A Radiant Trade Opportunity in the Making

The trade hypothesis laid out in the attached tweet has been playing out as expected. But, there is another opportunity that most of the market seems unaware of.

It is a well-known fact that $1 of buying leads to >$1 increase in market cap. Imagine what $20M of buy pressure would do to an asset with a $75M market cap.

Now Radiant Capital has well-established itself as one of the core DeFi protocols, sporting a TVL of $260M across Arbitrum and BSC.

The team has conveyed plans to move to Ethereum and this holds the potential to serve as the difference maker.

But why? Glad you asked!

Ethereum’s TVL is $22B, 5X more than the combined TVL of Arbitrum & BSC. Aave has $2B of stETH TVL, earning minimum APR. The Ethereum launch of Radiant is targeting that pool. The migration will be incentivized through increased $RDNT emissions.

But the tokens will not be immediately vested and thus won’t contribute to much sell-side pressure. OTOH, if they manage to get $400M of TVL from Aave, $20M of $RDNT will have to be locked up. Assuming 50% of that needs to be bought, $10M is still insane buying pressure.

So, how can one play this? Well, there are several ways. The most obvious way to play this is front-running and buying $RDNT before the Ethereum migration. But this runs the risk of going against you should the market nuke in the interim.

Then perhaps a spread trade wherein you long $RDNT & short $COMP or $AAVE or both would seem like a more risk-averse way of expressing your opinion. Even the “smart money” aptly named @smartestmoney_ (on Twitter) is long $2.5M of $RDNT, which is 20% of the OI on Binance and 15% of global OI. People ridiculed him for being massively offside on his recent $MKR long, but the same people were nowhere to be found when he made nearly $2M off the trade.

Will it be the same this time around? Who knows. But in a market with obvious trades being few and far between, at least presently, this presents a great risk-defined opportunity to capture some of the inefficiencies!

Leave your comment...

Nice thesis, even if market nukes, it seems like downside might be capped at 25% max - do you know what the supply unlock looks like? Currently only 33% is ciculating.

I'm not sure if the downside will be capped at 25%, but it should ideally hold up better when compared to similar tokens. The unlock schedule can be found in their documentation, but I reckon that it will look quite different as people lock up their RDNT for better yield.

Great call on COMP. Looking at the RDNT chart it also appears ripe for a potential breakout trend reversal...

Thank you, sir! Yes exactly, the FA is synonymous with the TA which makes RDNT a great play IMO! I reckon that it should start getting priced sooner rather than later.