Radiant Capital to Launch Mainnet on Ethereum: A Closer Look

Radiant Capital to Launch Mainnet on Ethereum: A Closer Look

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TLDR;

• Radiant Capital (RDNT) launches on the Ethereum Mainnet 3rd October 2023.

• We estimate this move could add $2.75bn-$7.15bn in TVL to the protocol.

• RDNT’s unique tokenomics sets it apart and means token holders would benefit from any increased liquidity offered by more

• With an upcoming catalyst, and a non-inflationary tokenomics model offered by dLP, we believe Radiant Capital's launch on Ethereum Mainnet on October 3rd is a major milestone for the protocol, that is not yet being priced in.

Introduction

Radiant Capital is an omnichain lending protocol that allows users to lend and borrow assets across multiple blockchains, including Arbitrum and BNB chain. Their primary goal is to consolidate the fragmented liquidity dispersed across the top ten alternative layers.

After going through multiple crypto cycles, we now know that most projects do not generate revenue and are not profitable. This is because they often have high emissions or inflation, which dilutes the value over time. The incentives to participate in these protocols are mostly in the form of farming rewards, which further inflates the supply of tokens.

Radiant v1 was similar to these traditional models - characterized by unsustainable emissions, insufficient runway, and low incentives to provide on-chain liquidity. Many years in the making - Radiant v2 addressed these problems by introducing a new tokenomics model, dubbed Dynamic Liquidity Provisioning (dLP), which took the project closer to its main aim of becoming the most profitable DeFi protocol by generating fees from borrowers and lenders.

Dynamic Liquidity Provisioning

Dynamic Liquidity Provisioning (dLP) is a mechanism that incentivizes users to provide liquidity to the protocol by rewarding them with RDNT tokens. dLP works by dynamically adjusting the amount of RDNT tokens that are rewarded to liquidity providers based on the amount of liquidity that is available. This ensures that the protocol is always well-supplied with liquidity, while also preventing inflation.

dLP is unique in a number of ways. By dynamically adjusting the rewards, dLP helps to prevent inflation and ensure that the value of the RDNT token remains stable. It is also more efficient. By rewarding users for providing liquidity, dLP helps to ensure that there is always enough liquidity available to borrowers, and finally - by locking up dLP tokens, liquidity providers are helping to secure the network and prevent attacks.

Ethereum: The Next Growth Frontier

This incentive model has helped the protocol capture market share, and since launching in March, has attracted over 13% of the total Arbitrum Total Value Locked (TVL) of $1.65bn. This puts it in the top 3 projects on the chain and is a clear sign that the team has found the elusive product-market fit.

Arbitrum's transaction fee mitigation, combined with Ethereum's security and institutional adoption, enabled the team to build an ecosystem that provides users with competitive interest-bearing opportunities while maintaining a high degree of safety.

However, at present the project remains a big fish in a small pond. Arbitrum represents just 3.29% of total chain TVL compared to 56% native on Ethereum. This native liquidity dwarfs its Layer-2 counterpart and is made up of over $55bn in stablecoins - the majority of this is currently not utilized to generate yield or earns less than US treasuries.

Radiant’s decision, therefore, to target this huge market could be a major turning point for the project. We estimate the Ethereum mainnet launch could add between $2.75bn-$7.15bn in TVL to Radiant Capital’s asset base, placing it in the top 5 protocols on Ethereum, and directly benefitting RDNT token holders through a number of channels:

• Increased staking rewards: The protocol uses a dynamic liquidity provisioning (dLP) model to incentivize users to provide liquidity to the protocol. This model rewards liquidity providers with RDNT tokens, and the amount of rewards is based on the amount of liquidity that is provided. As the TVL increases, the amount of liquidity that is provided also increases, which means that the staking rewards also increase.

• Increased demand for RDNT tokens: As the TVL increases, the demand for RDNT tokens also increases. This is because RDNT tokens are used to pay for fees on the protocol, and they are also used to participate in governance. As the demand for RDNT tokens increases, the price of the token is also likely to increase.

• Increased utility of RDNT tokens: The RDNT token has a number of utilities, including:

  • Paying for fees on the protocol

  • Participating in governance

  • Staking to earn rewards

  • Using as collateral to borrow assets

Conclusion

Since launching on Binance futures, the RDNT token has underperformed the Defi basket significantly, trading down ~35% over the last month. With an upcoming catalyst, and a non-inflationary tokenomics model offered by dLP, we believe Radiant Capital's launch on Ethereum Mainnet on October 3rd is a major milestone for the protocol, that is not yet being priced in.

Overall, It will make the protocol more accessible to a wider audience and open up a larger pool of assets. This is a significant opportunity for Radiant Capital to grow its user base and TVL, and the flywheel created by its unique dLP incentives model will benefit RDNT holders through increased value capture.

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