RFP-17: Optimizing Minimum Zap Length in Vesting Process

Abstract

RFP-17 aims to synchronize the minimum lock time for Zaps from vesting $RDNT to align with the emission $RDNT vesting period of 90 days.

Motivation

Typically, the vesting schedule of $RDNT reward tokens via emissions matures over a 90 day period. During this vesting process, a user can choose to exit a vest early for a linear penalty, with the exit penalty being redistributed back to the Radiant DAO Reserve (per RFP-11).

As part of the v2 deployment, Radiant introduced a feature by which users with vesting $RDNT tokens can “Zap into dLP”. This mechanism bypasses the penalty typically incurred when triggering an early exit and provides users with the option of locking the newly-formed dLP for 1, 3, 6 or 12 months.

When conducting an analysis of the use of this feature to date, a community member highlighted that this function has a “loophole” whereby users can bypass the typical vesting duration for incentivized $RDNT (90 days) and be able to redeem the entire reward amount after locking the tokens for 30 days, vs. a 90-day vest. This is not a true loophole, as the user then needs to put up ETH/BNB for the dLP, as well as take on some IL risk.

However, in the analysis conducted, almost 90% of the users using the “Zap into dLP” feature are locking for only 1 month, whereas the normal distribution of locking length amongst users is quite different, with the majority of users locking for 1 year. This would indicate that users are using this feature as a way to accelerate vesting through the back door, rather than its intended function which was to help provide more long-term on-chain liquidity.

The recommendation is to remove the 30-day option for the “Zap vesting $RDNT into dLP” mechanism and adjust the minimum lock length to 90 days in alignment with the standard vesting schedule.

This will have the net effect of reducing inflation into the protocol and extending the runway for emissions, which will promote further longevity and affords more flexibility to the Radiant DAO’s plan to expand to more chains in the future.

Given the analysis showed that this dLP that resulted from vesting $RDNT Zaps was not sticky (with most users unwinding dLP within 24h of the locks expiring), it’s not predicted to have a meaningful impact on average on-chain liquidity levels as well

This update will only address the “Zap from vesting $RDNT” function and will not in any way impact any of the other timelocked features within the Radiant protocol. Users will still have the option to Zap fully-vested $RDNT tokens into dLP for 1 month if they so choose. Furthermore, should it pass, this RFP will not retroactively apply to existing locks.

Key Terms

• Vesting $RDNT - The process of distributing incentive emissions to users over time
• dLP - Dynamic Liquidity Providers within the Radiant protocol
• Lock duration - The period during which dLP remains locked in the Radiant protocol

Specifications

• Discontinue 1-month Zap option for vesting $RDNT into dLP; 3, 6, and 12-month options remain
• No impact on in-flight locks; applies to future locks only

Steps to Implement

• Scoping is currently underway
• Auditing of the feature
• Implementation into smart contract
• Implementation into front end

Overall Cost/Impact

Minimal costs relating to upgrade of the Zap vesting $RDNT into dLP contract calls

Timeline

Upon successful testing and audit feedback, feature would be implemented into Arbitrum, BNB Chain and all subsequent network deployments

Voting

• In favor: Endorses RFP-17, advocating for alignment of "Zap vesting $RDNT to dLP" with standard emissions vesting duration
• Against: Against implementation of the RFP-17 proposal
• Abstain: Undecided, but contributing to quorum