Reserve
Assets held to back a token, obligation, or redemption promise
Definition
Reserve means assets held to back a token, obligation, or redemption promise. In DeFi, the concept matters because it affects risk, return, liquidity, governance, or execution assumptions.
Reserve is a DeFi term used to understand assets held to back a token, obligation, or redemption promise.
Example
A fiat-backed stablecoin may hold cash and short-term Treasury bills as reserves.
How it works
In practice, the concept shows up like this: A fiat-backed stablecoin may hold cash and short-term Treasury bills as reserves.
Why it matters
Reserve matters because small misunderstandings can turn into bad pricing, liquidation, governance, custody, or smart-contract risk.
What to check
Inspect backing, redemption paths, liquidity, issuer assumptions, and stressed-market behavior. The main checks are: Insufficient reserves; Opaque reporting; Custody and counterparty risk.
Risks to Consider
- Insufficient reserves
- Opaque reporting
- Custody and counterparty risk
Common Questions
What does Reserve mean in DeFi?
Reserve means assets held to back a token, obligation, or redemption promise.
How is Reserve used in practice?
A practical example: A fiat-backed stablecoin may hold cash and short-term Treasury bills as reserves.
What should I check before relying on Reserve?
Inspect backing, redemption paths, liquidity, issuer assumptions, and stressed-market behavior. The main checks are: Insufficient reserves; Opaque reporting; Custody and counterparty risk.