Radiant Capital

Abstract

RFP-16 looks to establish an initial framework for how the Radiant DAO will use its allocation of $ARB tokens.

Motivation

Radiant Capital is one of the recipients of the Arbitrum Foundation’s distribution to DAOs that are building applications within the Arbitrum ecosystem. As a result, the Radiant DAO has received 3,348,026 $ARB tokens, one of the largest allocations made by the Arbitrum Foundation.

There have been discussions in Discourse and amongst the community regarding the usage of this allocation. This proposal aims to obtain consensus on how best to utilize these tokens.

Some of the community’s discussed objectives include:

• Act as a key steward in the future governance of the Arbitrum Foundation. As Radiant is one of the largest on-chain governance-directed protocols on Arbitrum, the Radiant DAO could potentially become a significant policy maker within this network.

• Facilitate a future flywheel by attracting new users to the Radiant protocol and Arbitrum network through the use of $ARB tokens as incentives to Radiant users.

• Help extend the runway of the protocol for future operating expense needs such as audits, development costs, and future hiring.

• Incentivize behavior within the protocol from existing users that will help increase the stability, liquidity, and future success of Radiant’s deployment broadly and on Arbitrum.

• Enable Radiant to reduce future inflation levels by using already allocated $ARB as a complement to existing $RDNT rewards.

This proposal serves as an indicator of the community’s interest in distributing $ARB through incentives. Following proposals will detail the specific allocations, outlining the amount of $ARB designated for various groups such as dLP lockers, lenders, borrowers, Starfleet, and re-lockers.

This discussion provided some initial thoughts on why the $ARB airdrop should primarily be used for incentives. This proposal lays out the idea that $ARB should be used in a mix of incentives towards:

• dLP lockers → Providing value in the form of on-chain locked liquidity.
• Borrowers → Providing additional protocol fees, which help improve the flywheel of onboarding new users without having to use additional $RDNT via inflation.
• Lenders → Top-of-the-funnel new user acquisition and existing lenders who enable the protocol to function.
• Starfleet → Allocating a portion to the most engaged users, with a future scoring mechanism to establish the “Starfleet Leaderboard” to be determined at a later stage.
• Long-term lockers → Long-term lockers ensure future on-chain liquidity availability, which in turn encourages new users to confidently adopt and use the Radiant protocol.

RFP-15 recently passed and was successfully implemented, allowing users who earn incentives in $ARB to utilize that $ARB as collateral, thereby increasing their cross-chain borrowing power.

If RFP-16 is approved, it will initiate the necessary development work to enable dual-emissions, allowing both $RDNT and $ARB to be distributed to lenders and borrowers.

This proposal recommends taking multiple snapshots of dLP users over the coming months in order to set up an airdrop of $ARB to long-term and consistent dLP holders, in addition to the incentives laid out above (dLP lockers directly of all durations, lenders, borrowers).

This approach allows the current cohort of dLP lockers to extend their lock durations while also rewarding initial long-term lockers. Those who have liquid LP tokens (in Balancer, TraderJoe, PancakeSwap, or Uniswap) would not be eligible for this portion of the incentives. A community member suggested this method in order to assuage concerns regarding the “unlocks” of short-term locked dLP.

Key Terms

• $ARB - The governance token of the Arbitrum Foundation
• dLP - Dynamic Liquidity Providers within the Radiant protocol
• Starfleet - Defined in RFP-11
• Dual Emissions - Both $RDNT and a second token issued concurrently to lenders and borrowers

Specifications

There are no on-chain executable parameters with this proposal, as it is meant to set-up a future proposal on the weighting of $ARB to various incentive categories.

Steps to Implement

• There are several work-tracks which would be initiated if RFP-16 passes. Firstly, it would necessitate technical efforts to scope, audit, and implement dual-emissions. Some of the initial work has been done here on a spec, and this would go into Radiant’s upcoming audit with OpenZeppelin.

• Set-up randomized snapshots over the coming months to compile a list of addresses that have consistently been a dLP from v2 launch until the snapshot end dates, effectively excluding “liquid LP providers.”

Overall Cost/Impact

Development costs relating to building, auditing and implementing dual-emissions are to be scoped out, but initial estimates have come back as a “low/medium” level of effort given the ability to use battle-tested code.

Timeline

If RFP-16 passes, a subsequent discussion and vote(s) would be set up regarding the distribution of $ARB rewards to the dLP users, lenders, borrowers and long-term lockers.

Voting

• In favor: Supportive of RFP-16, agreeing to use some portion of $ARB tokens to Radiant stakeholders in the categories listed above
• Against: Against implementation of the RFP-16 proposal, which would not use $ARB to incentivize stakeholders
• Abstain: Undecided, but contributing to quorum