Rai Reflex Index (RAI) is a non-pegged, Ethereum-backed stable asset developed by Reflexer. Unlike conventional stablecoins that are pegged to a fiat currency like the US dollar, RAI is designed to float freely, driven by market forces, while aiming to mitigate volatility more effectively than traditional cryptocurrencies.
RAI operates on the Ethereum blockchain and employs a decentralized mechanism for maintaining stability. The system adjusts the supply dynamically through a mechanism that reacts to on-chain market activity, ensuring that the market price follows the redemption price set by the protocol. This is achieved without a direct 1:1 peg to any fiat currency. Users can mint RAI by locking up ETH as collateral in smart contracts. The governance and management of the protocol are decentralized, involving no central authority.
RAI has several use cases, particularly in the DeFi sector:
RAI was developed by Reflexer Finance and was launched on 13 February 2021. It was created by Stefan Ionescu and Ameen Soleimani, initially as a fork of MakerDAO’s DAI, but with significant innovations such as a floating price mechanism and the use of interest rates to influence market prices. The platform allows users to mint RAI tokens using ETH collateral, maintaining stability through the liquidation of collateralized debt positions. RAI has evolved to become a recognised decentralized stablecoin, supported by a community-driven governance structure, which is managed through the FLX token.