Resolv: Delta Neutral Yield Stablecoin of the Three Token Model

In the current market environment, large funds have more choices, creating new opportunities for small funds. In this cycle, venture capital, opinion leaders, and stablecoins have become the three major trends, among which opinion leaders themselves can also be seen as a tokenizable asset.

As the choices for venture capital become increasingly limited, they tend to focus on stablecoins and simple investment products, and reinvest in projects with issued tokens, all of which are low-risk options with certain returns.

On April 16, the on-chain Delta neutral yield stablecoin (YBS) project Resolv completed a $10 million seed round financing, marking the project's first public fundraising since its establishment in 2023. Compared to the high-profile stances of some similar projects, Resolv is relatively low-key, but its level of innovation is equally impressive, mainly reflected in its unique yield model, more on-chain yield sources, and complex Token economics design.

The American Dream of Russian Geeks

This round of financing was led by an investment institution based in the Netherlands, with many participating institutions being American capital. The three founders of Resolv, Ivan Kozlov, Fedor Chmilevfa, and Tim Shekikhachev, all received their science education in Russia. There is reason to speculate that this financing may have already been completed, but has been postponed for certain considerations. Referring to the experience of other YBS projects, Resolv needs at least a certain scale of liquidity to cope with potential market risks.

More Complex Token Economics

Unlike the dual-token mechanism, Resolv actually employs three types of tokens: stablecoin USR, insurance fund and LP token RLP, and governance token $RESOLV. It is worth noting that Resolv's governance token does not carry special interest alliance functions.

The core of Resolv lies in the dual-yield Token system formed by USR and RLP. After users deposit USDC/USDT/ETH, they can theoretically mint USR at a 1:1 ratio. These assets are mainly stored in on-chain protocols or certain liquidity platforms to minimize the asset risks brought by hedging from centralized exchanges.

The design of RLP Token is quite creative, mainly used for covering funds hedged in centralized exchanges. RLP offers higher yields, theoretically with an annualized return of USR between 7%-10%, while RLP can reach 20%-30%. However, the actual returns have not yet met expectations.

More On-Chain Income Sources

Resolv actively embraces the on-chain ecosystem, with its revenue sources including the inherent yields from interest-bearing assets like stETH, as well as the hedging fees from centralized exchange contracts. The on-chain yields may surpass those from centralized exchange hedging, but the main issue faced is that the liquidity of certain decentralized platforms is not on par with mainstream centralized exchanges. Currently, the ratio of hedging contracts opened on centralized to decentralized platforms is about 7:3, highlighting the value of RLP.

RLP is a leveraged yield Token that can maintain a high yield with relatively low capital. Currently, the total locked value of RLP is approximately $63 million, which is less than 20% of USR, making it suitable for users with a higher risk appetite.

A More Unique Yield Model

The main difference between USR and other similar stablecoins is the introduction of RLP as an insurance mechanism. As Resolv is currently unable to completely eliminate its reliance on centralized exchanges and specific stablecoins, it hopes to minimize potential negative impacts through this approach.

Theoretically, USR will be fully over-issued by on-chain assets (currently at a 120% ratio, of which 40% is on-chain assets), and part of the issued collateral assets will be used for institutional custody and off-chain hedging. The capital efficiency of this model may not be as good as solutions that completely rely on centralized exchanges for hedging, so Resolv designed RLP to bridge this gap in returns.

YBS Future Outlook

The emerging YBS project has only opened a door, with more possibilities to come in the future. In Resolv's design, the yield on the USR itself ranges from 7% to 10%, while the yield on the RLP ranges from 20% to 30%, achieving risk isolation. For example, 1.2 units of ETH can mint 1 USR, with reserves primarily hedged on-chain and on specific platforms, while the remaining 0.2 units are used to mint RLP and hedge on centralized exchanges.

This design theoretically ensures rigid compliance even in extreme situations, such as the collapse of a centralized exchange, with USR. The theoretical risk exposure of RLP is about 8%, which is an innovation and improvement over the model that completely relies on centralized exchanges.

However, this innovation may also be seen as a regression. In the mechanisms of certain YBS projects, as long as centralized exchanges do not maliciously attack, there is basically no possibility of a death spiral. On the other hand, by placing more profits and funds on-chain, Resolv will have to face various influences of the on-chain ecosystem, which could bring new challenges.

In a highly competitive environment, it is difficult to ensure both security and high returns at the same time. Although Resolv launched at the same time as some competitors, there is currently a certain gap in total locked value and issuance volume. However, the number of projects participating in the YBS track may increase, especially in the era of low-interest wealth management, where the launch costs for project parties may be lower than during the previous DeFi boom.

This may seem contradictory, but in reality, as long as the new YBS project can provide an annualized return of over 5%, it is likely to attract investors with a higher risk tolerance. The key lies in how to stand out among many similar products, which requires not only innovative product design but also effective marketing strategies.

Conclusion

The combination of USR and RLP can be seen as a hybrid product of certain decentralized platforms and the YBS project, similar to a combination of LP Token and YBS. This design attempts to surpass existing products through more complex mechanisms.

However, this design also brings a significant increase in risk. Any LP Token mechanism may face the dilemma of creating liquidity for liquidity, and the insurance mechanism of RLP has not yet been tested in extreme market conditions.

For any stablecoin project, experiencing and overcoming the de-pegging risk is an important milestone. Hope Resolv can successfully pass this critical stage and establish a foothold in the YBS field.