RFP-11: Removal of Burn Component to Exit Penalty; Creation of Starfleet Leaderboard [Protocol Mechanics]

Abstract

RFP-11 aims to adjust the handling of exit penalties and create a better incentive framework for protocol participants through the creation of the “Starfleet Leaderboard.”

Motivation

The Radiant DAO has taken numerous measures in order to reduce inflation to more sustainable levels, including RFP-2 (reducing emissions), RFP-5 (exit penalty treatment), and RFP-8 (extending the emissions runway).

While most of the proposals in RFP-5 for adjusting exit penalties were strongly supported, such as redirecting 50% of exit penalty RDNT to the RDNT DAO Reserve and adjusting penalties by time vested, the idea of burning 10% of exit penalty tokens was criticized. This was due to the RDNT token's fixed supply of 1 billion tokens and the fact that a burn alone would offer little benefit to the protocol in its early days.

Token burning could serve as a useful neutralizing mechanism if Radiant operated on an inflationary Proof-of-Stake (POS) model like Ethereum. However, given that Radiant does not utilize such a model, the token burn component would not offer significant benefits.

The second motivation behind the proposed incentive structure is to encourage users to take actions that promote the protocol's longevity, including longer locking times to ensure sustained on-chain liquidity and a higher percentage of dLP to increase gross liquidity flowing into the protocol.

Although users with a higher percentage of dLP receive a larger share of protocol fees, a higher ratio of locked dLP to total assets deposited does not guarantee a higher percentage of emissions received. Consequently, users may have an incentive to lock their tokens close to the 5% threshold, which can result in unintended negative consequences such as becoming ineligible and losing access to emissions.

A group of community members have collaborated on a proposal to repurpose the 10% of RDNT currently earmarked for token burning. This proposal, known as the 'Radiant Starfleet Leaderboard,' aims to find a better way to utilize these funds.

This proposal for repurposing the 10% of exit penalties suggests rewarding users based on a 'weighted score' that considers factors like gross dLP locked, dLP ratio, locking length, and keeping 'Auto-Compound' enabled. This would incentivize users to take actions that promote the protocol's long-term sustainability and enhance cross-chain liquidity.

The precise details and weightings for the proposed reward system should be decided by the Radiant Capital DAO in a subsequent proposal. One suggestion is to introduce 'Seasons' with varying weighting parameters that can be adjusted over time.

Key Terms

• Exit Penalty: RDNT emitted is vested over 90 days, and a user may claim this vesting RDNT by paying an exit penalty
• dLP: Dynamic Liquidity

Specifications

• Create the Radiant Starfleet Treasury, which will be a MultiSig that receives 10% of exit penalty RDNT upon the v2 launch.
• Adjust the treatment of exit penalties upon the v2 launch: send 10% of exit penalty tokens, which were originally allocated for burning, to the Radiant Starfleet Treasury.

Steps to Implement

• Create a scoring mechanism to evaluate user actions, which has already been specified and will require development work after the v2 launch.
• Implementation will occur after approval of a subsequent DAO proposal that specifies Starfleet Season timelines and the formula for calculating winners.

Overall Cost/Impact

It is expected that developing and testing the scoring mechanism, including a prototype with integrated front-end, will take approximately 2-3 weeks.

Timeline

The implementation of the proposal will begin with the launch of v2 and the new exit penalty parameters. The scoring mechanism, including a prototype with an integrated front-end, will follow after additional development work.

Voting

• In Favor: Supportive of RFP-11, adjusting Exit Penalty treatment and creation of Starfleet Leaderboard
• Against: Against implementation of the RFP-11 proposal
• Abstain: Undecided, but contributing to quorum