RFP (Idea): ARB incentives for Radiant (Arbitrum) stakeholders

Feedback
1

Written after incorporating feedback from several other stakeholders. Open to feedback, changes, additions, etc.

Abstract

Radiant was awarded a 3,348,026 ARB grant by the Arbitrum Foundation. This proposal seeks to utilize this grant to grow the Arbitrum arm of the Radiant platform, facilitate a flywheel, and achieve platform metrics to be eligible for further large grants in future. An initial suggested split of 40% of ARB to borrowers, 40% to dLP lockers, 10% to depositors, and 10% to the Starfleet Treasury is proposed with a 12 month horizon for the current grant. If Radiant is awarded a larger allocation of any future grants prior to the 12 months ending, then these numbers could be altered to be more aggressive subject to governance.

Motivation

Utilizing token grants for the purpose of platform growth has seen great success within other ecosystems: notably Velodrome’s use of OP to incentivize liquidity and kickstart their VELO flywheel. Radiant was among the largest recipients of the initial ARB grant, and it would be valuable to make use of this grant to cement our place as a pivotal protocol in the Arbitrum ecosystem.

Given ARB’s high proportion of supply reserved for future growth, further grants based on contribution to the chain’s TVL, usage, and activity, are very likely. By adding ARB incentives to the Radiant platform for depositors, borrowers, and dLP lockers, we are able to significantly increase the likelihood of increasing any future ARB grants, while increasing fees to dLP lockers in the process.

Rationale

The alternative use of keeping these tokens for the project runway is a flawed proposition. If a leading ecosystem project like Radiant were to sell its ARB grant to fund its runway rather than to incentivize users and grow the network’s value, it would certainly be controversial and looked upon sourly by the wider Arbitrum/DeFi community, and detract from the likelihood of receiving future grants. The more productive route would be to use ARB to facilitate protocol growth, which in turn also increases the Radiant Foundation’s 15% OpEx budget for runway through increased TVL and borrowing (as well as real yield to dLP lockers). Also, ARB is of course a governance token, so distributing it into the hands of a wide variety of users to decentralize its voting power is likely to be looked upon favourably by the Arbitrum Foundation.

Specifications

3,348,026 ARB grant, split into 12 months = 279,002 ARB/mo, broken down to:

111,601 ARB/mo shared between Arbitrum dLP lockers proportional to their lock length (the same split as the protocol revenue is currently)

111,601 ARB/mo shared between Arbitrum asset borrowers, encouraging more borrowing & therefore real yield fees to dLP lockers. This should be applied to each asset proportional to the RDNT emissions currently being emitted.

27,900 ARB/mo shared between Arbitrum asset depositors. This should be applied to each asset proportional to the RDNT emissions currently being emitted.

27,900 ARB/mo sent to the Starfleet Treasury.

90 day vesting for depositors and borrowers, no vest for dLP lockers or the Starfleet Treasury.

Steps To Implement

Add ARB as a reward token to the Radiant platform (Arbitrum Chain only) and move 279,002 ARB/mo to the relevant contracts for emission.

However, given that contracts enabling dual emissions for depositors/borrowers have not yet been completed & audited, hold this portion back. If this takes 1 month, then split the allocations over the following 11 months, such that the allocations to each category are in sync and ‘run out’ at the same time.

Timeline

Immediate as approved and implemented. Incentives to depositors/borrowers subject to completion & audit.

Overall Cost

279,002 ARB/mo for 12 months = 3,348,026 ARB

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I like this proposal. Here are a few comments/suggests.

1: I’d add something that says these ratios are subject to change based on future governance to meet the changing needs of the DAO/market conditions.

2: You seem to be allocating about 10% of the ARB to the treasury. I’d prefer to see that closer to 30%. It’s important for a DAO to build and maintain and eventually put to work a diverse treasury.

3: You mention 27,900 ARB/month being sent to the treasury, but where would this ARB come from. It’s already in the treasury as far as I know.

I think this all looks great if you take 1/3 of the ARB and allocate it to long term treasury holding/lp and then remove the portion being paid monthly to the treasury and see this more as payouts from the treasury that are being directed by this proposal.

I’m also interested. How did you decide on the ratio between DLP lockers, borrowers and depositors? Do you suggest that they are allocated in the same ratio as RDNT is?

What about creating an ARB market and allocating a decent chunk to depositors and borrowers there? Should ARB emissions to deposits/borrowers also be subject to the 5% DLP limit?

6 Likes
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Given the concerns around distributing Arb across multiple users, perhaps one alternative could be to stake the Arb allocation and use the earnings to supplement protocol revenue. This would incentivize dLP holders without distributing the tokens, it would also mean Radiant could continue to play an active role in Arb governance.

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chud.eth is referencing the Starfleet Treasury which is not the DAO Treasury. When implemented, it will support emission qualification with a more dynamic model than the hard 5% threshold, using a ‘weighted score’ that considers factors like gross dLP locked, dLP ratio, locking length, and keeping ‘Auto-Compound’ enabled.

RFP-11

  • Create the Radiant Starfleet Treasury, which will be a MultiSig that receives 10% of exit penalty RDNT upon the v2 launch.
  • Adjust the treatment of exit penalties upon the v2 launch: send 10% of exit penalty tokens, which were originally allocated for burning, to the Radiant Starfleet Treasury.
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I fully support this proposal, and I feel strongly about leveraging Radiant’s current position as a protagonist protocol in Arbitrum to raise into more prominence by incentivising and rewarding users to make capital sticky (as opposed to mercenary capital).

