Radiant DLP allocation Discussion

Single choice vote: Choose one of three options determined later

Overview

With the CLAMM LP and D2 vault allocations done at a total $1.05M, and the original approved range of a $1.5-2M productive treasury, we lift a proposal on an allocation to Radiant farms up for discussion.

Current allocations (With xGrail looking like a Dividend allocation):

Value allocated	Token from treasury	Destination
$300k	ARB	D2 plsOMM++ vault
$150k	ETH	Orange CLAMM ETH vaults
$125k	ARB	Orange CLAMM ETH vaults
$225k	ARB	Orange CLAMM ARB vaults
$200k	GLP	Orange CLAMM BTC vaults
$25k	ARB	Orange CLAMM BTC vaults
$190k	xGrail	Camelot Dividends plugin

This leaves us with the following assets can use (prices from 8/7): $180k ARB in Multisig 2 $290k GLP in Fee Collector 1 $70k WETH in Multisig 1

We want to consider allocating up to $200k worth of assets to the farms on Radiant after staking the $200k xGrail based on the outcome of the xGrail stake proposal

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Allocate up to 200k to the Radiant GM Farms and the single USDC farm

Radiant is one of our most important partners as we have over 1.6M max-locked dLP through plsRDNT. The potential of this dLP has not been used by Plutus thus far.

Besides Radiant, GMX has been one of Plutus first partners and it might be time to breathe some life to that long lasting partnership. Allocating funds to the gmBTC-USDC and gmETH-USDC farms on Radiant would tick both of these boxes.

Radiant DAO’s mission is to unify the billions in fragmented liquidity across Web3 money markets under one safe, user-friendly, and capital-efficient omnichain protocol. We can in turn unleash its full potential with our max-locked dLP.

Why Radiant?

We choose to farm on Radiant for 3 reasons.

1. A massive unused farming opportunity with our idle max-locked DLP.
2. Besides offering an attractive yield, the Radiant protocol is a mature battle-tested multichain protocol (having expanded to Base with a splash recently).
3. plvRDNT

Target vaults

gmETH-USD gmBTC-USD Single USDC farm

USDC farm

Through this farm we make the most use of our max locked DLP. The current APR on this vault is:

• 4.57% base APY
• 4.56% Radiant emission boost! with dLP

Leverage	APR	Funding rate	Projected net APR	Comment
USDC on Arbitrum
1x	9.14%	n/a	9.14%	below the minimum 15% target
2x	21.7%	-6.27%	15.42%	Healthfactor 1.68
3x	38.64%	-16.22%	22.42%	Healthfactor 1.27
4x	55.25%	-25.97%	29.28%	Healthfactor 1.13
USDC on Ethereum
1x	8.96%	n/a	8.96	below our 15% minimum target
2x	28.97%	-9.81%	18.97%	Healthfactor 1.64
3x	51.19%	-22.4%	28.79%	Healthfactor 1.24
4x	73.14%	-34.73%	39.4%	Healthfactor 1.13

How degen we go with this is one of the main things we would like some discussion on before putting it to a vote.

GM vaults

The GM farms were chosen because they offer the most attractive yield without leverage.

gmETH-USD vault:

• 22.33% GMX APY
• 13.66% ARB STIPP boost (expires mid September)
• 0.51% RDNT boost with dLP Total: 36.5%

gmBTC-USD vault:

• 16.99% GMX APY
• 19.13% ARB STIPP boost (expires mid September)
• 0.59% RDNT boost with dLP Total: 36.71%

Even without the ARB STIPP boost the yield remains attractive between 15-30%. Even at a minimum above our 15% target rate for the productive treasury.

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GMX V2 GM tokens

A GM pool (GMX Market pool) consists of:

• Index Price Feed: Long and short tokens will be opened / closed based on this price feed
• Long Token: This is the token that will back long positions
• Short Token: This is the token that will back short positions

Since tokens in a market are reserved based on the total open interest of the market, the liquidity available for redemption is capped at the tokens in the pool multiplied by the pool's reserve factor minus the tokens reserved. If this capacity is reached, liquidity providers would need to wait for positions to close before selling the GM token or for liquidity to be deposited by other providers. The borrow fee rate in this case would also be higher which should help to incentivise deposits.

