Interest rate curves and rdnt incentives approach changes

Feedback
1

Maybe with the introduction of riz v2 and glp, is a good time to change interest rate curves and rdnt incentives approach.
Problems:
Current structure demands locking dlp for someone to be eligible for emissions. Radiant has a trust problem because of the hacks and probably people are not willing to buy rdnt and lock dlp because of emissions eligibility status or locked dlp apr. Current interest rate curves models are not competitive nor effective and are just used for looping and farming rdnt so current structure is not sustainable long term (incentives will dry up and what then). TVL is very low (5m at the moment) and there is no point going forward this way. On the other side, if you dont have locked dlp, you would not consider using protocol at all, simply because you can borrow cheaper on other protocols. So this means high and risky entry barriers for new people and new TVL.
Suggestions:

  1. Change interest rate curves. Maybe the approach should be to adjust interest rate curves in a way that borrowing interest rates are market competitive so everyone can participate (even without locking dlp). At the moment entry barriers for new TVL are high and risky. The point is to offer attractive/competitive interest rates for borrowers (without locking dlp) so much more people can participate.
  2. Remove incentives for borrowers. No major protocol does this anymore. Just give borrowers competitive interest rates. Incentivize supply with locked dlp. But this will not be a deal breaker for those who dont want to lock dlp because they get almost nothing on other protocols for blue chip assets supplied as collateral. So locking dlp will just give you some bonus rewards in that case.
  3. Display the graphs of the interest rate models so people can be aware of interest rate changes on various utilization levels (all major protocols have it).
2

Thank you very much for the thoughtful input. This is a great starting point for a broader discussion about how we should approach interest rates and emissions over the long term.

I will take some time to think about this in more detail… But we will only have bandwidth for this once RIZv2 markets are all deployed in the current cedance. So until then, we should discuss.

However, one point I would like to emphasize already is that when there is a trust issue around a protocol, the core problem is usually not that users are unwilling to interact with specific mechanisms (such as depositing dLP to qualify for emissions). The deeper issue is that they may be hesitant to deposit at all. And without deposits, there is no collateral, which means no borrowing activity either.

So the challenge may be less about optimizing borrow rate mechanics and more about restoring confidence and lowering the psychological barrier to entry. Some markets already offer more competitive borrowing rates compared to competitors, and some are even net positive APR to borrow.

Waiting for further feedback from both the team and the broader community, and it will be important to evaluate these suggestions collectively.

3

Agreed paying people to loop/farm isn’t really the best use case over the long run. Probably makes sense to still push incentives to core deposits but just pushing borrowing costs down without incentives>

@esports4053 what curves are you seeing and what curves would you think should be targeted? I haven’t looked at the rate curves in awhile maybe we should post some examples