Product

Reserve Attestation — What You Need to Know

10 December, 2019

The performance page on our website includes a reserve attestation section where we provide reports on the value of Saga’s reserve and its deployment.

The reserve reporting is updated on a daily basis with the most up to date data each day. While the crypto markets are “open” 24/7, traditional financial markets (where a significant part of the reserve is held) work only during the relevant business days and hours. Moreover, settlements and fund transfers may take up to 3 business days. This is why the reserve attestations are updated on business days only and, depending on the reserve holding entity, might reflect the attestation for previous days. In addition, we separately report on “funds in transfer” (explained below).

When designing how the reserve would be deployed, we had to balance between three conflicting goals:

  • Exposure — The reserve should be deployed in a manner that minimises exposure to ETH in favour of exposure to fiat currencies held to replicate the SDR currency basket. Funds held in fiat currencies in regulated banks represent the highest level of direct replication of the SDR. Stablecoins offers similar currency exposure but expose the reserve to stablecoin issuer counterparty risk.
  • Liquidity — funds held in the reserve should be liquid and ready to be used in order to buy back SGA tokens from the market. ETH held in the Liquidity Buffer represents the highest level of liquidity (but is exposed to ETH volatility).
  • Costs — any funds transfer or currency exchange comes with a cost, which should be minimised.

    • Reserve Holding Entities

    To balance the conflicting targets mentioned above, a three-phase reserve deployment plan is in place:

    1. Reserve value under $2M

  • Up to 10% of the reserve is held in the ETH liquidity buffer.
  • USD portion is held in USD Stablecoins.
  • Other SDR currencies are held in bank deposits.
  • Deposits and withdrawals from the reserve holding bank are made in EUR. Rebalancing the SDR basket is done on a weekly basis.

    • 2. Reserve value between $2M and $10M

  • Up to 6% of the reserve is held in the ETH liquidity buffer.
  • 50% or more of the USD portion is held in banks.
  • Other SDR currencies are held in bank deposits.
  • Deposits and withdrawals from the bank are made in EUR. Rebalancing the SDR basket is done on a weekly basis.
  • As the Saga economy grows, a higher portion of the reserve is held in banks and smaller portions are held in stablecoins and ETH.

    • 3. Reserve size greater than $10M

    At least 90% of the reserve is held in banks. Up to 5% is held in the ETH liquidity buffer and the rest is held in stablecoins.

    With the continuous growth of Saga’s economy, the portion of the reserve held in banks increases.

    *Reserve deployment guidelines changes will be reflected on this page.

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