The price of the GM token depends on the price of the long / short tokens and the net pending PnL of traders' open positions. Fees from leverage trading and swaps will automatically increase the price of GM tokens.

GM pools aim to maintain an equal worth of long and short tokens, e.g. when the price of a long token increases there may be a positive price impact to incentivise selling long tokens for short tokens to rebalance the pool.

While this balancing is incentivised by the pool it is still possible for pools not to be balanced at times. If a pool keeps its balance, its pricing excluding PnL should mimic a pool that is 50% long token and 50% short token and that rebalances as price changes. It is however not guaranteed that long and short positions will always be balanced.

An additional case to note is that if, for example, long positions happen to be balanced with high leverage short positions and there is a sudden price spike, the high leverage short positions could be liquidated, temporarily causing an imbalance of longs and shorts. An attempt to mitigate this risk is made through funding fees and price impact.

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Risks (Plutus team analysis)

Using the Radiant vault exposes us to three (3) types of risk:

1. Smart contract risk. While Radiant v2 is primarily composed of the same codebase as Radiant v1 — the Radiant DAO takes safety & security seriously and tripled down on audits.

Radiant conducted multiple top-to-bottom v2 audits with Open Zeppelin, Peckshield, and Zokyo with zero unresolved critical or high issues. BlockSec was also hired for whitehat hacking with zero unresolved issues.

GMX, is a battle tested Arbitrum OG protocol and has had several audits. The GMX V2 products alone have had 4 audits (latest one last month).

2. Counterparty risk. There will be short periods of imbalance between the long/short tokens and there will be periods were traders will be net positive. In the long run they aren’t and the house (us) wins. See the gmETH-USD chart on Dune for reference.

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plvRDNT

Currently the USD farms have about $28M TVL and the gm farms have about $10M TVL.

gmFarms

We plan distribute deposits in both the gmETH and gmBTC farms and weigh them towards the better yielding pair and offer a higher yield + more convenience for the LP’s. Hopefully Radiant will add more gmpairs to their farms.

USDC farms

We plan to distribute between the different usd farms available (on all chains) and weigh towards the best yielding farms to provide optimal yield using 2-3x leverage. Again providing a higher yield and more convenience than providing yourself.

Summa summarum

By offering a superior yield we can attract part of current and optimally new TVL. It would not be vampiric to Radiant because the TVL remains in the gm vaults. Potentially attracting new liquidity and considering a potential $200k of productive treasury liquidity further sweetens the deal.

With our max-locked dLP we can service around $10M TVL which makes for an attractive market to address.

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Conclusion

Based on the current 30-40% APR, a estimated minimum of 15% APR is realistic without incentives. By allocating up to $200k we expect good annualized rewards at the cost of some added smart contract and some counterparty risk. We feel this is an acceptable trade-off. The rewards will be split between the treasury and bPLS holders 50/50.

On top of purely being a productive treasury allocation there are also two added benefits.

1. We can beta test plvRDNT and release it with added confience to expand our protocol and provide added value for our users.
2. Strengthen our relationship with both Radiant and GMX.

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Funds to use

TBD

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Proposal

Based on discussion over the course of the first week of this proposal we will fill in options 1-3 for voting. The amount of tokens to allocate, where and whether to allocate them and potential other considerations will be filled in before voting starts.

Option 1: TBD

Option 2: TBD

Option 3: TBD

To protect the treasury and maintain a dynamic response to market conditions or contract security issues, the Plutus core team and multisig members reserve the rights to withdraw at their discretion any or all funds from contracts approved by Plutus DAO for productive treasury allocation. Any withdrawals or alterations made by the team and multisig members will be made with a preference for in-kind withdrawal, and will be announced and reported with reasons.