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Overview

Radian is an end-to-end DeFi protocol which provides a set of financial primitives which -- together -- bring the user experience of CeFi systems while maintaining the trustlessness and decentralization aspects of DeFi systems.

Although the compatible primitives of Radian are provided on layer 1, core features of Radian are enabled by running on a layer 2, specifically zkSync.

Radian can be seen as split into 2 distinct types of protocol contracts - core modules, and Defi modules. These are described in more detail below.

Core Modules​

The core modules are the backbone that enable a unique user experience, as well as the ability for the economics of Radian to be self-sustaining.

Core: Smart Wallet​

An account-abstraction contract which allows users to interact with the protocol without having to manage private keys or gas.

Core: Paymaster​

A contract which allows users to pay for gas fees in any token, so long as that token has enough liquidity on the exchange.

Core: Wallet Modules​

These can be thought of "apps" that can be installed into a Radian smart wallet. Anyone can build their own wallet module, and users can choose which wallet modules they want to install into their smart wallet. This enables, for example, the ability for a debit card to spend funds, or subscription services to automatically pay for recurring payments.

Defi Modules​

Defi modules enable the financial primitives of the Radian protocol

Defi: Collector + RAD​

Because Radian is built such that it can be compatible with any representation of value whether it be a stablecoin, a token, a derivative, or an NFT, this value must somehow be "summarized" into a single value. Radian (RAD) is the native token of the protocol. Unlike other tokens, this token cannot leave the protocol and therefore cannot be traded or trasferred outside of the protocol.

To give a more technical description, RAD token transfers require either the "from" or "to" address to be some contract of the protocol itself. This means it can be transferred from the protocol to your wallet, but not from your wallet to another wallet (however you will still be able to transfer it back to the protocol).

Some parts of the protocol may incur fees (such as trades or the paymaster), and some parts of the protocol may lock tokens (such as posting collateral for a loan). Any sort of value such as this is stored in the Radian collector contract. The collector stores two types of value - "locked" and "unlocked". Unlocked value means that value belongs to holders of RAD. This allows RAD to have a value that is linearly correlated to the sum of the unlocked value in the collector. This can then be used to represent, in a single token, the locked value in the protocol. This value is then used to enable backing value of the USDX stable coin, as well as to enable the exchange.

Defi: Stablecoin​

The stablecoin in Radian is called USDX. It is a stable coin backed by RAD, which in turn means it can be backed by anything of value. For example, if you want to mint USDX using a token, you can do so, so long as that token has liquidity on the Radian exchange. The value of the token is based on the price in the exchange.

Analogous to the mechanics of DAI, this means that should the price of the token on the exchange drop too much, users will be able to liquidate the borrower.

Defi: Exchange​

The exchange is a uniswap-like AMM which allows users to trade between any token. The exchange is built such that it can be used to trade any token, even ones which are not native to the protocol. Unlike Uniswap, one side of each pool is always USDX. This has a few benefits:

  1. Since there is never more than a single pair involving a specific token, a trade never requires more than 1 hop, whereas the number of hops is potentially unbounded in Uniswap.
  2. It is much easier for the protocol to determine the prices of things in terms of USD value.
  3. It makes it possible to implement a mechanism where the protocol itself can provide one side of the liquidity in the pool, whereas in Uniswap it is always required for liquidity providers to provide both sides of the pool.

Defi: Uncollateralized Lending (V1)​

The combination of smart wallets with the protocol allows for the enabling of uncollateralied lending. We are working on a version of this module that is completely unconstrained and represents more closely the "traditional" lending system, but in the first version the uncollateralized lending system has two constraints:

  1. If a creditor defaults, it is the party to whom they paid the borrowed money for which is taking the risk. For this reason, when accepting a payment where the funds originated from an uncollateralized loan, the payee must accept the risk that the funds may be from an uncollateralized loan. For this reason a reputation system is implemented to allow payees to determine whether or not they want to accept the risk of accepting a payment from an uncollateralized loan.
  2. The payment itself is wrapped into an ERC-115 NFT, and cannot be unwrapped unless the creditor has a healthy balance sheet.

At a high-level, the uncollateralized lending system works as follows:

  1. A user wants to buy something for $10.
  2. The user borrows $10 from the protocol - this is received by the user in the form of an NFT that contains the payment, as well as some metadata in order to identify the original borrower. This allows the payee to see who the original borrower was, and to see the reputation of the original borrower.
  3. So long as the user has a healthy balance sheet, they can unwrap the NFT. If the user does not have a healthy balance sheet, the payee will need to wait until the user has a healthy balance sheet before they can unwrap the NFT.