[RFC] Incentivizing VST Lending and Borrowing on Radiant

Summary

This proposal aims to ask the community to utilize ~26,071 VSTA per month to support VST on Radiant Capital, a leading omni-chain money market. Radiant aims to be the first platform where users can deposit any major asset on any major chain and borrow a variety of supported assets across multiple chains, consolidating the $22 billion of fragmented liquidity currently dispersed across the top ten alternative layers. By incentivizing the VST market with VSTA incentives, we aim to increase the utility and demand for VST in this new outlet.

About Radiant

Radiant Capital aims to be the future of DeFi by offering a seamless cross-chain lending and borrowing experience. Capital in DeFi is currently fragmented across chains, making it difficult for users to deposit and withdraw assets across different chains. Radiant aims to change this by consolidating the fragmented liquidity and allowing users to deposit and withdraw any major asset on any major chain.

Here is a quick overview of Radiant:

  • Total market size: 115M
  • Collateral supported: ETH, USDC, USDT, WBTC, DAI
  • Governance token holders: 13481
  • Reaching over 30000 individuals through their social media presence

Radiant is currently launching V2 which will include revolutionary changes to core protocol mechanics, emissions, utility, and deeper cross-chain functionality - you may read more here: https://medium.com/@RadiantCapital/cryptos-most-profitable-protocol-a-new-era-for-defi-b374ca82a741

Motivation and Value Add for Vesta

Right now we are in the process of adding VST on Radiant with a max LTV of 75% and a borrow cap of 2M, you may follow the governance proposal here: https://community.radiant.capital/t/rfp-8-adding-support-for-vst/502?n=1674117598339 (please note that accessing the site requires holding of 1 locked RDNT).

Having this additional venue will enable users to have alternative ways of using their VST besides swapping it for other assets, creating additional use cases.

Speculate on Vesta’s Loan Demand

Users can effectively speculate on the loan demand on Vesta. There exists a correlation between VST price and users’ demand for leveraging on underlying assets supported by Vesta. A strong demand for leverage usually results in VST going underpeg, and a decrease in leverage demand would result in VST going overpeg. With VST becoming a borrowable asset, traders can then speculate on VST peg.

Using Exotic Collaterals to Short

Users may take VST loans against Vesta’s supported collateral types such as gOHM, GMX, DPX, and GLP, and then use the VST to borrow assets on Radiant. This effectively enables users to retain exposure to gOHM, GMX, DPX, and GLP to short ETH, WBTC, and the other supported assets on Radiant.

Incentivizing VST Usage on Radiant

To bring attention to the aforementioned use cases, we hope to incentivize VST lending and borrowing on Radiant with VSTA. As mentioned in the Radiant proposal, I believe an initial borrowing cap of 2m VST or a deposit cap of 2.85m VST should be implemented.

Considering the current incentives on Radiant (lend is around 1%-1.5%, borrow is around 8-12%), we would like to position the VST market to be at 1% APR for $2.85m of lending and 5% for $2m of borrowing. The borrowing APR is set low as we do not expect it to be filled.

We would like to incentivize the market for one-month to see how it performs, monitoring for VSTA selling pressure and how users use the VST they lend/borrow. We will be using the 7-day TWAP price ending at the time of proposal passing to calculate the price of VSTA. For example, if we take the 7-day TWAP price from this moment, the price of VSTA is $0.343, which would translate to 1,598 VSTA for lending and 4,485 VSTA for borrowing per week, totalling 6,083 VSTA per week. If Radiant allows, we plan to adjust the emission every week depending on VSTA price. After the first month, we plan to adjust the target APR and target capacity. Please feel free to play around with the numbers here.

Feedback Period

The feedback process begins now and is expected to end in 72 hours at 2023/02/01 3 AM UTC. After this, a Snapshot vote is expected to be put up immediately if there is sufficient interest and support for the proposal from the community.

2 Likes

100% for this one!
Adding utility to VST is always good!

2 Likes

Radiant seems to be a big up-and-comer and I think it would greatly benefit Vesta to be part of their platform. These incentives don’t seem over-the-top and it would create more demand for VST.

I’m for it!

1 Like