1. Background
With the continuous development of public chains and Layer2 ecology, liquidity has been further divided. In the blockchain world, fragmented distribution of liquidity has become the norm.
According to statistics from defillama, the amount of funds locked in DeFi has reached more than 70 billion US dollars. This is a huge amount of funds. At its peak, the TVL once reached more than 200 billion US dollars.
However, this amount of more than 70 billion US dollars is not distributed in a centralized manner, but is widely distributed in various public chains and protocols. According to defillama statistics, more than 70 billion US dollars of funds are widely distributed in more than 200 public chains.
Moreover, each public chain has a large number of protocols. For example, there are more than 800 protocols on the Ethereum public chain and more than 600 protocols on the BSC chain. These public chains and the various protocols under the public chains have cut more than 70 billion US dollars of funds into countless fragments.
The fragmentation of liquidity has greatly reduced the utilization rate of funds. Currently, more and more project parties are committed to integrating these scattered fragmented liquidity through certain protocols to improve the utilization rate of funds.
For example, in the DEX track, 1inch (fusion), Uniswap (UniswapX protocol), etc. are committed to introducing external liquidity and providing users with more advantageous exchange prices through technologies such as smart routing.
Lending is a rigid demand in the financial world and an important component. In the DeFi segment, in addition to DEX, decentralized lending projects also need to integrate decentralized liquidity to lower the threshold for lending, such as lower fees and simpler operations. Radiant Capital emerged in this context.
2. Radiant Protocol Overview
Radiant's goal is to become the first full-chain lending market, which essentially integrates liquidity distributed on different chains without the need for cross-chain and seamless connection. This will lower the threshold for user operations and improve asset utilization.
Moreover, most of the fees generated in the Radiant lending protocol are also returned to the dLP holders, that is, the users who contribute to the Radiant platform.
At present, if most lending protocols want to implement cross-chain lending operations, the common practice is to deploy different versions on different chains, such as deploying one version on the Ethereum mainnet and deploying different versions on different chains such as BSC chain, Arbitrum, Optimism, etc. These different versions are not interoperable, and the liquidity between them is separated. Cross-chain and lending need to be carried out separately.
For example, if a user has deposited USDT tokens on the Arbitrum chain but wants to borrow BNB on the BSC chain to participate in Binance’s activities, he or she will first need to transfer USDT from the Arbitrum chain to the BNB chain through a cross-chain bridge, and then borrow BNB.
However, the full-chain loan protocol Radiant can realize cross-chain lending. Users can deposit any mainstream assets on any chain, and then perform lending operations on other chains.
In the above example, as long as the user deposits USDT tokens as collateral on the Arbitrum chain, the BNB token lending operation can be performed directly on the BSC chain. The user does not even feel the existence of the cross-chain, thus achieving seamless cross-chain lending between different chains.
Radiant not only reduces the trouble and cost of user operations, but also integrates the decentralized liquidity on different chains and improves the utilization rate of funds.
3. Cross-chain mechanism
How does Radiant achieve full-chain lending?
From a technical perspective, Radiant (RDNT) builds its full-chain interoperability through LayerZero’s Omnichain technology.
The cross-chain function of Radiant V1 mainly relies on Stargate's cross-chain routing, but in V2, Radiant first converts RDNT's token standard from ERC-20 to LayerZero OFT format, and replaces RDNT's Stargate routing interface with LayerZero's OFT cross-chain standard.
What is OFT and what does it do?
OFT is LayerZero's OFT (Omnichain Fungible Token) token standard, which is a token standard like ERC-20 and TRC-20.
The OFT standard token is a wrapped token that allows free flow between chains supported by LayerZero. OFT is a shared token standard on all chains supported by LayerZero and can be seamlessly transferred between these chains without adding additional costs (such as cross-chain asset fees). When the OFT standard token is transferred between chains, it will be directly destroyed on the source chain through the token contract, and the corresponding token will be minted on the target chain.
We can understand OFT standard tokens as tokens that are compatible with different chains. As long as they are chains supported by LayerZero, OFT standard tokens can be seamlessly transferred between these chains without any additional costs. OFT is the token standard shared by these chains.
