Reserve (Reserve Protocol)

Reserve is a decentralized protocol for creating and using asset-backed baskets of tokens called DTFs (Decentralized Token Folios), enabling entire portfolios to be held and transferred as a single onchain token. Its two core sub-protocols — the Index Protocol (tracking broad market indexes like CoinMarketCap 20 or CF Large Cap) and the Yield Protocol (baskets of yield-bearing assets such as liquid staking tokens or stablecoin yield positions) — let users either own diversified exposure or earn automated yield, all governed transparently by RSR token holders.

Reserve makes money — and passes it on to users — through two separate types of baskets, called DTFs (Digital Token Folios). Here's how each one works.

Yield DTFs (baskets of tokens that earn interest on their own)

These baskets are made up of tokens that naturally grow in value over time, like staked ETH versions (wstETH, weETH, rETH) or stablecoin yield tokens (sDAI, USDA). The returns come from the underlying protocols those tokens live on — think liquid staking services or lending markets.

A "Backing Manager" regularly checks whether the basket has built up extra value above what it needs as collateral. If there's surplus, it converts that extra value through onchain auctions. Governance decides where this harvested profit goes, splitting it among up to three destinations:

• DTF holders — new DTF tokens are bought and burned (destroyed), which makes each remaining token worth more
• RSR stakers — the surplus is swapped for RSR tokens and given to people who have staked (locked up) their RSR, raising the value of their staked position
• Any other address governance chooses

The safety role of RSR stakers: Stakers put their RSR up as a first-loss buffer. If one of the basket's collateral tokens suffers a big, lasting price crash, enough staked RSR is taken and sold to cover the shortfall. The catch: when stakers want to unstake, they have to wait a set period (usually 7–30 days), and during that wait they earn no rewards.

Index DTFs (baskets that track market indexes)

These baskets earn revenue from two types of fees:

• A management fee — a tiny percentage charged on the total value sitting in the basket (assets under management)
• A mint fee — a one-time fee charged when new DTF tokens are created

After a platform fee is taken out, the remaining fees are distributed to whoever governance decides, according to set percentages.

Revenue for governance token holders: By default, people who hold RSR can vote-lock their tokens (commit them for a period to get voting power, with a one-week unlock delay). When revenue sharing is turned on, they earn a share of those fees proportional to how much they've locked.

The deflationary burn: A separate protocol contract takes a portion of all Index DTF mint fees and management fees, uses them to buy RSR on the open market, and sends that RSR to a "burn" address (permanently removing it from circulation). As more people use these baskets, more RSR gets burned — shrinking the total supply over time.

All fee rates, recipient splits, and the share sent to the burn contract can be adjusted through onchain governance votes.