Solving the most important problems in DeFi
Good token distribution favoring decentralization
Lower ranks are better
New DLT with unique consensus mechanism
Scalable solution that keeps composability
Reputable team with strong investor profile
Solving the most important problems in DeFi
Good token distribution favoring decentralization
Still in early stages with the tech yet to be fully developed and operational but does have academic paper proving the theory from University California, Davis
High barrier to entry with developers having to learn a new development environment
It is marketed as THE DeFi protocol, which can lead to the use case not being understood to the fullest and limited to only DeFi.
Taking a high market share in DeFi applications
Taking a big share of developer community with its on-ledger reward incentives
Establishing as a leading platform for DeFi growth
Ethereum 2.0 might solve the majority of the problems that the project tackles before it can reach full capacity
Not being able to draw in developers and users
Too much focus on developers that can easily take their attention elsewhere
Radix is the first layer 1 protocol specifically built for Decentralized Financial applications. Since DeFi has specific needs, then other decentralized applications most applications are built on top of Ethereum which comes with some downsides. This is why Radix took the approach of building a new distributed ledger model to support decentralized applications more reliably, redesigning the consensus mechanism, smart contracts, and tokens.
In Ethereum, the token is merely a representation of balance in one wallet, and the change of balance in one directly impacts the change in balance in the other. This can create many problems in DeFi applications due to bad coding or other issues with smart contracts working together in a composable way.
Radix focuses on simplicity and control. While in competing platforms we see exploits on a daily basis, due to smart contract issues. In Radix, smart contracts are finite state machines that are easy to analyze, thus reducing the possibility of errors, bugs, and exploits.
With its unique design, it aims to solve some of the key problems currently faced by DeFi applications on Ethereum as the blockchain that is currently leading in the number of Dapps. These problems are:
The project also makes a key focus on developers building these applications because if they can do a better job, DeFi products can be better. This is why they have built this new model having in mind the needs of developers and their specific problems.
These problems are each associated with four crucial layers of a complete DeFi platform stack:
On the chart below, you can see these problems and their solution counterparts that have been developed by Radix.
Radix platform is built as a permissionless, programmable distributed ledger with its own uniquely developed consensus mechanism. Having been built as a solution to Ethereum's problems while implemented to DeFi, we are going to describe most of its features in comparison to Ethereum’s blockchain.
Since Radix aims at eliminating the room for error both in network possibilities and in human interaction which can be very costly in the case of handling financial transactions. In order to host decentralized applications the network needs to be programmable, but robust, predictable and designed specifically to produce correct results on-ledger in response to requests.
This is why instead of being Turing complete like in the case of Ethereum, the Radix Engine allows developers to build “Components” that are Conditional Finite State Machines which is a solution that is commonly used in mission-critical embedded systems where predictable correctness is the first priority. The programming language used for the Radix Engine is called Scrypto.
Smart contracts are the key component of Ethereum’s programmability. They allow anything to be built on top of its network. However this flexibility is the problem when it comes to building Decentralized Financial applications. It puts the developer on the spot and errors could occur in writing the code, and especially in DeFi these smart contracts can easily get complex when combining with each other to produce a function.
The key problem here is not the mere number of operations a smart contract can perform, but it's “fluid” design. The way smart contracts are designed is similar to a server running a code.To make that server perform its function it offers “methods” that users or other apps can call by sending a signed message. In order to perform the right function that correlates with the received message it has different variables (if-then) that are triggered by different call methods.
These variables are actually what represents a token. It's simply a change in balance between wallets that are made inside an ERC20 smart contract which is created to behave like a supply of tokens by maintaining an internal list of balances. In this particular case to change those variables a “send” method is called upon a smart contract.
Radix platform's equivalent of smart contracts is called components, which are built with finite state machine logic. Components are defined in behavior and function by "actions," which are equivalent to Ethereum's "method." These actions directly translate an existing input state to output or an after state.
Designed in this way, these components are defined, but they can limit the room for errors and make them behave more like physical assets. Secondly, these components' usage is intuitive and predictable, which creates explicit guard rails on what can and cannot happen in creating the final output state.
Thus, a token on the Radix network behaves more like a physical asset that can be exchanged between users via, for example, a "change owner" action. In this case, the token is a component defined by actions similar to those that can be performed with real-world coins.
