Raising Debt & Acquiring ETH
Why raising debt in USD makes sense to buy ETH and why it benefits Rezerve?
In the long arc of financial history, debt and currency dynamics have always shaped wealth creation. Today, the U.S. dollar (the world’s reserve currency) is under pressure. Rising inflation, unsustainable fiscal deficits, and long-term economic uncertainty have raised doubts about its enduring value.
While the dollar remains dominant in global trade, its purchasing power has been steadily eroded; since the Federal Reserve was founded in 1913, the dollar has lost more than 96% of its value due to inflation.
Why Raising Debt in Dollars Makes Sense?
In an environment where the dollar depreciates over time, raising debt denominated in USD is a strategic advantage. Borrowers effectively repay in “cheaper dollars” tomorrow, reducing the real cost of debt.
Corporations and governments alike have long exploited this, locking in low interest rates while inflation erodes their liabilities. If a borrower can access USD debt at favorable terms and allocate it into appreciating or scarce assets, they transform a liability into an asymmetric bet.
Why Acquire ETH Instead of Holding USD?
Ethereum represents the opposite side of this trade: a scarce, programmable asset with increasing utility in decentralized finance (DeFi). With a fixed issuance schedule post-merge and structural deflationary pressures from EIP-1559’s fee burns, ETH is emerging as a store of value with productive yield properties.
Unlike dollars, which inflate, ETH supply contracts when network activity rises. This makes ETH an attractive hedge against fiat debasement and a cornerstone asset for protocols seeking long-term resilience.
The Rezerve Trade
Rezerve mirrors a classic macroeconomic play: issue debt in inflation-prone dollars, then deploy into appreciating crypto assets like ETH.
By doing so, the protocol is positioned to benefit from two structural trends:
Dollar Depreciation: Over time, debt obligations shrink in real terms.
ETH Appreciation: As ETH becomes scarcer and more valuable, the asset side of the balance sheet strengthens disproportionately.
Through its leverage design and convertible note system, Rezerve ensures that borrowed capital is backed not only by ETH but also by USD-denominated locked positions.
This dual-layered structure cushions volatility while preserving the upside of the long ETH bet.
The result is a system that mirrors what sophisticated corporates like MicroStrategy did with Bitcoin using cheap fiat debt to accumulate scarce digital assets but tailored for Ethereum’s unique monetary policy and liquidity ecosystem.
Conclusion
The dollar is designed to inflate; ETH is designed to be scarce. By raising debt in the former and acquiring the latter, Rezerve is executing a trade that aligns with fundamental macroeconomic realities.
Over time, this strategy positions the protocol not only as a yield engine but also as a treasury manager for a new kind of decentralized reserve asset.
Last updated