💣A Bright Future For Cross Chain Liquidity

They say the future is cross-chain yet how many of the leading protocols that operate cross-chain have truly taken off? Not many. However, there is one that bucks the trend. Radiant, a cross-chain money market built using LayerZero, is a standout winner in a cross-chain future.

In this article, we’ll dive into:

• Pain Of Bridging

• The Holy Grail Solution

• Revenue Machine

• $RDNT And Sustainable Tokenomics

• Radiant V2 Constant Evolution

Pain Of Bridging

Let’s shine the light on a pain we have all experienced. One that every onchain degen is sick of. Imagine you have some funds on Arbitrum, perhaps some WETH. You find an exciting new protocol on BNB Chain that you want to try out. You don’t really want to bridge from Arbitrum to Ethereum, then Ethereum to BNB Chain. What now?

What if you could keep your WETH on Arbitrum, and then borrow some BUSD against that on BNB Chain, all without having to move a single cent? That’s what Radiant helps you do.

The Holy Grail Solution

Powered by LayerZero, a cross-chain messaging protocol that allows a protocol to send tokens and messages cross-chain in a blink of an eye. Radiant allows anyone to earn interest and borrow assets cross-chain seamlessly

Radiant will bring lending/borrowing capital efficiency to all the chains it is deployed on. Think about the capital efficiency this would potentially bring to:

• Base

• Polygon

• Avalanche

• Optimism and so on

Borrowers will no longer be constrained by the liquidity available on a single chain while lenders are no longer constrained by the demand available on a single chain.

Today, the combined dollar value of all non-native assets within the Radiant ecosystem is $400M. Since launch, Radiant has seen its total borrow and lending value rise steadily. Currently, with $159M lent and an extra $251M borrowed, Radiant is a giant.

Adoption keeps a money market moving and represents demand for a protocol’s utility. Increased adoption means revenue growth and fees for stakeholders. Importantly, TVL is the best metric to measure demand for any protocol, and for Radiant, it has been a steady climb to >$200M.

Revenue Machine

Since inception, Radiant has generated >$16M in fees and paid that to RDNT lockers. In V2, the protocol has generated $14.95M in total fees with weekly fees averaging $500K—impressive numbers for a protocol at $70M marketcap. The chart below illustrates Radiant’s growth in fees generated with daily fees nearing $100K.

Radiant once had the lowest price to fees ratio in the entirety of crypto. Fundamentally, that means the token was hugely undervalued, generating huge fees compared to its small market cap. While Radiant no longer holds that title, of all the large projects out there, Radiant’s current price-to-fees ratio is still wildly attractive compared to 99% of DeFi.

$RDNT

RDNT is the main governance and incentive token of the protocol. Liquidity mining emissions can be instantly claimed for the total amount if they are zapped into locked dLP tokens. If not, they can be vested for three months or claimed early by taking an exit penalty.

The token has a fair allocation, with 49% reserved for incentives and 32% used for other areas such as the DAO reserve. Binance Labs recently made a $10M investment into Radiant.

Radiant V2

Radiant V2 is a radical overhaul of the protocol to address two main questions.

1. How can Radiant create more utility and thus value between lenders/borrowers and the protocol?

2. How should the protocol reward RDNT emissions?

The ultimate goal of this upgrade is to:

• prevent mercenary farming

• implement decentralised governance

• expand the fee surface area with new collateral options

And drive real utility for the protocol and $RDNT.

The north star? To deliver the most real value to token holders by being the protocol with the lowest price-to-fee ratio in all of crypto.

Here’s a brief outline of problems with Radiant V1:

• Unsustainable emissions with high inflation

• Insufficient runway as original emissions would run out in 24 months

• Lack of incentives to provide liquidity

• Imperfect exit penalty design

• Fixed unlock period (max dumping events FUD)

Which all ultimately resulted in vast amounts of mercenary capital being incentivised.

These are all factors that have to go through deep consideration to truly build a sustainable and profitable protocol.

So what is Radiant V2 how will it solve these naggin issues?

• RDNT emissions will be based on a linear scale, with vesting time increased to 90 days.

• Expired RDNT locks will no longer receive emissions. However, they will be able to auto-relock. Better UX!

• Improved distribution — more to lockers (60%), reserving 25% for lenders, and 15% for the DAO

• Here’s the big one. Dynamic liquidity. If a user simply deposits into Radiant, he isn’t exactly a huge amount of value to the protocol. In V2, a user will be required to maintain a 5% threshold in locked dynamic liquidity, relative to their deposits.

What does the last point even mean? Let’s walk through an example.

Say a user deposits $10,000 in USDC into Radiant. In order to be eligible for RDNT emissions, the users would also have to lock $500 worth of RDNT/BNB dLP. Not everyone will want to lock their dLP tokens, and as such, users that are providing important value to the protocol will receive excess returns that have been amplified!

With this implementation, Radiant anticipates but isn’t worried about mercenary capital leaving. They want to play long term games with long term users.

In addition, one does not have to lock the dLP for an extended amount of time. Users can choose lock periods between 1 month, 3 months, 6 months, and 12 months. Each increasing lock length results in a higher percentage of protocol fee allocation. Longer locking = more fees!

Liquidity And Incentives

We all know how important token liquidity is. Radiant V2 will massively increase $RDNT liquidity as it requires users to lock 5% of deposit value as dLP to receive emissions.

The metrics don’t lie. This has had two major successful impacts on the protocol. Firstly, overall liquidity has vastly improved. Since 5 months ago, Arbitrum RDNT liquidity has increased from less than $20M to over $40M today.

Secondly, an increasing amount of dLP is locked. Currently, 91% of dLP is locked on Arbitrum while that number is an astonishing 98% on BNB Chain. This represents a huge amount of sticky liquidity for Radiant, and today, it has over $75M in RDNT token liquidity with $70M of that being locked.

Driving Value At Scale Through Utility

Radiant has cemented itself one of the largest, and perhaps the only cross-chain money market. The protocol has found its product market fit on the two chains it is currently deployed on. Even when it has made radical changes to its incentives model to disincentivize mercenary capital. Expansion to more chains is on the cards. Radiant will go live on Ethereum mainnet on October 15, 2023, and one should expect Radiant to expand to the other chains in the coming months.

With nearly 5,000 daily active users, a fast growing ecosystem that includes other protocols building on top of Radiant, and the upgrade to its tokenomics and incentives model, it’s no wonder Radiant has attracted an investment from Binance Labs. With one of the most engaged and active governance communities, it is easy to see how Radiant will dominate the cross-chain money market landscape.

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