Instead of smart contracts maintaining a balance for different wallets in this way, the token as a component acts like a tangible coin that can be owned by the users. Unlike in Ethereum's smart contract having to define a token supply, Radixes components are defined by their sub-components, so the token definition component (name, symbol, max supply, etc.) is subdivided into indivisible tokens equivalent to one Satoshi to Bitcoin. This leaves only a ledger maintaining the balances in the network as a whole. The advantage of this design is best seen when applied to liquidity pool staking and swapping tokens. Components that are limited in action can only perform a predefined operation. For example, a wrapped token defined to be given to a depositor can only fulfill this function, limiting the room for errors.
In order to achieve scalability and faster processing throughput, Radix has developed its unique consensus algorithm called Cerberus. It is designed behind the concept of sharding, which means that instead of all the nodes processing every transaction and competing to find blocks, they are processing smaller increments of the whole.
This is something ETH 2.0 will introduce, but instead of bringing shards into a monolithic blockchain, the Radix network splits the ledger into "shard spaces." Being built in this way, the network splits processing into multiple times, instead of a global chain. Secondly, it uses a different Byzantine Fault Tolerance mechanism to verify the synchronicity of shards working together to produce a specific transaction since different shards are combined to do so.
The consensus is called "braiding," and instead of a typical BFT-style consensus which uses 2 or 3 phases of signed commitments from different nodes to confidently finalize a transaction, it runs a single 3 phase BFT instance within each shard but braids these instances together with commitments provided by the leaders of the other related shards.
Thirdly and most importantly, these sharding dynamic 3-braid consensus processes may run in parallel. This increases the network's throughput and enables local BFT instances to run completely independently and unrelatedly to any other at the time.
Instead of having each shard to conduct consensus independently, which makes transaction processing across multiple shards atomically difficult, the Radix network made a different approach to sharding in order to achieve composability. Cross-shard coordination has been made easier.
Radix Engine is the application layer for Cerberus and the underlying ledger. Its bottom-most layer for scalability is the Radix Virtual Machine. It provides the partial ordering that Cerberus requires to braid consensus on a per-transaction basis – including transactions driven by Component Action logic. It does this by defining transactions as a related set of changes to state encoded across shards.
As a DeFi specific layer 1 platform, its target audience is mainly developers. However, the dApps made on Radix ultimately serve the end-user wanting to participate in financial services but in a fully trustless and reliable way. Therefore, Radix focuses on bridging the gap between developers and development tools for building these applications.
Taking a developer-centric approach, the project introduces Developer Royalties to incentivize the developer participation in building new network components. Like how mining mechanisms use a native token to keep nodes incentivized to process the network transactions and keep it secure, these royalties are in place to incentivize developer contribution. The developer can specify his desired royalty for a component he builds, which is paid in RADIX token per transaction-use fee that must be included within the transaction itself. This means that royalties' payment is based on the real utility that the Component brings to the network and is both a recurring income and on-ledger, promoting developers to build components that have long term value that other developers can re-use.
Radix is a network for building Decentralized Financial applications. As such, its key components have been described in the technology section. However, as a platform focused on the ease of development, the main feature that stands out is its "Components Catalogue" and "Developer Royalties."
This design of the incentive mechanism being embedded on the ledger is purposefully done to increase these decentralized financial applications' developments and help foster its developer community, rewarding it for its contribution. Like how mining is rewarded by the network's native token, those who write code are rewarded by its usage.
When a Component's Scrypto code is pushed to the network, it is first added automatically to an on-ledger registry called the Component Catalog. This acts as a library that other developers can use to don't have to write the code from scratch and when they use an existing Component, it is called an Instantiated Component. It has its own unique identity on the Radix network, and its Actions become available for use by users.
When a developer wrote the code in Scrypto and deployed it to the Component Catalog, it has certain royalties for its use. Collection of royalties is then per-usage bases that increase developers' incentive to build tools and templates for the network's functions.
Radix network’s specified use case is for DeFi. It has been built from the ground up, having these applications in mind, which is why the network’s design is different in every way. Being built in this unique way, it took an approach of thinking about its use case beforehand. Considering the token’s behavior mimicking a physical asset and its limited actions, it is perfect for transferring value, stacking in pools due to its simplistic and straightforward nature, minting new tokens, and performing other operations are currently seen in decentralized finance space.
However, while DeFi is it’s current focus, there is no reason Radix’s Cerberus consensus technology couldn’t be applied for other uses.
The RADIX token (XRD) is a non-redeemable Utility Token. RADIX is intended to have two principal functions on the Radix Network. It may be used to pay for services on the network; second, it may secure the Network against attack through the proof-of-stake. As a utility token, it also serves to pay transaction fees for network usage and pay out those maintaining it both with computational power and functionality (developer royalties).
