Hi @Perl, appreciate your feedback and recognize you have been doing a great job responding to tons of proposals- quite a task!
Agreed that more love for the ARB market is in order.
Radiant is the first major lending market on Arbitrum that added collateral support and has the 2nd largest TVL of the ARB token behind Uniswap. Radiant has and will continue to provide aggressive emissions toward ARB and has one of the most competitive ARB lending rates at this time.
Some color:
Radiant’s Chef Incentives controller contract that handles emissions currently does not support dual emissions, meaning we cannot emit RDNT and ARB to lenders at this time. We plan to change that in the near future so Radiant can focus on incentives like the one you recommend in future grant rounds.
We are confident the airdrop portion of the campaign (if approved) will see considerable lending activity around ARB.
Radiant has reduced the grant request by 16%, from 3.3M to 2.8M ARB. We aim to be as efficient as possible with the allocation (if approved) while being mindful of the number of grant applications and total funds available.
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Firstly, thank you for your proposal and for your significant contributions to the Arbitrum ecosystem.
Introduction and Rationale
Radiant, a substantial player in Arbitrum with its Omnichain Money Market, seeks a Pinnacle Grant ranging from 52,126 to 3,359,302 ARB, which is up to 6.72% of the total 50M ARB available in the program. With more than $200m in TVL sustained for over 5 months, Radiant has proven its effectiveness. Their proposal focuses on three core areas: Sticky Liquidity (dLP), Ecosystem Enrichment, and Future Integration. We’re impressed by the scope of the project and its alignment with Arbitrum, especially the milestone-based incentives tied to TVL.
Major Concerns
Concern About Grant Allocation
About 70% of the grant aims to boost dLP, linked closely to the RDNT token.
dLP is the starting point for their protocol’s flywheel.
Our recommendation for change: We suggest allocating more ARB towards Strategic Ecosystem Initiatives, rather than primarily focusing on dLP and indirectly the RDNT token.
Minor Concerns
The necessity of locking 80% RDNT/20% ETH to receive fees and RDNT emissions.
The majority of the grant seems to focus on incentivizing their own token (RDNT) over the broader ecosystem.
Our recommendation for change: Consider a more balanced allocation that emphasizes ecosystem growth without putting undue focus on one’s own token.
Summary
Castle Capital values the strides Radiant has made and the unique offerings it brings to Arbitrum. While the proposal is broadly aligned with Arbitrum’s goals and the milestone approach is commendable, we believe the focus on dLP and by extension the RDNT token needs reconsideration.
Our key recommendation is to allocate more ARB to initiatives that enrich the broader ecosystem, rather than creating a buying pressure for RDNT. This adjustment could make the proposal more robust and beneficial for the whole community.
We hope our feedback is seen as constructive and look forward to your continued positive impact on the Arbitrum ecosystem.
Hi Castle, thank you for your feedback. We understand your perspective, however, dLP is the foundation of Radiant v2 and it’s intrinsic to how the protocol operates. dLP serves 3 primary functions:
Governance
Receive a share of protocol revenue
Activate emissions within the money market
This mechanism has proven effective as Radiant has seen notable growth and usage on the Arbitrum network since this implementation (below):
Regarding the grant, we were cognizant of your concern at the time of drafting it, which is why the milestones related to the airdrop are focused on lending TVL requirements. If the campaign underperforms, then smaller or no payouts occur, and the remaining ARB will be returned to the Arbitrum DAO.
Additionally, we have provided metrics regarding the first iteration of this campaign with the initial ARB allocation granted to the Radiant DAO, such as a 52% increase in users, and 19% in TVL throughout the campaign. Radiant v2 creates long-term liquidity on the chain since these users are locking liquidity for 6-12 months. Further metrics are provided in the grant application and on Dune.
Regarding allocating a higher proportion to ecosystem initiatives, the current ratio is 28% which seems like a fair distribution. This includes measures to increase utility around GMX v2 by creating a collateral market, diversifying liquidity options through Camelot v3, collaborating with Dopex on a CLAMM options market, and bolstering the liquidity of PLutus’ plsRDNT.