For example, Arbitrum and BSC originally belong to different chains, but LayerZero supports Arbitrum and BSC chains. OFT is the token standard shared by these two different chains. Therefore, Radiant, which uses LayerZero as the underlying technology, can achieve seamless transmission between the Arbitrum chain and the BSC chain.
Therefore, one of the advantages of Radiant's integration with LayerZero is that it can solve the problem of liquidity fragmentation to a certain extent and can use a unified token standard on multiple chains. Of course, the premise is that LayerZero can be widely expanded and can support more chains.
Currently, Radiant only supports cross-chain lending between Arbitrum and BSC, and will provide complete full-chain deposit and borrowing functions in the near future.
4. Team
Radiant Capital disclosed several team members in its official documents, but only their names and positions. No other information, including the resumes of the team members, was disclosed. In essence, it is an anonymous team.
In addition, Radiant mentioned in an official blog post in April this year that Radiant Capital has a team of 14 people who previously came from Morgan Stanley, Apple and Google. Team members have been engaged in the DeFi industry since early summer 2020, and many team members have been engaged in cryptocurrencies since 2015.
V. Financing
The Radiant Capital project did not raise any funds when it was first established, and all operating costs of the early projects were raised by the team members themselves.
The Radiant protocol has successfully completed its early cold start and has developed quite well. It has attracted a certain user base and can also bring stable income to the protocol, thereby covering certain operating costs.
However, on July 20, Binance’s venture capital arm, Binance Labs, announced that it had invested $10 million in the cross-chain lending protocol Radiant Capital.
The funds raised will be used for further technology and product development to expand oracle support, collateral expansion, Ethereum mainnet deployment, cross-chain liquidation, and full LayerZero messaging support, among other developments aimed at facilitating the onboarding of the next 100 million users to DeFi.
Commenting on the investment, He Yi, co-founder of Binance and head of Binance Labs, said:
“Binance Labs actively seeks out promising DeFi projects that are not only advancing the industry but also pushing the boundaries of innovation. Radiant Capital’s commitment to facilitating seamless cross-chain transactions in DeFi and its performance on Arbitrum and BNB Chain demonstrates its potential to drive mass adoption. We look forward to seeing Radiant’s continued growth and further contributions to the ecosystem.”
Radiant Capital is able to obtain investment support from Binance. With Binance's endorsement and the powerful resources behind Binance, it will be able to inject new vitality into Radiant's development in the future.
George Macallan, founder of Radiant Capital, said:
“I’m extremely excited about our partnership with Binance Labs as they bring extensive expertise, resources, and strategic support to the protocol. Their investment will play a vital role in driving Radiant to new heights as the protocol expands to new chains.”
Just after Binance announced its investment in Radiant Capital, Radiant Capital platform token RDNT surged.
VI. Basic Business
1. Borrowing
As a decentralized lending protocol, lending is the basic function of Radiant.
Currently, the Radiant lending market only supports mainstream assets on the Arbitrum chain and the BNB chain, and will expand to mortgage lending of more on-chain assets in the future.
On the Arbitrum chain, supported assets include:
1) Stablecoins: USDT, USDC and DAI.
2) Mainstream currencies: ETH, WBTC, wstETH.
3) Arbitrum platform currency: ARB.
On the BNB chain, supported assets include:
1) Stablecoins: USDT, USDC and BUSD.
2) Mainstream currencies: ETH, BTCB.
3) Platform currency: BNB.
Users can deposit and borrow across chains (currently only Arbitrum chain and BNB chain are supported) and deeply participate in the Radiant lending market.
Radiant offers two interest rates, as shown in the figure above. The interest rate above represents the basic lending rate, that is, the interest rate for deposits and loans.
As long as you deposit or lend money on the Radiant platform, you can get corresponding returns. For example, the interest rate for depositing DAI is 2.61%, while the interest rate for borrowing DAI is 16.51%.
The APR interest rate in the purple box below refers to the Radiant native token RDNT reward. This part is the dLP locked yield, but it has a threshold.
According to the rules of the Radiant platform, users must lock up at least 5% of the USD-denominated value of their deposits in dLP to be eligible for RDNT reward issuance on borrowing and depositing.
