RFP-28: Introducing Radiant v3 - Next-Gen DeFi via Radiant Innovation Zone, Enhanced Trading & More

Abstract

This proposal introduces a framework for Radiant v3, a collection of community-submitted proposals and ideas aimed at accelerating Radiant's growth. The vision for Radiant v3 is to achieve a potential 10x in DAUs (Daily Active Users), enhance user engagement, secure more value within the platform, improve protocol efficiency, expand business collaborations, and elevate the overall user experience.

Radiant v3 aims to revolutionize the current model by enhancing current omnichain functionality and introducing innovative features. These include the Radiant Innovation Zone for exploring more asset markets, advanced trading options like longing/shorting assets through looping, an auto-convert mechanism for protocol fees to dynamic liquidity (dLP), dual emissions in borrowing/lending markets, and dynamic protocol fee distribution during high utilization periods.

Furthermore, the advanced integration of LayerZero capabilities will facilitate cross-chain loan repayments, liquidations, and streamline access to cross-chain yield opportunities.

Each feature in Radiant v3 is designed to contribute uniquely to the platform's growth, solidifying Radiant's position as a more robust and user-friendly ecosystem.

Motivation

The protocol optimizations and innovations introduced in Radiant v2 heralded a new era for Radiant, leading to:

• 10x the number of RDNT token holders and protocol users.

• #2 money market on Arbitrum in terms of TVL and #1 in DAUs.

• #2 money market on BNB Chain and maintaining #1 in DAUs.

• Over $85M in dLP locked between Arbitrum, Ethereum, and BNB Chain deployments with the total market size peaking at $750M.

• More than $25M in protocol fees generated since inception.

• Consistently ranking in the top 3 for protocol revenue across all lending protocols on all chains, despite operating on only three chains.

These milestones have strengthened the DAO’s foundation and highlighted a clear direction for future growth. Radiant v3 seeks to leverage this momentum. The introduction of innovative features outlined in this proposal is envisioned to catalyze another leap in growth.

The objective is clear: to significantly increase DAUs, expand the token holder base, boost protocol fees, and enhance the overall sustainability and appeal of the platform.

Specifications

1. Radiant Innovation Zone (RIZ) / Isolated Risk Markets

   • Expands token listings to include a wide range of dynamic and emerging assets, such as LSDs, RWAs, NFTs, AI, and trending memecoins. This enables users to make more calculated decisions about risk of specific assets, mitigating the broader oracle and liquidity risks inherent in a fully cross-margined protocol.

   • RIZ allows for more nuanced risk assessments in isolated pools, compared to the fully-cross margined model of Radiant v2.

   • Offers higher yield opportunities within RIZ markets, tailored for users seeking higher returns, albeit with increased risks.

   • Radiant will move quickly to approve and deploy new RIZ markets, thus providing first-to-market collateral and leverage opportunities for each narrative-specific asset, opening doors for endless business development.

   • RIZ markets will be yield-incentivized, creating new opportunities for dLP growth and protocol fee generation.

2. Simple 1-click Long/Short Strategies via Money Market Looping

   • Facilitates native on-chain long/short positions on all Radiant assets, including those in the RIZ, through innovative use of lending market mechanics and liquidity that exists on Radiant across all chains.

   • Provides a user-friendly mechanism for complex strategies, exemplified by the “Long ETH” approach: Users can deposit ETH, borrow USDC, use the borrowed USDC to purchase more ETH, rinse and repeat. This effectively creates a leveraged 'long' position on ETH in a streamlined manner.

   • Leverages interest rate differentials across chains, offering users the ability to capitalize on the most cost-effective opportunities.

   • This enhances the native utility of the protocol, potentially driving significant protocol fees generation. This approach adds value to the protocol without depending solely on emissions.

Source: Contango Protocol

3. Solution to RDNT Inflation & Gas-Intensive Protocol Fee Claiming

   • Radiant has generated over $25M in protocol fees to date, ranking it among the top 25 fee-generating DeFi protocols globally. However, the current user experience for claiming protocol fees on Radiant is suboptimal. It involves claiming each asset individually and withdrawing from each lending separately – a gas-intensive process that can cost hundreds of dollars on ETH Mainnet.

   • With the approval of RFP-28 and the expansion of RIZ, the number and variety of assets generating protocol fees will increase significantly, making the claiming process untenable.