Radiant has also lowered the grant request by 16%, from 3.3M to 2.8M ARB. We aim to be as efficient as possible with the allocation (if approved) while being mindful of the number of grant applications and total funds available.
Radiant’s been innovating a new space with it’s product and It will be a whole chain reaction that boosts liquidity for a bunch of projects on arbitrum.
Radiant deserves this grant.
We understand how the entire system works in that you have weaved the requirement of RDNT into pretty much the entire protocol. However, just as there are positives to driving value and utility to RDNT this way, it can also serve as a deterrent to external users as they are suddenly required to become close stakeholders just to use the product efficiently.
We do appreciate the wider ecosystem initiatives, and think the GMX v2 one especially is very valuable.
We believe Radiant is very aligned with our values for supporting grants in general, but it’s the allocation we have an issue with.
We do not believe allocating 70% to native RDNT/WETH liquidity is appropriate, even if it is required for the v2 of the protocol to garner activity. If that is the case, then we would question the entire design.
We want to see proposals that grow the ecosystem, grow protocol TVL and userbase, not test token flywheels and search for product market fit of mechanisms.
We would like to see this drastically reduced and re-allocated to borrowers/lenders on the platform.
“We don’t appreciate the extensive barriers radiant has put between ourselves and the capital we intend to extract from them, while we provide little to no value to the ecosystem.”
Radiant has already proven they can do this in a very similar manner with the previous allocation.
If you had said this before v2 launched or as v2 launched, I’d have wholeheartedly agreed with you as at that time it was an experimental flywheel. Since then, Radiant has proven the model works as intended and that they can be good stewards of the funds they are entrusted with while also growing immensely.
Their plan for the initial airdrop (which we know was “no strings attached”, meaning they could have pushed a vote to dump it) worked brilliantly in bringing new users and TVL to the protocol. All of the metrics are here for anyone to see. With these funds I am 100% confident Radiant will see at minimum, the type of growth we saw for the first “airdrop” but likely more as the first round gave valuable insight to make the second round better.
Suggesting this proposal will isolate external users is borderline absurd, especially when considering the synergies being created with other blue chip protocols across arbitrum and previous success.
There is no “sudden requirement to become a stakeholder” because this is the way the protocol has operated since March. Prior to the launch of v2, it was well communicated that Radiant was moving away from single staking of any kind as it has traumatic effects on the token price, which in turn has compounded effects on the protocol. Long term holders are aligned with the protocol on this issue as it is mutually beneficial.
Radiant has spent a lot of time pioneering the path away from “defi 2.0” (farm and dump tokens) and a reversal from that now to further reward mercenary capital would be disrespectful at best, to those who have supported them through v1 and into v2. So while I certainly appreciate your point of view, I cannot agree with it at all.
As a user/LPer, my option still remains to be to buy and lock RDNT, or to never use the platform, since I would be paying 3~7% net APR to borrow on Radiant against my stablecoins compared to Aave (~0%) or Silo (get paid to borrow).
Can’t disagree RDNT is a giant on Arbitrum, but also have to remember that a majority of the TVL is looped and mercenary liquidity that only makes the borrow curve worse for real users who use it for lending activities.
If we wanted to extract value through a trade we would simply buy RDNT and push to have this proposal forced through, which is quite the opposite of what we are doing.
The point we are trying to make is that if dLP works so well, won’t users of the platform just naturally lock dLP to gain higher rewards and utility in the ecosystem? Why does it need the majority of incentives?
Maybe we are missing something…
But from the outside, it is akin to GMX traders or GLP holders having to stake and lock GMX/WETH liquidity just to get their revenue share, trading rebates and other such perks.
On the above quote, we would like to point out we were not questioning the proposal isolating users, but that the token/product design, in general, may do so (albeit whilst maximising very close stakeholder gain) - it’s all a trade-off!
