It's remarkable how a few more hours spent on a subject can profoundly change one's viewpoint.
Radiant Capital was that project for me.
I didn't exactly dedicate a lot of time to understanding it. I glanced at its tokenomics, checked out the website, lent some money, and that was it.
I genuinely couldn't understand why people were using it.
To me, it seemed like an obvious Ponzi scheme.
Look at it this way (as I did back then): You come to another lending platform, wanting to lend your money, naturally expecting a market-rate return on your deposit. And then you see that for your ETH, they offer 2%. But if you want more, you need to buy their $RDNT token, and the increased interest is paid in that same token. You research the token and see inflation, volatility, impermanent loss, and think, "Are they out of their minds?"
Moreover, you have to buy this inflationary token and lock it in liquidity. If the token's price drops, to continue receiving the increased rewards, you'll need to buy even more of these tokens.
So, you're lending your real money and getting inflationary tokens in return, which you then have to give back and can only retrieve once the lock period is over. Sounds like a Ponzi scheme, right?
And naturally, you'd think, so the rewards are paid in RDNT tokens, these tokens are sold in the market, meaning the price will continuously drop.
So, you'd have to keep buying this constantly falling token; otherwise, you'd get 2% on your ETH, which is below the market average. Better to just trade elsewhere.
That's probably what any crypto enthusiast, who's been burned a couple of times by hyperinflationary tokens, would think.
That's how I thought, having only superficially studied the tokenomics. From the Pendle case, I realized that if you don't understand something in crypto, delve deeper because the protocol was likely created by people much smarter than you.
I genuinely couldn't understand why people were using it.
The protocol was making big money, and here I was, arrogantly thinking it was a Ponzi.
After reading the documentation and several articles for a couple of hours, my view changed. You go to Radiant and have the opportunity to place your assets with leverage up to x4.
Yes, you need to invest in dLP at least 5% of your deposit to receive RDNT. It's an inflationary token, and dLP is subject to impermanent loss.
But is RDNT really subject to constant decline due to reward sales in the market?
The answer is no.
When you receive rewards in the form of RDNT, you have to put them into vesting to withdraw. But why do that when you can compound them into dLP and get rewards in the form of ETH, BTC, and stablecoins?
Thus, a significant portion of the new tokens doesn't hit the market; it's locked for a year (and now forever thanks to Radpie) and goes into farming on Balancer or Pancake.
The next factor is the disqualification of lenders from dLP rewards.
Users whose dLP share falls below 5% of their deposit stop receiving rewards. But the total rewards don't decrease; others just start receiving more. Thus, the more dropouts, the higher the APY for dLP -> more demand for dLP -> more demand for RDNT.
Early Exit penalty is another way to reward loyal protocol users. If a user decides to withdraw their rewards without waiting for the vesting to end, they will lose 25-90% of the withdrawal amount.
10% of this amount goes to the Radiant Starfleet Treasury, a fund that will reward the most loyal dLP holders.
90% goes to the DAO Reserve, which is community-managed.
And now another factor few consider.
We're always preparing for some crisis, but what if everything goes well? Are you prepared for that scenario?
I think it's clear what will happen to Radiant's earnings and their token in such a case.
Thus, we see a protocol that consistently makes money in a bear market and distributes earnings to dLP holders.
The described reward functions act almost like a constant buyback. There's currently market pressure on the token, but on October 3rd, Radiant is launching on the Ethereum chain, which will be a significant boost for revenue & fees.
So, question everything, including yourself.
We're in a dynamic environment where information can make you wealthy.
But it will only enrich those who are adaptable, not those stubbornly holding onto outdated beliefs.
