel, Coinbase, Distributed Global, GSR.IO and 40 others investors.
“In addition to our big-name investors, we are working with founders and early CEOs of TechCrunch, and Betfair, the Director of Product and Revenue at Tinder, three early, high-up PayPal team members, the technical founder of a multi-billion dollar telecommunications company, two heads of major startup incubators, other influential crypto funds like NEO Global Capital, Fenbushi and PreAngel, and others like that.”
The stablecoin Reserve is pegged 1:1 to the value of USD. According to Nevin Freeman, this currency will be more than a stablecoin. Freeman describes Reserve as a full-stack open currency that is “relatively stable” in purchasing power and private in limited amounts.
Furthermore, the coin allows you to verify that funds are actually in place to back your purchase.
In its first round of funding, Reserve raised $5 million.
“The reason we’ve gone through all the effort to design another stablecoin protocol is that we are convinced that all of the existing attempts are likely to fail as well. Leaders of the crypto ecosystem have been aware of the need for a stablecoin for years. The financial incentive to create the winning stablecoin is immense,” Freeman said. He also clarified what distinguishes the Reserve protocol from other stablecoin crypto projects.
“The key piece of the Reserve approach is to use cryptoassets from outside of our own ecosystem to maintain a peg, especially at the start. The problem with supporting a peg via cryptoassets that are all within a stablecoin’s smart contracts is that loss in confidence in that particular stablecoin can spiral out of control. We’ve worked hard to make that as unlikely as we can,” he explained.
This is an interesting development and cryptocurency traders are going to be watching for a more reliable stablecoin, and Reserve could be onto something.