Hey ReSource Community,
You may already have heard the exciting news about ReSource advancing towards being a fully decentralized organization, belonging to the people it is supposed to serve: its users, members, and all network participants, including yourself.
If you haven’t watched our announcement video, check out the link below for more info. -
We understand that crypto can be confusing at times. You may ask yourself, for example, why we’re handing out SOURCE, only to charge it back as transaction fees? Or what it actually means to be a “Stakeholder” in a “Decentralized Network”? We understand that all of this may seem a bit odd, but we promise that there’s solid logic behind all of it, and we’re here to answer all your questions.
So first things first -
What is SOURCE?
SOURCE is the cryptocurrency powering our decentralized circular economy behind the scenes. SOURCE secures our credit lines, manages our credit risk, governs our network and expands it.
How can a cryptocurrency do all these wondrous things?
To understand how a humble token such as SOURCE can do all these things, we need to keep in mind that ReSource is a decentralized project.
This means that it’s not owned or operated by a private company with a “normal” management structure or profit model. Rather, much like Bitcoin, it uses a set of rules (called a Protocol), to incentivize behavior that maintains the network - without anyone having to manage it in any traditional sense. Anyone can participate, add value and get rewards, but no one can join and do harm. This may sound like sorcery, but as Bitcoin, Ethereum and other crypto projects have shown, a good combination of Game Theory, market forces and cryptography can do the trick.
The general principle behind this trick is pretty straight forward: Every time someone performs a task that is needed for the network to operate, they get paid in SOURCE. Everytime someone uses the network to gain value, they pay SOURCE. That’s pretty much it. The ReSource Protocol simply ensures that this stays this way.
If you want to dive deeper into the nitty gritties of the ReSource protocol and fully understand the role SOURCE plays in it, you can read our whitepaper. We’re here if you have questions on what you’ve read.
So why are you giving me SOURCE, but then charging me SOURCE for using ReSource?
Other than rewarding people who have helped launch ReSource, we need to do this for the mathematics of the ReSource protocol to make sense.
In the next few weeks, the economic part of the ReSource Marketplace you know (and hopefully love) will begin to run entirely on the Blockchain. For RSD transactions this has already been the case for a while, but now we’re adding underwriting and risk management processes to the mix. These processes are performed by entities we call Underwriters (more about them below). Underwriters need to be paid for what they are doing, and your SOURCE transaction fees are the source (no pun intended, or is it?!) for these payments.
Simply put, giving you SOURCE for free, which you then use to pay transaction fees, allows the ReSource Protocol to track the activity on the Marketplace and compensate Underwriters accordingly without it costing anything for our necessary and treasured early adopters.
What happens to SOURCE after I’ve used it to pay transaction fees?
Unfortunately, the ReSource team is not getting any Lambos anytime soon. Rather, SOURCE paid as transaction fees fund three things:
- Underwriter Rewards (more about them below)
- Ambassador Rewards (currently being paid in RSD and USD)
- The Network Reserve
The Network Reserve is a pool of funds which we use to deal with credit risk. In short: it makes sure that RSD remains stable and valuable and that there’ll always be funds available to absorb uncollectible debt.
Ambassadors you probably have already heard of. They help onboard new members and are rewarded in return. Pretty soon, they will also receive SOURCE.
Who or what are Underwriters again?
In a nutshell, Underwriters are independent entities that analyze all new ReSource members, make sure that they’re credit worthy, and then decide how big of a credit line to offer them.
When we say “independent” we mean that they are not ReSource employees or contractors, but unaffiliated third parties. If you know how Bitcoin works, then Underwriters are a bit like miners in the BTC ecosystem; except that instead of validating transactions, as miners do, Underwriters assess and assume credit risk.
Technically, anyone can be an underwriter, and as long as they’re not attempting any monkey business, the Protocol makes sure that their contribution will be worthwhile. We’re saying “technically” here, because for the time being, underwriting on ReSource will only be accessible to whitelisted entities with proven underwriting proficiencies. Once the network is large enough, this requirement may be dropped and the Protocol will sort out the good ones, the same way Bitcoin does with miners.
You said that SOURCE also “governs” the network. What does that mean?
First of all, the flow of SOURCE through the network governs it economically. SOURCE creates the right incentives for all participants, such as Underwriters and Ambassadors, to add value to the system, without requiring traditional, top-down management – but that’s not the end of the story.
The ReSource Protocol is being developed by an open source nonprofit (incorporated as an NGO of sorts in Switzerland). This non-profit is governed by all people that hold and stake SOURCE (more on this below). SOURCE stakers elect the governing council overseeing the development of the ReSource protocol and make sure that it fulfils its purpose: to support regenerative, circular economies everywhere.
So what is Staking?
In the Blockchain industry, staking means locking an asset as a sort of security deposit. Underwriters, for example, stake SOURCE to ensure that they’ll only approve credit worthy members. If such a member defaults on their debt, this stake can be confiscated. This is a very simple and efficient method used in decentralized networks to ensure that everyone is on the same page and has their interests aligned.
You can also stake SOURCE and earn rewards in return! You don’t need to be an Underwriter to do so. Rather, if you stake your SOURCE, it will be delegated to an Underwriter, which can then do the underwriting on your behalf, which benefits the both of you.
Just a full disclosure on that part - the SOURCE you’re receiving on your account can’t be used for staking just yet. For various technical reasons, this will take a few months.
However, in a few weeks from now, staking of external SOURCE, meaning SOURCE that has not been gifted on the marketplace, will be available to the general public, including you. If you want to participate in that you’ll need to first buy SOURCE. This video shows how this is done.
Will transaction fees always be subsidized?
No, this would be unsustainable. However, we promise that once transaction fee subsidies are removed, you’ll gain enough value from the ReSource network to make it worthwhile! You’ll have access to trade relations, discounted goods and services, credit, payment, escrow and settlement services, and more – all of which will be worth much more than the fees that you’ll be requested to pay. Our transaction fees are still significantly lower than interest payments, credit card and banking fees.
Anyways, we don’t plan to remove subsidies anytime soon and we promise that you’ll learn about any new developments in that regard ahead of time.
Thanks for helping us create a new financial system for a regenerative future.Your friends at ReSource.