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.
Here’s a breakdown of all the major updates in Radiant V2 tokenomics:
- Dynamic Liquidity: Only Radiant lenders and borrowers who provide RDNT/ETH liquidity in the form of dLP tokens (dynamic liquidity provision) qualify for RDNT rewards.
- Maintaining Eligibility Status: In order to further qualify for RDNT emissions, lenders and/or borrowers must maintain a minimum 5% ratio between total deposit value and dLP value–meaning if I deposit $1000, I must maintain a staked dLP value of $50.
- Easy Zapping to dLP: To enter the dLP necessary to qualify for RDNT emissions, Radiant has made it easy to zap into the Balancer RDNT-ETH LP (or RDNT-BNB LP on BSC) without having to pair 2 tokens, directly from the Radiant UI. Radiant allows you to zap with ETH (or BNB on BSC) in your wallet or to borrow directly from the money market if you have deposited collateral.
- Vesting RDNT in 90 Days: Users can exit early from their vest for a 25-75% penalty fee or complete the 90-day (three-month) vesting period to receive the full amount.
- 1-Click Looping: I can attest the looping was not as easy to use in Radiant V1. They’ve made major improvements to the UI to allow looping (borrowing, redepositing, borrowing again) up to 4X to increase net yield and allows for using borrowed tokens to zap into the dLP to qualify for RDNT emissions.
Today, I’ll demonstrate how I can earn 70-130% APR with 1-click looping for tokens such as DAI, USDC, USDT, ETH, or WBTC.
How to Earn Up to 130% APR with Radiant V2
Before we get started, please be aware of these risks.
- Smart contract risk in Radiant Capital, Balancer, and possibly LayerZero
- Systemic risk in DeFi…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
