Request DAO approval to deposit and max loop a mixture of stablecoins on Radiant Capital
[…] the Risk Officer will now identify and share with the Treasury Council the risks associated with each strategy prior to the council’s vote […]
A TMP is being used to assist treasury personnel with decision making by having the DAO review the proposal, assess the risks and make the final decision.
- Deposit $5mm into a mixture of stablecoins (DAI, USDT, and/or USDC) on Radiant Capital
The Wonderland Treasury still has a lot of unallocated funds and given the current market conditions there are limited opportunities. It is believed that the nature of this proposal is relatively safe and will provide decent returns while waiting for market conditions to improve.
This is a fairly straightforward stable farm strategy with relatively low risk. In the absence of a Risk Officer, the DAO is being asked to accept the risk by providing its approval.
The Treasury Operators (TO) recommend fully looping stables, vesting the rewards for four weeks (to avoid the withdrawal penalty fee), and selling the emissions tokens (RDNT) on a weekly basis. The TOs will manage which stable is used and optimize the allocation/looping as necessary to optimize yields and limit risk within the $5mm allocation limit of the TMP.
Radiant Capital is currently paying a Net APY of 22.73% on 4x leveraged DAI (fully looped) and a Net APY of 38.54% on USDT on 5x leveraged USDT (fully looped). These rewards are paid in RDNT (Radiant emissions tokens). Yield on any rewards immediately sold would be cut in half due to the withdrawal penalty. Otherwise, the rewards could be vested for 4 weeks to avoid the 50% withdrawal penalty.
Assuming a more conservative realized yield of 10-20% after directional price risk, WL would achieve an average daily yield of $1,369- $2,739 on a $5mm allocation.
Realized yield may fluctuate based on a wide variety of factors including changes in the price of RDNT and parameter changes on Radiant Protocol. The Treasury Operators will monitor the positions to maximize profitability and manage risk. The TOs do not plan on locking into the Radiant LP (Pool2); contrary to our UwU Lend position, WL will not be “dumping on ourselves” or SifuVision by selling RDNT emissions tokens.
Radiant Protocol is a liquidity market on Arbitrum that offers depositing, borrowing, and its lending market is forked from Aave V2 (similar to UwU Lend).
- Approve Deployment
- Deny Deployment
For the purposes of redemption, any tokens vesting for 4 weeks will be considered illiquid. Given the anticipated yield and short vesting time frame, this should not have a significant material impact on the liquid redemption price.
Radiant Protocol’s emissions token RDNT could decline in price and farmed tokens need to be vested for 4 weeks to not incur a penalty fee. However, the price of RDNT seems to have stabilized since October as the protocol has matured.
There is a possibility the stable coins used could suffer from a depeg where the price drops below $1.00. There is also a risk for liquidation when the total Health Factor is reduced to 1.0 or lower, due to the collateral value not covering the loan/debt value. The liquidation penalty fee is 15% on Radiant Capital.
Radiant Capital has been audited by Peckshield and the report is published and publicly available.