Before we get started, this is not a recommendation or endorsement to buy any token mentioned.
As DeFi migrates away from Ethereum Mainnet to L2s, we should begin to see familiar protocols with added benefits thanks to faster transactions, lesser network fees, and interoperability among L2s. Among the few early protocols looking to establish themselves as L2-natives is Radiant Capital. Radiant is developing one of the the first omnichain money markets, meaning users can deposit on any major chain and borrow supported assets across multiple chains. Imagine depositing stETH as collateral on Ethereum Mainnet but then borrowing USDC on Arbitrum.
With Radiant, lenders provide/lend liquidity to the platform so that borrowers can withdraw the assets and pay interest. Borrowers are able to withdraw against their collateralized funds in order to obtain liquidity without selling their assets and closing their positions. Like Aave or Compound, if borrowers don’t maintain a “healthy” LTV (loan-to-value) ratio, they get liquidated.
Radiant’s cross-chain interoperability is built on Layer Zero. Currently, Radiant does support lending and borrowing on Arbitrum for DAI, WBTC, ETH and also supports borrowing USDC or USDT to other chains such as Ethereum L1, Polygon, Avalanche, and Fantom. Eventually, lenders who wish to reclaim their collateral will be able to direct which chain to withdraw funds to, and what percentage they’d like sent to each chain. With v2, Radiant has plans to support many more L2s and L1s.
Whether a user lends or borrows, they’re earning RDNT tokens in the money markets. Users can claim this full amount by vesting over 28 days or they can exit early for a 50% penalty fee. Meanwhile, those who lock/stake their RDNT get to share in 50% of “protocol fees” including the RDNT that a user might forgo in order to exit vesting RDNT early.
Today, I’ll demonstrate how I can collateralize a stablecoin like DAI, and then use looping to borrow up to 5X in a stablecoin like DAI or USDC to maximize yield in RDNT + lending interest while maintaining a position that is unlikely to be liquidated.
How to Earn RDNT Looping Stablecoins on Radiant on Arbitrum
Before we get started, please be aware of these risks.
- Smart contract risk in Radiant Capital
- Systemic risk in DeFi composability
- Stablecoins are capable of de-pegging
- Front-end spoof attack on the Radiant app
- Governance attacks on RDNT
- Liquidation risk if LTV ratio isn’t maintained
- If RDNT price were to drop, it’s possible the earned rewards APR from borrowing could be less than the interest rate to borrow, meaning I would want to close the position.
Here’s how I get started!
1. First, I go to the Radiant app markets to see which stablecoins I might use as collateral and what’s the required LTV. I can see there’s a higher LTV for USDC so if I had USDC, I might collateralize that, but since I only have DAI, I’ll use DAI as collateral (allowing up to 75% LTV).
2. Next, on the Deposit tab, I see I’m about to earn 2.63% APR in DAI interest + 2.13% APR in vesting RDNT rewards. I proceed to specify how much DAI and follow the prompts to Approve and Deposit.
3. On the Borrow tab, if I choose to borrow USDC or USDT, I can actually opt to have the borrowed funds end up on…
DeFi Dad is one of the earliest power users of DeFi, having worked with early Ethereum startups going back to 2018, including Zapper.