As a layer 1 focused DeFi project, Radix's direct competitors are other layer 1 focused DeFi projects. However, since Radix is quite unique and builds on Cerberus, there are not that many direct competitors. The 'indirect' competitors that try to solve the same problem (on different platforms) can be found below.
Radix conducted a public sale of its E-RADIX ERC20 token (eXRD) on the 8th of October. This is the precursor to the mainnet RADIX token that will enable network development and building the infrastructure. The value of capital raised by October 22nd was $12.7M in total.
The starting circulating supply of E-RADIX tokens is 42M, while its maximum circulating supply is set and capped at 4.41B. Another 200M E-RADIX will be allocated for Liquidity Incentives and are intended to be distributed over a 6-month period from E-RADIX distribution to community members who provide liquidity to the E-RADIX token. These tokens will be exchangeable at the 1:1 ratio for RADIX tokens once Mainnet is live. In addition to the ERC20 token circulation, on the mainnet, another 5.19B of RADIX tokens will be created.
The starting circulating supply of RADIX tokens will be 51.9M tokens, plus any E-RADIX tokens exchanged for RADIX tokens. Network Emissions for Staking Rewards are set at 12B RADIX tokens, to be released over a minimum 40 year period, at a maximum annual rate of 300m tokens.
A further 2.4Bn RADIX tokens will be created and locked into the Stablecoin Reserve to create the Radix Mainnet.
This brings the whole total supply of the RADIX token to 24B = $4.41B for E-RADIX once converted + 5.19B of RADIX + $12B for network emission + $2.4 for stablecoin reserves.
The tokens were sold at the price of $0.039, with a maximum of 642M allocated for the public sale.
The total of the initial E-RADIX token supply of 4.41Bn will be distributed as depicted on the chart below. As you can see, most tokens will go towards the Radix community, while the next biggest portion went to the public sale.
Out of the total of $4.41B tokens, $4.2B are locked and will be unlocked in relation to the token’s market price. The design of the unlocking mechanism is intended to promote supply and demand that tends towards equilibrium. You can see the thresholds for new emission on the chart below, which is relied upon the 1 week Simple Moving Average (SMA) crossing a specific price point.
DeFi market is currently sitting at $13B in total value locked (while writing this). Considering the problems the project aims to solve, we could expect to see it taking a significant share of this market if it succeeds in being the number one platform on top of which these decentralized applications are built.
It would need to take out Ethereum in its dominance, but it can easily do so indirectly by hosting better Dapps like decentralized exchanges, lending and borrowing platforms, stablecoins, etc.
The DeFi market itself is also in its early stages, and could take market share from the traditional financial services market which is worth trillions globally.
LocalGlobe is a UK-based venture capital firm that focuses on seed and impact investments. Seeding ambitious UK founders since 1999 including Citymapper, Improbable, Lovefilm, Moo, Tweetdeck, Transferwise and Zoopla.
Maven 11 Capital is a prominent European investment firm solely focused on investing in blockchain and distributed ledger technology (DLT). Maven 11 Capital invests in ventures & digital assets that adopt this technology. Their diverse team consists of serial entrepreneurs and traditional finance professionals with a common passion: we believe that blockchain technology will fundamentally change economic and social structures.
Xsquared Ventures was formed by its partners to serve as a catalyst for companies that are creative and disruptive. Their mission is to improve the liberty and well-being of people around the world by pushing for disintermediation through the growth and adoption of distributed ledger technologies.
Taavet Hinrikus is th co-founder and CEO of TransferWise. Prior to starting TransferWise, Taavet was Skype’s director of strategy until 2008, starting as its first-ever employee. One of the World Economic Forum's Tech Pioneers, Taavet is an adviser to the Prime Minister of Estonia on the digital agenda. He’s also a mentor and angel investor.
The biggest social media presence Radix has is on Twitter followed by its Telegram. Even though similar announcements are made on both channels Telegram users engage more with the content and are more likely to discuss and interact with one another. The smallest of them all by the number of followers of their YouTube channel which is reasonable considering that the content they provide isn’t all that suitable for a video format, and is mostly promotional advertisements and podcasts. They also have a Discord channel to keep the community updated and to interact with developers that want to build on Radix.
Quick overview: https://tokens.radixdlt.com/#roadmap
Token sale information: https://www.radixdlt.com/post/radix-token-sale-complete/
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