Radiant Marking a New Era for DeFi?


  • Radiant v2 which debuted in Q1 2023, is a fork of Aave, positioning itself as the inaugural multi-chain money market running on Arbitrum.
  • The protocol boasts impressive financial metrics, including approximately $12 million in annual revenue and a portfolio of active loans surpassing $300 million.
  • Radiant currently holds the lowest P/E ratio recorded on Token Terminal, suggesting it could be an attractive value investment.

What does Radiant do?

Radiant Capital, a decentralized finance (DeFi) initiative, has unveiled Radiant v2, a platform that they assert signifies a groundbreaking chapter in the realm of DeFi. This upgraded version offers a range of innovations, including cross-chain borrowing, streamlined DAO governance, enhanced economic models, and a user-friendly interface. Unlike many crypto projects without a revenue stream, Radiant v2 strives to establish sustainable income streams by consolidating fragmented liquidity across various blockchain networks.

Previous iterations of DeFi, referred to by Radiant as DeFi 1.0 and 2.0, encountered challenges such as limited utility, governance tokens with high emissions, and farming practices contributing to token devaluation. Drawing on these lessons, the Radiant DAO, comprising advisors, contributors, and community members, has shaped Radiant v2 to be a part of a fresh ecosystem labeled "DeFi 3.0." This evolution aims to address the shortcomings of its predecessors and chart a new course for DeFi 3.0.

Radian Roadmap, Source: Radian

What sets Radiant apart from other money market ventures such as Aave or Compound? The Radiant ecosystem prioritizes the following principles to foster liquidity unity across the crypto landscape:

  1. Innovative tokenomics that incentivize long-term strategies and discourage excessive yield farming.
  2. A wide range of collateral options with "safe" loan-to-value (LTV) limits.
  3. Cross-chain borrowing capabilities designed for global scalability.

Radiant Capital has earned the distinction of being the leading project in the DeFi sector, as per Token Terminal's "Fees to Market Cap" metric, boasting a 1.6x ratio. This ratio can be likened to the P/E ratios used in stock analysis. This achievement distinguishes Radiant from the multitude of projects that lack fee-capturing mechanisms and distribute tokens at high multiples of their revenue, effectively treating their native tokens as marketing expenses."

Lowest P/F Ratio in past 90 days, Source: Token Terminal

Radiant's performance metrics speak for themselves. Since the launch of v2, the total value locked (TVL) has doubled to approximately $250 million. Notably, it's an unusual sight to witness a DeFi protocol increasing its TVL in the midst of challenging market conditions, as we've encountered this summer.

Daily Total Value Locked, Source: Token Terminal

In addition to TVL, we've witnessed steady earnings growth, with June being the sole month in 2023 that showed stagnation. Achieving a leap from $100,000 in monthly earnings to $1 million in just two quarters is a significant achievement. What's more, they have sustained these elevated earnings levels while substantially reducing their token incentives.

In general Radiant v2 marks a substantial advancement over v1, with a focus on tokenomics, utility, cross-chain capabilities, and generating fees for token holders. Drawing from past experiences, Radiant strives to lead the next wave of DeFi and public blockchain technology by emphasizing Layer 2 scalability and sustainable business practices.

Portfolio Strategy: While Bitcoin and Ethereum should continue to form the core of your portfolio, diversification is crucial. We recommend allocating a portion of your holdings to DeFi projects, diversifying beyond Layer 1 assets to potentially capture additional opportunities in different crypto sub-sectors, especially in the short-to-intermediate term. Radiant, with its growing revenue, TVL, and positive market sentiment, is now firmly on our watch list and is under consideration for inclusion in our crypto model portfolio, pending further research.

Analyst's Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours.

I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment