Reflexer’s RAI returns crypto to its roots drawing inspiration | 🦄Uniswap🦄DeFi🦄PreSale🦄News

Reflexer’s RAI returns crypto to its roots drawing inspiration from the early days of stablecoins to offer crypto-native stability. RAI is an ETH backed, non pegged stable asset known as a reflex index whose monetary policy is managed by an on-chain, autonomous controller. Reflexer launched on mainnet on Feb 17, 2021.

RAI boils down to this: a volatility-reduced representation of ETH. It’s designed to float similar to other currencies and not be pegged to anything. Reflexer relies on a set of protocol parameters including borrowing power and market price to determine the price RAI can be redeemed for.

RAI was launched with a starting redemption price of $3.14. From this point on, RAI will continue to float while it is managed by the protocol’s on-chain controller.

Actually, there’s a chance it never returns to its original redemption price at all. Market forces and Reflexer protocol user incentives influence where the redemption price of RAI floats to.

Reflex indexes like RAI are designed to reduce volatility, shielding users against major and sudden moves in the market. On a technical level, the system behind RAI is a modified fork of multi-collateral DAI with a few distinct changes.

Some of these changes include autonomous feedback mechanisms that control user incentives, simplified variable names, more flexible collateral auctions, long term bounded governance, optional Safe insurance and more.

The Proto RAI (PRAI) demo ran for nearly 3 months before being shut down on January 25, 2021. More than $612K worth of ETH was deposited into the demo to mint almost 52K PRAI; PRAI’s redemption price started at $2.015 and then floated between $1.937 and $2.06. During this same time period, ETH increased by 350% going from about $400 to $1400. Doing the math, this means PRAI’s redemption price fluctuated less than 4%, demonstrating how Reflexer’s reflex indexes can be a more stable representation of its collateral.

Reflexer offers crypto-native stability while taking an approach previously left unexplored by the DeFi ecosystem. RAI answers the call for an ETH-backed asset with low volatility which many DeFi users have been calling for since the transition away from single-collateral DAI. Beyond individual users, Reflexer’s goal towards “ungoverned,” unfiltered access to borrowing power could prove to be a useful resource to future DeFi protocols.

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