I can’t comment much on the exact ratios. 10% for the treasury seems reasonable, but if others feels that it’s too low it could be increased to maybe 15% or 20% depending on the reasoning behind it (having the ARB parked in the treasury just for the sake of it doesn’t strike me as good use of capital).

This proposal should be considered in tandem with RFP-11. I believe the dLP % threshold is not implemented in an ideal way and it needs revisiting. The ARB allocation could contribute in this regard.

1 Like
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I would suggest not spending a significant amount on incentives. There is also an option to place these tokens in the liquidity pool on Balancer, Camelot, Uniswap and distribute the proceeds to dLP lockers. This would also create value for the protocol and keep the tokens in treasury. Will enable voting in the ecosystem in the future.

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What do you mean by staking? There is no $ARB staking as far as I know.

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Nice proposal but have you run the numbers given the current TVL? I expect the incentivization to be low-ish. If that’s so I’d rather have the DAO keep the $ARBs in its treasury.

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The point is maybe in a year in a bull market ARB is worth 10 bucks and the treasury doesn’t have so much Radiant and there’s a desire to emit a bunch for a big launch or something. The protocol is young, there’s a lot of tokens, it makes sense to save some for later and not allocate them all with 1 proposal in the first few weeks.

There’s also already a lot of interesting ways to make money and/or farm it if the treasury wants to engage in such measures to get an ROI on assets at rest. More important that earning yields on it is just keeping some around for later.

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Having the protocol have its own POL with ARB may be strategic in allocating to reserves, future ARB voting, incentives etc. I like the idea of not giving it all away as long as Radiant continues to have TVL adoption.

1 Like
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This is a good point - we could have a best of both worlds situation where we commit to this emission schedule, but also utilize the ‘pending’ ARB in the meantime to earn yield. During month 1, the treasury would be able to farm with 91.7% of the ARB, which is ‘pending emission’, and then keep the yield on that in the General Treasury, as ARB, to maintain exposure.

I would usually agree with this, but I think given the high likelihood (if not confirmation) of future grants, it makes sense in my mind to maximize our metrics for those, and be seen as a protocol to be decentralizing ARB’s tokenholder base, and using grants to grow the prominence of Radiant and Arbitrum. Like an ‘ARB grant flywheel’ :stuck_out_tongue:

2 Likes
14

Good thinking brother. Like that

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I am just unwrapping the onion of my stores of Radiant information held in my thoughts annnd coming here to lear others is a herlpful tool. I like this part. Nice !

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Sorry - description was too generic… Stake/farm/LP or otherwise utilise it in a fashion that generates a return. What I’m suggesting is there are alternative ways to use the Arb grant to incentivise platform growth that don’t dilute the DAO’s holdings and therefore the ongoing role the DAO can play in Arb governance. A few off the top of my head could be to:

  1. Stake/farm/LP on another platform and distribute income
  2. Utilise the granted Arb as collateral on Radiant and burn the resulting emissions
  3. Utilise the granted Arb as collateral on Radiant and distribute the resulting emissions
  4. Utilise the granted Arb as collateral on Radiant and allocate the emissions to marketing…
  5. If we wanted to increase the role Radiant could play in Arb governance, then the most logical thing would be to distribute any income/emissions gained from the above to delegators to incentivise delegation.
1 Like
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Believe it would be a good idea to hold on to the majority of these coins ARB now as they should be gaining value in the near future.

Maybe some of the funds can be used toward charity purposes. I believe in life we all should be trying to help others anyway we can and since this was essentially free money, how about we create some radiant yield accounts that are designed continually raise money for charity. Little donations multiplied by large volume can be so massive.

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Good thoughts are put into this, to keep the $ARB in the treasury, to my opinion, it is not a good financial management, POL is a good one since it puts the capital into work. I believe the current $RDNT emission is sufficient to bootstrap TVL, so to incentivize deposit/borrow activity using $ARB may not be ideal. Probably to encourage dLP with $ARB may work, and with higher dLP, people may deposit more TVL and the flywheel begins.

3 Likes
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I like this idea. Stake ARB and distribute rewards to dLP holders.
This would make protocol even more appealing.

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I like the idea of using some of the ARB to encourage dLP and depositors (lenders). Both add value to the protocol. What the exact ratios are is not clear to me now, but I think 20% to the DAO should be okay with the other 80% distributed over some period of time (like any other emmissions schedule) based on deposits and locked dLP.

2 Likes
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I think as part of the vote the % of incentives should be included. It’s a difficult matter and needs a proper vote, but in general i agree with everything vouched. I would probably halve the initial numbers and leave the rest in the treasury for future voting/incentives.

The best level of incentives would boost most pools by around 10% APY, this would make the investments interesting but wouldn’t waste too much ARB early on. The main goal of this is to bring more liquidity to the platform itself so that should be the measure on which the ARB is spent.

1 Like
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I like the proposal in principle, perhaps using a quadratic function, however I would like to see some element of extra award for those active within here as DAO members, contributions ultimately as important if we want to fully pursue the dream of true decentralization.