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Overview

The Radian Exchange is a first-class citizen of the protocol which also acts as a pricing oracle for the rest of the protocol. Anywhere a price is needed, such as determining the TVL of the collector, liquidation prices in the lending protocol, or the amount of some collateral required to mint USDX is determined by the price of the asset in the Radian Exchange.

Unlike other protocols, there is no "whitelist" of assets that allow such asset to be used in the Protocol. Whether or not an asset is allowed to be used in the protocol is determined by the price and liquidity of the asset on the Radian Exchange. Only the minimums of these values is governed by RAD holders.

Common denominator​

All liquidity pools in the Radian Exchange have USDX on one side of the pool. This differs from other AMMs where any two assets can be in a pool. By having a common base token across all pools, routing never requires more than one hop, whereas the number of hops is potentially unbounded in other AMMs. This is especially important in the Radian Protocol as it is very common for other core contracts to perform swaps as part of their primary function.

The other benefit is that lookups for liquidity and prices of assets are one-dimensional, reducing computational complexity and gas costs.

The Radian Exchange as a whole can be though of as a "spokes and hub" model, where the hub is USDX and the spokes are all the other assets.

Leveraged Trades​

Since the exchange has a native integration with the lending and stablecoin modules, the exchange has the ability to provide leveraged trades in such a way that the protocol itself acts as the counterparty. On the radian exchange, leverage is simply a parameter that can be set when executing a trade up to some limit which is set by protocol governance. At a high-level it works as follows:

  1. You want to create a 3x levered trade to buy $3000 worth of ETH against $1000 worth of RUSD
  2. You call the trade function on the exchange with the following parameters:
    • assetIn: RUSD
    • assetOut: ETH
    • amountIn: 1000
    • leverage: 3
  3. The exchange will mint 2000 RUSD from the stablecoin module
  4. A trade is executed on the exchange to buy $3000 of ETH for 3000 RUSD
  5. The $3000 worth of ETH is wrapped into an ERC-1155 NFT.
  6. You receive the NFT which represents the trade.

Once the trade is complete, the NFT can be redeemed for the underlying assets.

The reason for using an NFT is that it allows for the trade to be liquidated in the event that the price of ETH moves against the trader. This is especially important because RUSD minted by borrowing RAD from the collector, and the RAD that is borrowed is in fact minted, increasing the total supply on RAD. This allows a unique feature of the protocol but temporarily increases the supply of RAD, although economically it is not actually increasing the supply of RAD since it is guaranteed to be burned in the future.

Leveraged trades accrue fees according to the funding rate set by the protocol, and is proportional to the amount of leverage you use.

Alternative Price Curves​

By default, the Radian Exchange uses a constant product curve. This is the same curve used by Uniswap and Sushiswap. However, the Radian Exchange also supports any arbitrary curve, as well as concentrating liquidity along the curve. This creates a new spoke where the hub is the default curve, and the spoke is the alternative curve. This allows for the creation of options as well as optimized pools for stablecoins. Alternative curves must be deployed as smart contracts that implement the ICurve interface, and can be deployed by anyone.