The idea was developed in Dubai by RIVCapital, an asset manager founded by former Lehman Brothers Roberto Rivera, which manages quantitative investment strategies but does not disdain private capital operations. For example, it acquired 15% of the well-known super-luxury venue Billionaire Dubai
It has been a little over 15 years since October 2008 when Arxiv, a platform for scientific publications from the US Cornell University, published the white paper illustrating the birth of Bitcoin by Satoshi Nakamoto, considered by most to be a pseudonym behind the group of mathematicians and cryptographers who invented the first cryptocurrency in history. This event not only introduced a new asset class but also laid the foundations for the development of decentralised finance (DeFi), the attempt to introduce a model of finance that can operate without the intervention of third parties.
Well, in recent days, the same Arxiv platform has published another white paper illustrating the RIVcoin project, i.e. a cryptocurrency that aims to introduce a unique mechanism for storing and reallocating value, aiming to reduce the volatility typically associated with this asset class and at the same time simplifying access to crypto for both the retail public and institutional investors. The project was born as part of a fruitful collaboration between academia (it is not the norm for a crypto whitepaper to be published on Arxiv) and the corporate world, and is completely Italian.
The authors are in fact  Roberto Rivera, Guido Rocco, Massimiliano Marzo and Enrico Talin, all from the innovative asset management group based in Luxembourg and Dubai, RIV Capital, where RIV stands for Return, Investments and Value, as well as being the initials of Mr. Rivera, chairman and ceo. Mr. Rivera is a former derivatives trader at Lehman Brothers, who in the early 2000s was one of the leading players in the then nascent securitisation market in Italy, with a past also as an investment and private banker within European and American investment companies in London, Frankfurt and Milan, such as American Express Bank, Dresdner Bank, Banca IMI and Nomura. Mr. Rivera of the quartet is the only one from the trading world. Mr. Rocco is now chief operating officer of RIV Technologies, the RIV Capital group company that aims to create a wallet and token-supporting ecosystem, but used to be a senior consultant and IT architect at IBM for six years, and has worked with Italian companies on high-tech innovation projects, often in the blockchain field. Mr. Rocco is also learning facilitator at the online course Blockchain, Disruptive Technology’ for MIT Professional Education, a course that aims to explain blockchain to executives and entrepreneurs. As for Mr. Marzo, he is chief economist of RIV Capital and a Ph.D. student at Yale, a favourite pupil of the 2011 Nobel Prize winner for Economics Chris Sims, holder of the chairs of Economics of Financial Markets, International Finance and Asset Management at the University of Bologna and director of the Master of Wealth Management at the Bologna Business School. Finally Mr. Talin is chief blockchain officer of RIV Technologies and a serial entrepreneur, founder and chairman of Commercio.Network, a public permissionless blockchain structured as an international consortium of 100 companies worldwide.
Trying to simplify as much as possible, the real innovation of RIVcoin is that it classifies itself as an asset referenced token, i.e. a digital asset whose underlying value is guaranteed by a reserve of real assets. In essence, the assets held in the reserves are pledged as collateral to the users of the token, so unlike traditional cryptocurrencies, asset-referenced tokens have less volatility, as the intrinsic value of the token, from a logical point of view, can never fall below the value of the reserves. The latter will be represented in the case of RIVCoin by the assets of a new fund, christened RIV Algo Fund, which will be managed by RIV Capital with the same investment approach as RIV Capital Sicav RAIF, the fund currently under management and which has so far led to great performance.
RIV Capital cannot access the underlying asset, which is stored in a segregated account. The issuance of the token takes place through a DAO (Decentralised Autonomous Organisation): this is code executed on the blockchain that cannot be modified, and which establishes the rationale according to which the token is issued.
As Mr. Rivera and Mr. Rocco explained, “each transaction of RIVCoin purchase, sale, pledging of reserves, is completely transparent as it is written on the blockchain. Investments of reserves are also notarised, ensuring absolute transparency to users and regulators. A fully transparent and auditable public on-chain accounting system has been built, unlike other similar projects whose underlying value is often difficult to determine. The fund holding the reserves is monitored by a Fund Administrator and a custodian bank of primary standing, which is UBS Luxembourg. This introduces two models of control, combining the world of centralised finance with the power and transparency of blockchain’.
In any case, however, Rivera and Rocco point out, “the NAV of the invested reserves will be published in real time and will act as the token’s reference value, which means that downward speculation can never take the price of the token too far from that value. In the event of an extreme event, however unjustified, token holders can virtually go to the Vault and claim the euro equivalent of the value of the corresponding share of the underlying asset”. Everything aims at creating a cryptocurrency that is a “real currency”, being at the same time a store of value, a unit of account and a medium of exchange.
Of course, one could argue, if the asset value of the underlying went to zero, then the value of the collateral would be nil, but this, Mr. Rivera points out, “will not happen, because the fund that invests the underlying will have the same asset allocation launched two years ago and that invests in a granular manner with a long-term horizon, based on quantitative strategies derived from models that are themselves based on both statistical and fundamental analysis. This strategy to date boasts an average annual return of 16.9% with a historical Sharpe ratio greater than 3.
The RIVCoin guarantee fund will also be directly subscribable, as is the RAIF; with minimum investment tickets of 125k euros. But the novelty with respect to the RAIF, Mr. Rivera says, is precisely that “given that not everyone can afford to write a cheque for 125k euros, RIVCoin is the way to bring this type of investment with high returns also to this audience of investors. It is about redistributing wealth through technology“.
All of this happens without bank intermediation, since the system envisages that the role of banks can be played by the token holders themselves. Through the use of decentralised protocols, those who are not using RIVCoin to purchase goods or services can temporarily make them available to other parties interested in trading on decentralised applications, along the lines of what has historically been done on the traditional repo market.
Such parties are called Liquidity Providers. The latter do the work of banks in the traditional world, collecting seigniorage when distributed as a reward for their liquidity providing activities. This seigniorage is paid in turn through the organic issuance of new tokens.
RIVCoin represents the academically recognised scientific research of RIV Capital, which began as an investment club deal that has raised commitments totalling EUR 100 million in 2021 and has since also made investments in unlisted assets. And not insignificant ones. For instance, it bought 15 per cent of the well-known super-luxury club Billionaire Dubai, an iconic entertainment venue founded and led by well known Italian entrepreneur Flavio Briatore. RIV also owns a minority stake in EGO sistema Palestre Italiane, the gym group founded and led by Francesco Iezzoni, in which various names on the Italian financial scene have invested. And finally, Mr, Rivera is now said to be working together with well-known names in finance on the acquisition of an iconic brand of Italian industry.