In other words, users need to form a dLP first, that is, two coins form a trading pair. The Radiant platform dLP currently only supports two forms of trading pairs:
Decision: Balancer 80/20 composition (80% RDNT & 20% ETH)
BSC: Pancakeswap 50/50 (50% RDNT & 50% BNB)
Moreover, the value of the dLP locked position needs to reach 5% of the total deposit value, so that you can get the RDNT token reward with the corresponding yield in the blue box mentioned above.
Of course, the locked tokens may fall in value. When the dLP locked value is lower than 5% of the total deposit value, no income will be obtained. When the price rises and the locked value is higher than 5% of the total deposit value, income can be obtained again. This is a dynamic process.
Let’s take an example to help understand:
User A: Deposit 1 million USDT into Radiant, but lock up $0 in RDNT/BNB dLP. Then, he will be eligible for the basic deposit yield, but will not receive additional RDNT rewards.
User B: deposits 1 million USDT into Radiant, but locks up $50,000 worth of RDNT/BNB dLP. In addition to the basic deposit income, he can also receive additional RDNT rewards (assuming he continues to meet the minimum 5% threshold).
2. Revolving loan
The Recycle & Lock feature allows users to increase the value of their collateral by automatically making multiple deposit and borrow cycles. The feature also automatically borrows ETH and transfers it into a locked dLP position to meet the 5% dLP requirement to activate RDNT issuance.
In addition, Radiant also provides a one-click recycling function, which allows users to increase the value of their collateral through multiple automatic deposit and borrowing cycles (up to 5x leverage).
Radiant’s 1-Click Loop feature provides users with an easier way to gradually increase liquidity and achieve higher returns with up to 5x leverage.
7. Token Economic Model
The total amount of RDNT is 1 billion, which is distributed as follows:
According to statistics from https://stats.radiant.capital/circulating, the total number of RDNT tokens in circulation is 290 million, accounting for 29% of the total RDNT.
The above picture shows the unlocking schedule of RDNT tokens after issuance.
On July 24, 2022, a major token unlock and distribution occurred in the Radiant ecosystem.
Treasury unlocked 30 million RDNT tokens, while DAO reserve unlocked 140 million RDNT tokens. Secondly, 70 million RDNT tokens were allocated to core contributors and advisors, which will be gradually released within 18 months. In addition, 540 million RDNT tokens were allocated to supply and borrower incentives, which will be released within 60 months. Pool 2 received 20 million RDNT token incentives, which are expected to be released within 8 months.
The remaining locked tokens will be released gradually in the future until all are unlocked in July 2027.
In addition, in order to reduce the impact of inflation, Radiant introduced a dynamic liquidity supply (dLP) mechanism to encourage users to lock RDNT tokens through token incentives.
If users want to receive RDNT token rewards, they need to lock up at least 5% of the total deposited value in dLP tokens. This means that if a user deposits $1,000 worth of tokens on the Radiant platform, they need to hold at least $50 worth of dLP tokens.
Currently Radiant offers two locked LP pools:
1) Arbitration: 80% RDNT & 20% ETH
2）BNB Chain：50% RDNT & 50% BNB
This means that users need to stake a certain proportion of RDNT/ETH or RDNT/BNB dLP to obtain RDNT token rewards. Higher yields will encourage more users to lock RDNT tokens through dLP.
dLP currently supports a lock-up period of 1-12 months. The longer the lock-up period, the higher the token reward will be. The token reward will be released linearly within 3 months. For users, if they do not want to wait for 3 months, they can of course apply for early withdrawal, but early withdrawal of tokens can only obtain 10-75% of the token reward.
If the token price falls below the minimum threshold of 5%, in order to continue to obtain RDNT returns, users will be incentivized to continue purchasing RDNT tokens and re-lock more LPs to stay above the minimum threshold of 5%.
In addition, users who fail to withdraw rewards after the expiration date will be removed from the pool and will no longer receive incentives. Users can activate the re-locking option in the interface.
These unlocking and distribution mechanisms together form the token economic model of RDNT.
It can be seen that in Radiant’s token economic model, the token release rate is controlled to a certain extent, which ensures the sustainable growth of the project without affecting the liquidity within the ecosystem.
