What is a Reserves?
Quick Definition
Reserves are the total pool of assets held by a stablecoin issuer to back the tokens in circulation.
Full Definition
Reserves are the foundation of any reserve-backed stablecoin. They represent the actual assets that stand behind every token issued. The size of reserves should always match or exceed the total token supply (a 1:1 ratio at minimum) to ensure that every holder could, in principle, redeem their token for its underlying value.
What makes reserves trustworthy
Three things matter most when evaluating reserves: composition (what assets are held), transparency (how reserves are reported and verified), and accessibility (whether holders can actually redeem against them). Reserves held in low-risk, liquid assets like government bonds are stronger than those held in corporate debt or illiquid investments. Reserves audited or attested by independent third parties are stronger than self-reported figures. And reserves that holders can actually redeem against are stronger than reserves that exist on paper only.
Steady's reserves
Steady maintains full 1:1 reserves. Every STDY token in circulation is backed by an equivalent amount in reserve assets, primarily short-term US Treasury Bills and cash equivalents. Reserve composition, current holdings, and historical data are published in real time on Steady's Transparency Portal, allowing any user to independently verify the backing at any time. This level of transparency is one of the factors that sets Steady apart from many other stablecoins in the market.
Related Terms
Algorithmic Stablecoin
ReadAn algorithmic stablecoin attempts to maintain its value through automated rules that adjust token supply based on market demand, rather than holding equivalent reserve assets.
Asset Backing
ReadAsset backing refers to the real-world or on-chain assets held by the issuer to support the value of every token in circulation.
Backing
ReadBacking refers to the assets or mechanisms that support a stablecoin's value and help it maintain its intended reference value.
Collateralization / Over-collateralization
ReadCollateralization refers to the ratio between the value of assets held in reserve and the value of tokens issued. Over-collateralization means holding more in reserves than the value of tokens issued.
Counterparty Exposure
ReadCounterparty exposure refers to the risk that another party, such as a bank, custodian, broker, or service provider fails to fulfill its obligations, potentially affecting the assets or funds it holds.
Depeg
ReadA depeg occurs when a stablecoin's market price deviates significantly from its intended reference value, failing to maintain its expected price.
Market Capitalization
ReadMarket capitalization, or market cap, is the total value of all tokens in circulation, calculated by multiplying the current price by the circulating supply.
Minting & Burning
ReadMinting is the process of creating new tokens; burning is the process of permanently removing tokens from circulation.
Peg
ReadA peg is the fixed reference value a stablecoin is designed to track, typically a fiat currency like the US dollar.
Redemption
ReadRedemption is the process of exchanging a stablecoin for its underlying value (typically fiat currency) directly with the issuer.
Redemption Infrastructure
ReadRedemption infrastructure refers to the systems, processes, and partners that enable holders to exchange their tokens for the underlying value.
Reserve Assets
ReadReserve assets are the specific financial instruments held by a stablecoin issuer to back the tokens in circulation.
Reserve-backed Stablecoin
ReadA reserve-backed stablecoin is a stablecoin backed by real assets held in reserve, where each token in circulation is supported by an equivalent value of underlying assets.
Stablecoin
ReadA stablecoin is a type of cryptocurrency designed to maintain a stable value by being denominated in a reference asset, typically a fiat currency like the US dollar.
Total Value Locked (TVL)
ReadTotal Value Locked (TVL) is a metric that measures the total value of assets held within a specific protocol, platform, or token.
Transparency Portal
ReadA transparency portal is a publicly accessible dashboard where a protocol publishes detailed information about its operations, reserves, and performance.
Other Glossary Items
Learn about common and essential terms related to Steady and other stablecoin protocols.
AML
ReadAML (Anti-Money Laundering) refers to the laws, regulations, and procedures designed to prevent the use of financial systems for laundering the proceeds of crime.
APY
ReadAPY, or Annual Percentage Yield, is the standardized rate of return an asset generates over a year, including the effect of compounding.
Arbitrum
ReadArbitrum is a Layer 2 blockchain network built on top of Ethereum, designed to offer faster and cheaper transactions while inheriting Ethereum's security and infrastructure.
Asset Locking
ReadAsset locking refers to restricting access to funds for a defined period or condition, during which they cannot be transferred or used.
Asset Segregation
ReadAsset segregation is the practice of keeping client or backing assets separate from the issuer's operational funds, protecting them from the issuer's other obligations.
Audit
ReadAn audit is an independent examination of a protocol's code, reserves, or operations by qualified third parties to verify accuracy and compliance with stated claims.
Blockchain Network
ReadA blockchain network is the system of connected participants and infrastructure that validates, records, and maintains data on a specific blockchain.
Blockchain
ReadA blockchain is a distributed digital ledger that records transactions across a network of computers in a secure, transparent, and tamper-resistant way.
Bridge
ReadA bridge is a mechanism that enables the transfer of assets or data between different blockchain networks.
Clarity Act
ReadThe Clarity Act is a proposed US legislative framework intended to clarify the regulatory treatment of digital assets, defining when they should be treated as securities versus commodities.
Composability
ReadComposability refers to the ability of different protocols, contracts, and tokens on a blockchain to interact and combine with each other seamlessly.
Custodial vs. Non-Custodial
ReadCustodial means a third party holds the private keys to your assets on your behalf. Non-custodial means you hold your own keys and control your own assets directly.
Custody
ReadCustody is the safekeeping of assets (digital or traditional) by an institution or system responsible for protecting them on behalf of the owner.
DeFi (Decentralized Finance)
ReadDeFi refers to financial services and applications built on blockchain technology, operating through smart contracts without traditional intermediaries.
Ethereum
ReadEthereum is the most widely used public blockchain for smart contracts, tokens, and decentralized applications.
LearnMoreAboutSteady
Transparency Portal
reserves, statements, audits, smart contract, and more.
FAQs
Discover the basics about Steady in our frequently asked questions.
Contact Us
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