RFP-47: Creating Fractional Reserve Markets to Reimburse Radiant Depositors on BSC and Arbitrum

Feedback
43

I just don’t forsee any of the loans outstanding to remain after the 1 month grace period I think it was.

None of the debt will have any real capital in it for a long time. It will be worth zero and when liquidation grace period is over anyone with a borrow will immediately be liquidated. So makes no sense to me why we would start in this manner with all of the collateral worth zero. It won’t accrue to anything meaningful to make a difference here.

It would be like if we allowed borrows on the deposits. If someone has no outstanding debt and wants to borrow they dont actually have collateral available. Nobody will be able to borrow as well.

44

You don’t know that. If you write a plan with prejudice it will fail for sure.
Also, it’s entirely possible the contract will start with 20-30-40% capitalization right away from bailouts and not from 0.

My plan accounts for both possibilities, that some people don’t want to keep their loans and some want to. I have a big loan and I want to keep it. I’m happy to deposit interest into the contract not be liquidated. Real money.

45

Your entire loan will be liquidated after the grace period because you deposit is worth zero and the “value” in loan to value is zero.

How do you expect 20% recapitalization right away? Where is that 10-20million coming from? We start with say 100mil in debt tokens issued (hypothetically) then after 1 month we get revenue that comes in. Optimistically we will get 100k in revenue so lets just say we give 30k of that back to depositors.

Now you have 100mil in debt tokens worth $30k and 50million in borrows maybe. If we set loan to value at 20% to be conservative after the one month grace period All of that revenue just liquidates month after month to pay the loans off until the debt is written to zero. And the protocol just tracks bad debt the entire time.

Is that how we want this repayment to function? Seems like a bad way to do it.

46

The loans (variableDebtTokens) are matched to the debt tokens (rTokens) and not the real deposits. You won’t get liquidated.

If the Radiant team does its job, it comes from Binance and ArbiDao. But any third party can deposit into the contract for RDNT rewards.

47

Impressed, good write-up.
My initial thoughts:

I understand that the 5% radiant reward (for deposits) goes directly to the user but it does not explicitly mentions this and how the withdrawal would work (e.g. similar 90 day vesting as the current protocol?)

I feel the early withdrawal penalty % should be higher somewhere between 15%-25%
Potentially it could start at 25% and would decrease to 15% over a 2-year time frame
We could potentially vote for the percentage

Funds stuck in the hacked contract:
BNB stuck is essentially burned ==> contact Binance for compensation via the BNB burn program
wBETH stuck is essentially burned ==> contact Binance to mint new wBETH (or compensation)
StETH stuck is essentially burned ==> contact Lido to mint new StETH (or compensation)
I feel this needs to be specifically mentioned as I didn’t see much discussion on these options
And we need the Radiant team to actively pursue this

The ambition should be to start the “Pre-Hack Isolated Markets” with as little debt as possible
So I really like the part on “Manual Loan Repayment via Deposit Deduction”
But I feel it will be very difficult to execute when loans are a different token than the deposited currency
Almost feel this should be done centralized by the team (to reduce workload on implementing this as a contract)
It would be much less complex (and thus faster) to just settle all debt centrally at the start by reducing the deposits by the % loaned at the time of hack

Doesn’t specify how the loan interest rates will be defined, while this is a crucial part of the proposal
It mentions it could either be dynamic or hard-coded
This part needs more clarity, as it can make or break the “Pre-Hack Isolated Markets”

Once we have value in the “Pre-Hack Isolated Markets” I can imagine that we could use the DLP eligible deposits in the new BSC/ARB “Post-Hack Isolated Markets” to get additional yield on the deposits
Could be optional feature

48

Thanks for the detailed feedback!

RDNT Rewards for “Pre-Hack Isolated Market” Deposits:
The 5% RDNT reward for deposits will function exactly as it does for the normal core markets. Unlike the core markets where rewards are dynamic, this will be a static reward.
The standard core market rules will apply when it comes to vesting/withdrawals/etc.

Early Withdrawal Penalty:
The early withdrawal penalty is subject to change. The 15% mentioned is just a baseline suggestion, originally proposed by @TheGames.
I’m waiting for feedback from the community, as well as input from the council and the development team, before finalizing any numbers in the proposal.
The early withdrawal might not get implemented right away.

Stuck Assets
Weren’t these assets sold through a DEX by the hacker? If so, they’re only “stuck” from our perspective—they still exist in the ecosystem. Regardless, we should fully explore all partnership options. The proposal lacks specific details on this because I don’t have visibility into the team’s exact plans. I included general language for potential bailout options.

Debt Discussion:
When we talk about debt, we’re referring to two types:

  1. Debt owed by the protocol to depositors.
  2. Debt owed by borrowers to the protocol.

My goal is to start the pool with as much outstanding borrower debt to the protocol as possible. If borrowers keep their loans, they’re signaling an intent to pay interest, which generates revenue for the protocol.

The net debt the protocol owes to depositors doesn’t change whether people offset their loans or not. This is why it’s preferable if fewer people use the ‘Manual Loan Repayment via Deposit Deduction’ option.