How can there be mercenary liquidity if those same users lock dLP (RDNT/ETH) to use the protocol? Seems paradoxical- Radiant transitioned from v1 to v2 to mitigate mercenary liquidity.
To reward those who contribute the most to protocol health. Same reason 60% of fees go to dLP lockers. The protocol is built around rewarding those with the most skin in the game, why would it make sense to change it now?
you’re right - people are committed to locked token to earn more to farm it.
I guess question remains - what edge does Radiant have besides nurturing more users who are effectively forced to use Radiant due to sunk opportunity cost?
In fact, the top 2 addreses that contribute to 28% of Radiant’s TVL simply claim and sell or claim and send to Binance (0x64b6ebe0a55244f09dfb1e46fe59b74ab94f8be1, 0xa0076833d8316521e3ba4628ad84de11830aa813), with the second address taking a delta neutral position on non stablecoin assets. At first glance, it seems that the money market is being used for farming the token, rather than normal borrowing and lending activities.
Are you sure this program is not nurturing parasite liquidity on Arbitrum that are hostaged into perpetually selling and hurting the ecosystem further? I support Radiant’s growth on Arbitrum and hope for its success, but if the proposal were to not pass as is, I would like to see some metrics on how the money market is currently being utilized, and how it can foster the Arbitrum community at large.
The point is if users are choosing to lock tokens for 6-12 months, they are less likely to leave the ecosystem. No one is forcing users to believe in Radiant or lock tokens. But they do.
The above proposal provides plenty of metrics around the first airdrop campaign and it’s effectiveness at growing the types of KPI’s the DAO is looking for. Your question as to what edge Radiant has is confusing, half the proposal is about that edge. To sum it up for you:
Sticky liquidity
Milestone-based grant request
Case study & demonstrated success
Emphasis on white space users due to presence on other chains + LZ/SG integration
Growing Arbitrum together with protocols such as GMX, Camelot, Dopex, & Plutus.
How do you feel Radiant is hurting the Arbitrum ecosystem as you claim when the numbers indicate the opposite?
Are you applying the same level of scrutiny to all grants, analyzing the user base, and expecting none of the users to sell the native token?
Agreed, this simple reasoning only is enough, in my opinion, to delegitimize Radiant’s proposal.
Radiant V2 major “upgrade” was to turn into ponzinomics realm. Using this STIP for incentivizing/forcing the demand of their own token is just another chapter of this approach.
Tbh I don’t know how this proposal even passed the approval without being asked for changes. It’s clearly not aligned with the STIP purpose to my understanding. All the funds, or at least the majority of them (>90%), should be allocated to incentivize markets with a special focus on ARB.
It’s sticky for sure. They have no other choice really
I’m hoping to see info on how lending activities go on - as just from a quick glimpse, many top addresses are engaging in no net borrowing, just net looping to earn RDNT and sell. Then the ARB grant is being used on creating a wETH buffer for farmers to sell into with rebates - not really bootstrapping the ecosystem. Would be interesting to see metrics of the % of the TVL contributed by people who are not supplying the same asset they are borrowing =)
Also yes, I do apply the same scrutiny - I strongly believe that the grants should be given to ecosystem users, not token holders. This is pretty well reflected on my first Ramses post - but I don’t really want to get into the politics or scrutinize this proposal specifically.
Just wanted to point out from the perspective of a regular user, I felt like I would not be able to participate unless I BOUGHT the token, which not what I think the program is for.
Blockworks Research supports this proposal and finds the requested amount of up to 2,852,046 ARB to be justified based on, among other things, the anticipated sustainable impact on, and goodwill to, the ecosystem, metrics such as TVL / volume / fees on Arbitrum and overall, a comparative analysis of all submitted STIP proposals, the distribution of incentives across verticals, as well as, to a certain extent, the recommendations made by the Arbitrum Working Group through the four grant categories.
