Reflexer

Reflexer is a decentralized finance protocol where anyone can use their crypto collateral to issue reflex indexes like RAI.

As of now, Reflexer has launched an ETH-only version of the protocol, with the RAI token, Reflexer's first reflex index, being an ETH-backed, non-pegged stable asset whose monetary policy is managed by an on-chain, autonomous controller. Reflex indexes are stable assets that are not pegged to anything, very similar to how the US Dollar is not pegged and is still considered stable.

Some of the main use cases for Reflexer and RAI include:

• Borrowing against ETH with very attractive rates (Reflexer has a negative stability fee currently)

• Leveraging (longing) ETH

• Using RAI as a trust-minimized stable asset (instead of using stablecoins such as DAI or USDC)

What is RAI?

RAI is an ETH-backed stablecoin with a managed float regime. RAI is actually one of the first stablecoins. What most people call "stablecoins" are actually pegged coins. Pegged coins are oscillating around a specific value (usually pegged to fiat coins such as USD, EUR etc).

RAI, on the other hand, is not pegged to anything. The system behind RAI only cares about the market price getting as close as possible to the redemption price. The redemption price will almost always float (thus, it won't be pegged) in order to compel system participants to bring the market price toward it.

The RAI-USD exchange rate is determined by supply and demand while the protocol that issues RAI tries to stabilize its price by constantly de or revaluing it. The supply and demand mechanic plays out between two parties: SAFE users (those who generate RAI with their ETH) and RAI holders (those who hold, speculate on or use RAI in other protocols and apps).

The long term price trajectory of RAI is determined by the demand for ETH leverage. RAI tends to appreciate if Safe users deleverage and/or RAI users long and it depreciates in case Safe users leverage and/or RAI users short.