Arbitrum Looping Strategy: How to Earn Up to 130% APR with Radiant V2

Radiant V2

Before we get started, this is not a recommendation or endorsement to buy any token(s) mentioned. 

Previously, we reviewed a new omni-chain lending and borrowing market on Arbitrum called Radiant Capital. On the surface, Radiant looks straightforward as an Aave-like product but integrated with LayerZero, allowing users to deposit collateral (ie ETH or WBTC) on Arbitrum or BSC. Then, users borrow assets to Arbitrum, Polygon, Avalanche, Fantom, or Ethereum Mainnet. However, my main takeaway was more about the painstaking detail that went into designing tokenomics that work to reward only those who add value to the protocol long term. DeFi has suffered from mercenary farming since 2020, where liquidity providers earned easy-to-claim rewards tokens, often the native governance token of the protocol, which would get sold off for profits, putting immense selling pressure on the token. This flywheel of value extraction would tank the protocol yield rates measured in the governance token, and kill off user interest in a protocol due to the price of its native token being sold off.

In Radiant V1, we learned about simple measures taken to vest RDNT rewards to lenders and borrowers, or else face penalties for withdrawing early. RDNT stakers were incentivized to lock up and earn a share of the platform fees including those slashed rewards. It was a solid foundation to build off of but this new Radiant V2 goes to greater lengths to further reward users who truly add value. Users that simply deposit but don't add value to the protocol will still earn natural market rates as lenders in the form of borrowing interest, but will not be eligible for RDNT emissions.

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