1/n RAI is (officially) live!
Let the money god rise and shine 🗿https://t.co/anKCFHhJAd
— Reflexer Labs (@reflexerfinance) February 17, 2021
In a nutshell, RAI is a non-pegged stable asset that is only backed by ETH and programmed to maintain its own price stability without needing to peg to an external price reference like the USD. Ameen Solemani and the team at Reflexer Labs believe that with time & support RAI could eventually become the standard unit of account in the Ethereum ecosystem.
So how does Rai work exactly?
When RAI notices that its market price has deviated from its target price, RAI’s algorithmic controller automatically sets an interest rate to proportionally oppose the price move and incentivize people to return RAI to its target price.
Put another way, the further the market price of RAI moves from the pre-set target price, the greater the incentive ( in the form of interest) to return RAI to its target price.
Unlike past renditions of decentralized stablecoins, RAI doesn’t care about being pegged exactly to $1.00. Instead, the project focuses on “relative stability” and governance minimization. This focus is due to the fact that the team hopes for RAI to be the project that brings credible neutrality to the administration of a stable global reserve asset, making RAI the DeFi stablecoin that serves as a public good. More details of how they plan to achieve this grand plan can be found in their ungoverance roadmap.
Reflexer Labs recently raised a $4M round from well-known investors like Pantera and Lemniscap. To read more about RAI’s origins and inner workings check out this blogpost.
Keep up with Reflexer Labs by following them on Twitter.