[Proposal] Safety Fund


Devs have done a good job checking for every problem they can they can think of. I am here, however, to address a far greater problem: the thing they and we don’t think of.

For that purpose, I propose the DAO create a Safety Fund. I also propose we make it huge, to account for the fact that we don’t know how big the thing we don’t think of will be.

After all, Radiant’s money markets do in fact represent customers’ hopes and dreams - degenerate and silly as those may be - for themselves and their families. We should do something to prepare for the day something unforeseen happens.

To wit:

  1. Divert 10% of fees to a Safety Fund, where it can sit in yield-bearing stablecoin positions or real world assets (t-bills, other peoples’ bills).
  • I’m not married to 10%, but I think below 5% it will never build up quickly enough to address even low-tier threats in the near to medium future.
  1. Continue to put those fees + the interest into Safety Fund until it reaches a pre-determined proportion of TVL.
  • Whenever the Fund is smaller than the pre-determined level, fees and interest are both added and compounded to it continuously.

  • When the Fund exceeds the level, fees return to dLP holders, and the interest is also added to that stream.

  1. I think a good target is ~25% of TVL. It may take years and years for the Fund to reach that size, but with 10% or more of fees, it could quickly reach a size that still helps instill confidence in Radiant’s markets.
  • Below 25%, due to the tendency of leveraged systems to spiral out of control, we run the risk of impotently tweeting “deploying more capital” without it mattering. Above 25%, we are probably over-insuring as anything bigger than that is approaching an insta-kill event.

  • However, I could be persuaded that that number is in fact 30-40%.

  • After all, I’m also proposing we just patiently divert a trickle to it now and let it build up. Since it might eventually turn into both an insurance policy and an income stream once it reaches maturity, a big fund is not necessarily that much of a drag on business.

  1. Perhaps there is also a way to use this fund to assist Radiant’s omnichain future? Perhaps if the fund is of a sufficient size and held in part on each chain, it could also help Radiant do in-house clearance for cross-chain lending, borrowing and movement. I realize this is also in itself surface area for exploitation, but we have to get to v3 somehow.


The idea is quite good, and I’ve thought about it several times, especially since the curve exploit. However, I believe we should delve a bit deeper with competent people to draw a conclusion on how to fund this insurance, as you mention percentages of 25% and 10% for the fees, but there’s nothing concrete behind your figures. Nevertheless, thank you for putting the idea on the table.