   • This proposal suggests that in the short-term, auto-compound is enabled for all users by default in order to streamline the fee claiming process. This will save users gas, allowing the protocol to batch claim fees and convert them into dLP vs. the sub-optimal experience of dealing with small amounts of individual assets. Both from a UX and cost perspective, there is an improvement to the user.

     NOTE: users can easily disable the auto-compound feature with a single click.

   • This is a technically simple solution to implement, as auto-compounding is already an existing, audited feature of the protocol.

   • Users will have the flexibility to auto-compound protocol fees into dLP for 3, 6, and 12-month lock periods. More details about dLP can be found here.

   • Additionally, RFP-28 encourages the emergence of a new, community-generated proposal to innovate and shape the future of Radiant’s fee claiming process.

4. Dual Emissions

   • Allows Radiant to maintain competitive yields while continuing to reduce emissions. To supplement emissions reduction, the protocol can utilize secondary tokens such as ARB, token pools acquired from business development, incentives from new chain launches, and grants.

   • Dual emissions are designed to enhance the attractiveness of the money market, striking a balance between reducing emissions and providing compelling user incentives.

5. Dynamic Protocol Fee Distributions

   • Radiant, like many other lending protocols, experiences fluctuations in market utilization due to various factors, such as when Binance holds Launchpools, or when users are looking to take additional loans for various reasons.

   • The current mechanism of raising borrow and lending interest to normalize rates has been insufficient in attracting new lenders, partly because dLP receives 60% of the lending fees.

   • A novel suggestion proposed by a community member involves making the protocol fee distribution more dynamic. In high utilization periods, this approach would shift more protocol fees to the base lender pool, effectively raising lending interest rates and restoring market balance. This dynamic shift could also attract a new cohort of users who are unfamiliar with Radiant Capital, enhancing liquidity in stablecoin markets during peak demand times.

   • Approving RFP-28 would not put this strategy into effect - it will simply kickstart in-depth brainstorming and lead to a new proposal detailing specific mechanisms and formulas for this strategy.

The implementation of these features has the potential to significantly increase protocol fees, foster business development opportunities, and boost DAUs. Additionally, it offers a strategic approach to counteracting inflation through RDNT buybacks.

The introduction of the Radiant Innovation Zone (RIZ) is particularly impactful, as it allows the protocol to diversify its collateral assets significantly mitigating asset-specific risks for the broader user base.

As with all Radiant initiatives, this proposal remains open to further innovative contributions from the community in Discourse.

Key Terms

• dLP: Dynamic Liquidity Providers within Radiant’s ecosystem.
• Dual Emissions: Implementing additional incentives for borrowing and lending activities.
• Long/Short Trading: Simplified trading strategies via looping within the borrowing/lending market.
• Radiant Innovation Zone (RIZ): A platform for launching isolated risk markets for new and emerging narratives in DeFi.

Steps to Implement

1. Develop and Approve RIZ Markets: Establish a technical framework through DAO process for rapidly approving and deploying new RIZ markets, with a focus on various emerging narratives.

2. Implement Trading Mechanics: Enhance the borrowing/lending market to support long/short trading using innovative on-chain mechanics.

3. Optimize Protocol Fee UX: Streamline the fee claiming process by transitioning from claims on multiple assets to a simplified distribution in dLP tokens.

4. Integrate Dual Emissions: Develop and implement a dual emission system, supplementing RDNT with secondary tokens.

Cost

1. Development Costs: Resources will be allocated for designing, developing, and integrating RIZ markets, trading enhancements, and protocol fee optimizations. This includes manpower and technology costs.

2. Auditing Costs: Essential for ensuring the security and reliability of new features like RIZ and trading mechanics.

3. Operational Costs: Ongoing expenses associated with platform maintenance and upgrades.

4. Business Development Costs: Expenses related to acquiring secondary tokens for dual emissions and establishing new partnerships.

Given the scope and complexity of these implementations, the estimated cost ranges from $250K - $1M. These costs are expected to be offset by the anticipated increase in protocol fees, user engagement, and overall platform growth.

Timeline

Move swiftly to begin releasing v3 features in Q1 2023.

Voting

In favor: Supportive of RFP-28, endorsing the decision for the DAO to implement the four protocol changes detailed in this proposal.

Against: Opposed to the implementation of RFP-28, preventing the DAO from deploying the proposed changes.

Abstain: Undecided, but contributing to quorum.