RFP-52: Establishing the Radiant Guardian Fund

Abstract

RFP-52 advocates for the creation of a new security framework known as Radiant Guardian, consisting of three components:

• Guardian Fund: A 4/7 multi-sig cold wallet holding diversified assets.

• Guardian Staking Contract: Enables users to stake their dLP to become eligible for deposit protection.

• Guardian LP Token (gLP): Enables users to secure the protocol by providing collateral into the Guardian Fund while also making funds held in the Guardian Fund capital efficient, as it enables its use in DeFi.

Radiant Guardian offers an electable economic shield that enhances trust, incentivizes long-term participation, and uniquely positions Radiant among a crowded field of DeFi protocols competing for institutional and whale capital.

Motivation

In 2024, DeFi protocols lost over $2.1B, with lending protocols representing ~35% of those losses (Chainalysis, Immunefi). Despite security improvements, Radiant itself endured $54.5M in exploit losses last year.

Code audits alone are no longer sufficient. Institutions and sophisticated users demand economic protection layered atop technical security.

Radiant Guardian answers this call by offering:

• A pre-funded safety net (Guardian Fund)

• User-aligned staking for coverage (dLP Staking)

• Capital-efficient participation (gLP)

Rationale & Key Benefits

🛡 Economic Backstop

Protects eligible users from smart contract exploits, oracle failures, custodial risks, and liquidation breakdowns.

🔐 Rebuilds Trust

Creates the first true economic remediation model in DeFi lending, reviving confidence among institutions and whales.

💸 Incentivized Participation

Users stake ≥10% of net deposits in dLP to qualify for protection, rewarding aligned longtermism and skin-in-the-game commitment.

🌍 New Market Access

Appeals to risk-averse capital by providing opt-in protection, expanding Radiant’s addressable user base.

⚙ Capital Efficiency

gLP is ERC20-compatible, yield-bearing, and usable as collateral (RIZ and elsewhere), blending security with utility.

🏆 Competitive Advantage

Unlike Aave’s Safety Module (protecting solvency, capped at ~2–4% TVL loss), Radiant Guardian provides direct user remediation with DeFi-native capital efficiency, a first in DeFi lending security.

Implementation Details

As deliberated in detail for 2 weeks in the community forum’s Feedback 105:

Phase I - Radiant Guardian Fund & Staking

The Radiant Guardian multi-signature wallet has already been established through RFP-51 as part of the broader economic reorganization. Now, the DAO seeks permission to develop the Guardian feature itself.

• To maintain eligibility for Guardian remediation, users must stake dLP valued at ≥10% of their net Radiant deposits.

Users who stake their dLP into the Guardian Staking Contract will become eligible for swift automatic remediation for the following covered events:

• Smart contract exploits and hacks

• Severe oracle failures or manipulations

• Custodian risks and failures

• Major liquidation failures

• Bad debt

Payout Mechanism

In the event of a qualifying security incident, the Guardian Fund will be utilized to remediate eligible users who staked in the Guardian Staking Contract. The payout process will follow these key principles:

1. Eligibility Verification – Users must have maintained a staked dLP amount equal to or greater than 10% of their net deposits within Radiant markets at the exact block of the incident.

2. Proportional Compensation – Payouts will be distributed proportionally based on the user’s net deposits and the available funds in the Radiant Guardian Fund.

3. Multi-Sig Governance – A decentralized multi-signature wallet, the Radiant Guardian Multi-sig managed by the DAO, will oversee fund disbursement to ensure transparency and prevent misuse.

4. Timely Distribution – Once a security breach is verified, the DAO will initiate a structured payout process, prioritizing swift and efficient remediation.

Payout Mathematics

The Guardian Fund payout mechanism is designed to remediate eligible users following a qualifying incident. The payout amount (C) is calculated based on four key variables:

Variables:

• N = User’s Net Deposits in Radiant markets (USD)

• S = User’s Staked dLP at the incident block (USD)

• G = Total funds available in the Radiant Guardian Fund at the time of payout (USD)

• U = Sum of all eligible users’ net deposits (only those who meet the 10% staking requirement)

• C = User’s Remediation (payout amount)

Eligibility Condition:

S / N >= 0.10 (10%)

Payout Formula:

C = MIN ( (N / U) * G , N )

Explanation:

• Users who meet the 10% stake requirement are eligible for remediation.

• Each eligible user receives a share of the Guardian Fund based on the ratio of their net deposits (N) to the total eligible net deposits (U).

• If the Guardian Fund is insufficient to fully cover all eligible users, funds will be distributed proportionally.

• Remediation is proportional, fair, and capped at 100% of loss.

Notes:

• The Guardian Multi-Sig will execute the distribution following this calculation.

• Only eligible users (those who staked ≥10% of their net deposits as dLP) will be included in U.

• This formula will be applied to all eligible users simultaneously at the time of payout.

Initial Capitalization & Composition

• 50M RDNT DAO allocation (25M in two 2025 rounds).

• Diversified Fund Portfolio:

  • 20% BTC (+derivatives)

  • 20% ETH (+derivatives)

  • 20% Stablecoins

  • 40% RDNT

Guardian LP tokens (gLP) will be minted during Phase II and will be deployed strategically to support liquidity and collateral utility.

Phase II - Radiant Guardian LP Token (gLP)

To enhance the capital efficiency of the Guardian Fund while enabling seamless user participation, the Radiant DAO will introduce the Radiant Guardian LP Token (gLP), an ERC20 token analogous to Liquidity Pool (LP) tokens, but instead of providing liquidity for swapping in a Decentralized Exchange, gLP will represent liquidity in the Guardian Fund MultiSig that is securing those who stake dLP to participate in the Radiant Guardian feature.

Users will be able to mint and redeem gLP through a straightforward deposit mechanism into the Radiant Guardian Fund. This process will utilize a mint/redeem system where only a small fraction of the assets are held directly by the contract (hot wallet), while the majority of funds will reside securely within the Guardian Fund multisig, functioning as an offline, cold-storage solution (cold wallet).

gLP Utility

1. 📈 Yield-Bearing: Earns 10% of protocol revenue (non-dilutive).

2. 🔄 DeFi Compatible: Usable in lending, staking, and borrowing.

3. 🪙 Collateral Integration: gLP accepted in Arbitrum RIZ Markets.

4. 🎁 Incentives: RDNT emissions allocated to gLP RIZ Market participants.

In addition to the above, users gain access to an instrument with many benefits over its traditional counterparts:

• Diversified Crypto Instrument

• Natively Yield Bearing

• Pausable on-chain

• Collateralizable

• ERC20 Compliant

Redemption/Unstaking Periods

To encourage long-termism, promote stability, and the size of the Guardian Fund, the following waiting periods shall be implemented in Phase 2. A waiting period is a reasonable trade-off, given that gLP remains liquid within DeFi, generates real yields, and serves a functional role in the protocol as a RIZ asset. However, it effectively deters mercenary capital.

• dLP Unstaking Period: 30 days

• gLP Redemption Period: 14 days

Cost Estimates

• 10% of protocol revenue flows into the Guardian Fund

• Additional RDNT emissions to bootstrap gLP adoption

• Ongoing support

• Minimal development and marketing overhead relative to the long-term gains in trust, TVL, and user growth

Voting

• ✅ In Favor – Approve Radiant Guardian Fund as proposed

• ❌ Against – Reject this proposal

• ⚪ Abstain – No position, but contribute to quorum