DeFi Protocol Radix in a Nutshell
The DeFi market is growing exponentially, yet there is a massive amount of crypto assets locked out of the DeFi space. The Ethereum network, with its scalability problem, is already weighed down with sizeable daily transaction pressure DeFi brings. Other blockchains have seized this opportunity to address the issues hindering DeFi growth and, therefore, DeFi app development.
But, Radix takes a radically new approach by offering the first layer-1 blockchain network geared for supporting DApp for DeFi. This article will investigate how Radix intends to contribute and transform the burgeoning DeFi space with its technology.
#1. Radix Wrapping and Ren Protocol Wrapping Services
The Cerberus consensus protocol development is core to building the platform to bring the much-needed scalability into the DeFi spectrum. The DeFi market is spread among various blockchains, each offering something or the other unique features. This naturally calls for interoperability between them to fully capitalize on their powers for DeFi progress.
In its quest to be the universal marketplace for digital assets, Radix is focused on establishing numerous bridges between blockchains through its token wrapping services. This will bring various tokens like cryptocurrencies, fiat-backed stablecoins, governance tokens, utility tokens, synthetic assets, and others from different platforms.
To this end, Radix has selected Copper as its custodial partner for Radix Wrapping Service. Copper’s custody platform offers an expanding range of tokenized assets with the highest security and insurance standard. This enables Radix to have a Radix-compatible version of all such existing and future tokens, thus linking with the most significant number of blockchains.
Also, Copper’s compliance standard grants Radix to offer specialized services for organizations using Radix wrapped tokens within its custodial wallet and exchange trading services. As the Radix mainnet launches, the Copper-listed Radix ERC-20 token will enable all ERC-20 tokens in the Ethereum network to automatically be the wrapped versions of the native Radix token. This will allow Radix token-holders to use services of the Ethereum DeFi ecosystem.
To seamlessly integrate Ethereum into the Radix platform, Radix joined hands with Ren Alliance – a consortium of DeFi firms to bring cross-chain assets to the Ethereum network. It’s main product RenVM will support Radix to offer fully decentralized wrapping solutions. The underlying Ren protocol allows automatic minting of wrapped token while native assets are locked in their respective public ledgers without centralized supervision.
Radix will gain from Ren’s vision of becoming an inter-ledger settlement layer offering seamless asset transfer, excluding trust custodians and other centralized authorities from the equation. The integration of RenVM with the Radix public network serves as another yet more decentralized low-friction bridge into its platform.
#2. Radix Dev Incentives and Royalties
One of the core features of the Radix network is the Developer Royalty programs. This is a self-incentivized decentralized system offering automatic on-ledger continuous revenue streams to code developers for DeFi development in the Radix ecosystem.
Unlike others, Radix’s revenue approach is different. Unlike the finite fund or diminishing earning potential in other platforms, this revenue grows with the Radix ecosystem – for both first developers and laters. Another essential feature is this self-incentivizing developer ecosystem is integrated with the decentralized network protocol.
This is possible because at the heart of it Radix utilizes a Component model instead of going the smart contract route. While ‘Components’ are trustless as well, their capabilities are certain action or function-based, offering an intuitive approach like various finance building-block primitives. All created Components are like templates that are first added to a repository (termed Component Catalog) and later called upon and customized as per user needs. Therefore, this strategy grants inherent modularity – added and layered with each other.
Radix allows the developers to set the royalty fees, which are automatically paid every time a DeFi platform uses their developed or instantiated Components. Since Components can be used either directly, instantiated, from the catalog, or imported, Radix enables developers to set different revenue prices for each method. This gives developers the freedom to act as per their preference.
These payments are similar to gas or node-runner fees i.e., on per transactional use basis and are made on-ledger. This creates a feedback loop for self-betterment. The more well-functioning and useful Components coders create for incentives, the more it will be used. This increases the revenue, which will encourage developers to create better Components and thus attract larger royalty income. At the early stage, Radix also plans to add extra subsidies for the royalties.
By connecting the royalty definition with the royalty distribution through on-ledger, Radix unlocks an open market economy’s power, thus pioneering the incentivization of open source development.
#3. Made for DeFi – Radix’s Evolving Protocol and the Push towards DeFi
Specifically intended for supporting the evolving DeFi ecosystem, Radix is designed from the ground up. To address the drivers of DeFi growth, i.e. liquidity, accessibility, and choice, its DLT technology is built on layer 1. Its consensus mechanism based on the proprietary Cerberus Byzantine Fault-tolerant algorithm offers the much-needed scalability, low transaction cost, high-level security by design.
This enables the Radix’s Proof-of-Stake blockchain version to execute parallel transactions over shard chains without negating the requirement of atomic composability. In fact, the Radix team claimed Cerberus has managed to cross the 1 TPS mark.
Radix plans to launch its mainnet dubbed Radix Public Network 1 (RPN-1) in four drops. While the first drop in May 2020 has brought basic blockchain functionality, the second drop will raise the validator numbers. The third drop will finalize Sybil-resistant staking with rewards and fees and a Desktop wallet and exchange integration. With the addition of block explorer and token-vesting functionalities in the final drop, RPN-1 will be ready. This will prompt its native XRD token sale in September.
Radix has also published a DeFi whitepaper that demonstrates its seriousness and fixation towards its DeFi objectives. The paper showcases how each of its four core platform technologies solves various hurdles of DeFi growth and details how each of the four technologies works together to create the world’s first true-blue layer-1 protocol for DeFi.
As mentioned above, Cerberus tackles scalability while maintaining DeFi composability, Component brings interoperability to the network, and Developer Royalty program directly pushes developers for better products. The fourth technology Radix Engine (development environment) will help skirt app hacks, exploits, and failures associated with smart contracts.
Radix’s highly experienced team in handling enterprise-grade solutions and strong VC support backs its technological might. While the core technologies support all the necessary features for seamless DeFi ecosystem development, its developer-friendly self-incentivized system drives developers to build quality DApps and keep improving it. Radix seems to be on the right track, where it can be a lead contributor to DeFi technology transformation, promoting further growth.