8. Development Status and Competition Landscape
1、TVL
According to defillama’s statistics, Radiant ranks 21st in the entire DeFi ranking, and ranks 6th in the DeFi lending segment.
In lending on the Arbitrum chain, Radiant ranks first, 3 above AAVE, while in lending on the BNB chain, Radiant ranks second, just behind Venus.
Radiant has emerged as a leading player in the Arbitrum and BNB Chain ecosystems.
Radiant landed on the Arbitrum chain last year, and its TVL on the Arbitrum chain has surpassed AAVE. On the BSC chain, Radiant went online in March 2023. After only four months, its TVL rose to second place, highlighting Radiant’s strong performance on both platforms and its increasingly prominent position in the lending field.
The growth trend of TVL can also be clearly seen through the data. Whether it is the BNB chain or the Arbitrum chain, TVL has grown significantly.
2. User
According to dune website data, Radiant currently has 4,750 daily active users and a total of 216,831 users.
The number of holders of RDNT tokens is 132263.
3. Trading volume
Radiant’s trading volume in May and June was over $700 million, with the highest volume in April reaching $1.2 billion.
Compared with other lending protocols, Radiant's trading volume is second only to AAVE. In recent months, Radiant's trading volume has been relatively stable, basically around US$700 million. In recent months, its trading volume has exceeded Venus and Compound. Due to the influence of the RWA track, Compound's trading volume in June exceeded Radiant.
Radiant has only been online for one year, but its transaction volume has exceeded that of some established lending protocols that have been running for several years, which is a very good result.
4、Utilization rate
Radiant’s total utilization rate is about 60%. According to official documents, when borrowing, the LTV of DAI is 75%, and the LTV of USDC and USDT are both 80%.
This means that for every $10,000 deposited, you can only borrow a maximum of $7,500 in DAI. If you borrow USDT or USDC, you can only borrow a maximum of $8,000.
The capital utilization rates of the three major stablecoins are relatively close to the upper limit. RDNT token rewards and the simple user interface for circulation and locking have improved the utilization rate of funds.
Although the utilization rates of the three major stablecoins are not as high as AAVE, the utilization rates of WBTC and WBTC exceed AAVE.
5、Revenue
Compared with the other three lending projects, Radiant's average revenue in the past six months is higher than that of well-known lending protocols such as Venus and Compound, except that it is lower than AAVE.
Moreover, judging from the revenue in the last three months, Radiant's average revenue is already higher than AAVE, ranking first.
Compared with AAVE, Radiant currently only supports BNB chain and Arbitrum chain, while AAVE currently supports 6 chains, including Ethereum mainnet, Arbitrum, Avalanche, Optimism, Polygon and Fantom. The revenue generated by Radiant's two chains is already higher than AAVE's revenue on 6 chains.
This also shows to a certain extent that Radiant is experiencing a period of rapid expansion and has gained good influence in the industry.
6. Financial statement analysis
Judging from the financial statements, Radiant's transaction volume and revenue have increased significantly in the past few months.
Trading volume increased by 238% from $207.50m in February to $707.16m in June.
From February to June, Radiant's revenue increased significantly, from $575.47k in February to $982.92k, an increase of more than 70%.
The total deposits and active loans in recent months have also been relatively stable. The total net deposits have been over US$500 million in recent months, which can provide a large amount of liquidity for the platform.
In addition, the number of active users and holders of RDNT tokens has also grown significantly.
From the above financial statements, it can be seen that RDNT has good fundamentals and a good financial condition, thus having a good foundation to continue to expand its user base and market share in decentralized lending.
IX. Latest progress of the project
1. Completed milestones
Third quarter of 2022:
Radiant launches on the Arbitrum chain;
Become the lending protocol with the highest TVL on the Arbitrum chain;
Announcement of Radiant’s DAO-based governance framework and Radiant Foundation Request for Proposal (RFP).
Fourth quarter of 2022:
dLP (dynamic liquidity provider) fees reached $5 million;
Token Terminal ranked Radiant Capital as the#1“Price/Fees” project in DeFi.
First quarter of 2023:
Launched V2;
Radiant is launched on the BNB chain.
2. Version roadmap
Radiant disclosed a simple roadmap for the project in its official documentation. Radiant v2 was launched in March this year, and the team plans to launch V3 and V4 versions in the future.