Your suggestion to liquidate everyone at once would result in forfeiting future loan revenue, which is approximately $2-3 million per year.

The offset process would more likely happen off-chain before we launch the isolated contracts, but it is still too early to consider this.

Loan Interest Rates:
I don’t know what the appropriate interest rate on loans should be. Since this market won’t operate in a typical manner, implementing dynamic pricing could be challenging. Fixed rates in the range of 5–10% might be reasonable, but I’m waiting for additional feedback before deciding.

I don’t really understand this last point. Could you elaborate?

49

There’s no reason to deposit when you can’t withdraw for 1-2 years, the deposits don’t get interest, and the protocol was recently hacked. This proposal is absurd. It also directly harms those who don’t want to add more capital (which will be 99% of users).

Can we have a proposal that doesn’t make things worse for victims or is that too much to ask?

50
  • Deposits do earn interest. 5% in RDNT. Obviously, this isn’t nearly enough to incentivize deposits. So a fair point.
  • But, we want to get Binance and Arbi to deposit. And want to incentivize other big players with OTC RDNT. We need a contract for that, so they can deposit directly. Also, they will get their funds back + OTC RDNT + 5% RDNT. Much better value proposition for them. + They help us.
  • You don’t have to add more capital. You will be able to offset all your loans before the contract even starts.
  • There were more complex solutions, but those would take way too long to implement and take away time from actually growing revenue.
  • You can create a proposal and the community can also vote on it, or if it has great elements maybe I can add it to my proposal.
1 Like
51

I wrote up a rough one almost a week away but nobody seems to care. I’ve worked as a tokenomics guy for 2 years and with some extremely name people but not a comment yet!

53

I agree with compensating users, but I demand equal compensation for both deposit users and wallet-authorized users. Prioritizing compensation for deposit users over wallet-authorized users is highly unfair.

1 Like
54

I 100% agree with your position that it is not possible to give priority compensation only to those users whose funds were stolen from the platform. Why is this unfair? Because it is not a coincidence that those are the people whose funds were stolen by the Hacker via Aprove, as these people contributed their funds to the Arbitrum and BSC networks long before this Horrible Hack. Thus, they supported the Protocol with liquidity at an early stage, i.e. they were part of the community. Therefore, I ask the esteemed Project Team to also take into account the Addresses that the Hacker emptied via Aprove and set the same Priority for these Addresses as for those users who stored funds in the Protocol at the time of the Theft.Thanks for understanding.

55

As one of the very early Radiant users, this plan looks good and is very well thought out. The main issue is the protocol has not really expanded their services to start bringing in real earnings/fees like other competitors have done.

The key to Radiant surviving is getting the funds to pay users in full quickly. If this means they have to sell the project to a competitor or bring on another partner, this needs to be done now as I believe they will not make it in the end. There are too many good protocols out there.

It’s also been over 2 months now and they haven’t even gotten any partners or even the founders coming out of pocket to save their company. How about large partners like Binance and Ether.fi to help? What is being done.

Will pitch this again but how about an NFT sale? This sale will provide you with a locked in APR for a certain period. The NFT could have multiple utilities to help borrowers pay a FIXED APR and/or lenders earn FIXED APR.

For example, you can do an NFT for each asset:

BORROW
6% APR for 24 months on USDC up to $10k
6% APR for 24 months on USDC up to $20k
6% APR for 24 months on WBTC up to $10k
6% APR for 24 months on WBTC up to $20k

LEND
5% APR for 24 months on WBTC for up to $10k
5% APR for 24 months on USDC up to $20k
5% APR for 24 months on WBTC up to $10k
5% APR for 24 months on WBTC up to $20k

Create unique NFT’s based on the amount that users will be depositing/lending allowing for different prices for the NFT’s. The nft’s will be locked in the protocol for the term of the loan. This would be solving one of the biggest issues with DEFI that rates are variable. This creates real utility. Focus on UTILITY FOR BTC. This is one of the hottest narratives right now.

This NFT launch can help jumpstart the funds raise and create hype and excitement about the protocol.

There should be some type of partnership with an insurance protocol and/or a custodial company that will be on control of the funds. I believe Radiant is not capable of holding the private keys themselves and should outsource this to another party which that party would be insured and audited.

Maybe a partnership with GMX???

To save a company that was really not killing it, you have to reinvent the service and find the areas in Defi that need improvement. INNOVATE.

56

RFP-47a Idea will not be moving forward. It completed the 7-day ideation process. It was a really ambitious plan, but challenges on the dev side would make it too difficult/costly to implement. It would take too much dev time to maintain an entire isolated lending market for hack victims only. The lending contracts are incredibly complex and hooked into virtually every existing contract.

There are a lot of things to consider and many stakeholders with different interests. There is a lot of game theory involved and potential future issues that need to be anticipated in advance. It’s kind of a nightmare to come up with something that works for everyone. However, I wrote several proposals that will require community feedback later.

First, the existing core markets have to be restored though.

Radiant will not launch any NFTs or ERC20 tokens as part of the recovery process.

I lot of innovation is coming to the protocol in tandem with a recovery plan. I would like to ask you to be a little more patient. I know this is asking a lot!