According to the official roadmap, in the subsequent Radiant V3 version, the team plans to completely get rid of its dependence on the third-party cross-chain bridge (Stargate), fully integrate LayerZero, and become the "LayerZero" of liquidity and yield in the V4 version, becoming the preferred money market and cross-chain liquidity source for DeFi.
3. Latest News
In addition, Radiant recently announced the launch of a development update on Twitter, which includes a series of completed milestones, current major tasks, and future plans.
According to Radiant on Twitter:
On the backend side: the audit-related updates for Open Zeppelin have been completed, rigorously tested and merged (waiting to go live).
Front-end improvements: Enhanced application performance, including reducing and optimizing RPC call rate; refactored image resources for a smoother experience; and improved dark mode for a more stylish look.
Current main tasks: The FE team is working on stepping up its game through UI/UX optimization and is also working on application performance.
In addition, Radiant Capital is about to be launched on the Ethereum mainnet. The development team is currently reviewing the Radiant codebase and UI/UX to achieve Ethereum mainnet integration and is preparing for a smooth transition.
10. Future Potential
More and more DeFi protocols have dispersed the liquidity of funds, and the utilization rate of funds has continued to decline. In the future, those protocols that can aggregate the decentralized liquidity in the market are likely to stand out.
In the DeFi segment, decentralized lending plays a key role in the entire DeFi, with its TVL ranking second only to Liquid Staking, and even surpassing DEX. Lending can improve market liquidity and improve the utilization rate of funds. The full-chain lending market has huge room for imagination in the future.
Moreover, the competition in the decentralized lending sector is extremely fierce, with more than 200 protocols vying for market share. Currently, the top lending protocols include AAVE, JustLend, Compound, Venus, and Radiant.
As a pioneer and leader in decentralized full-chain lending, Radiant Protocol has good fundamentals and healthy indicators, as can be seen from the financial data analysis, and has a good foundation for expanding market share and user groups.
Moreover, Radiant currently only supports two chains (BNB and Arbitrum). With the development of LayerZero, Radiant will support more chains in the future (Ethereum mainnet will be supported in the near future), and will integrate more decentralized liquidity on the chain to provide better services to users.
In addition, the types of lending currencies currently supported by Radiant are very limited, and more currencies will be launched in the future.
In the future, more currencies will be supported and more chains will be launched, which will inevitably increase Radiant's TVL, transaction volume, user volume, revenue, etc., and will push Radiant to a new height.
Although other protocols are also planning full-chain lending, such as AAVE V3's Portal, TapiocaDAO and Cedro Finance, which also use LayerZero as their cross-chain infrastructure, they have not yet been officially launched.
Radiant already has a clear first-mover advantage in the field of full-chain lending and has accumulated a considerable amount of liquidity and user base.
From the data analyzed above, it can be seen that Radiant not only has a first-mover advantage in the field of full-chain lending and has become a leading project in this field, but also is basically on par with other leading lending protocols (such as AAVE) and has the momentum to catch up.
Radiant's token economy design also lays the foundation for Radiant's stable and sustainable development.
In addition, Radiant has the support of Binance. With Binance's endorsement, Radiant will receive more resource support in the future.
Currently, RDNT’s market value is over 90 million US dollars, ranking 257th. Let’s take a quick look at the market value and ranking of other lending protocols.
There is no doubt that AAVE has the highest market value, which has exceeded 1 billion US dollars, and the circulation of AAVE tokens has reached more than 90%. RDNT is still 10 times away from AAVE.
Currently, the circulation of RDNT is only 29%, and more than two-thirds of RDNT tokens have not yet been unlocked. Even if RDNT tokens are fully circulated, the market value is around 310 million US dollars, which is still 4 times the full circulation market value of AAVE.
According to the token economic model of RDNT, it will not be fully released until 2027, and it will be released linearly. In addition, the 5% dLP lock-up mining mechanism can also reduce the circulation of some RDNT tokens, thereby diluting the impact of daily token unlocking pressure to a certain extent.
With the huge future development space of the full-chain lending track, Binance's resource support, Radiant's excellent token design, and the explosion of Layer2, Radiant still has huge room for imagination in the future.