How does Vesta use Radiant to bring scalable stablecoins to Arbitrum and more chains?
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How does Vesta use Radiant to bring scalable stablecoins to Arbitrum and more chains?
Vesta Finance, a collateralized stablecoin protocol, discussed the addition of $VST to the Radiant Capital platform with Radiant Capital, an omnichain money market.
Navigating Web3 tides with focused insightsWritten by: Revelo Intel
Compiled by: TechFlow
In this Radiant Capital Twitter Spaces session, Mikey and Vestator from Vesta Finance—the collateralized stablecoin protocol—joined Issac and Hung Vu from Radiant Capital to discuss the addition of $VST to the Radiant platform. Read our summary below for more details.
Mikey's Background
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Co-founder of Vesta Finance, a collateralized stablecoin protocol.
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Worked for a year and a half on Zapper’s UI layer project.
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Interest in stablecoins drove the creation of Vesta.
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He said the experience has been great and that he has built strong connections with other builders in the space.
What is Radiant?
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Radiant Capital is a cross-chain money market that allows users to deposit and borrow various supported assets across multiple chains without using cross-chain bridges.
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Radiant v2, set to launch in mid-February, aims to become the DeFi protocol with the lowest price-to-fee ratio in the cryptocurrency space.
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Users can earn real yield on stablecoins by locking Radiant liquidity tokens and receive a share of protocol revenue.
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Additionally, unlocking Radiant liquidity activates the ability to earn $RDNT tokens, which are used for borrowing and lending within the money market and grant voting rights on the protocol’s future direction.
What is Vesta?
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Vesta is a CDP protocol that allows users to collateralize assets to mint stablecoins.
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The project’s long-term vision is to become the power plant of DeFi by offering a range of financial products.
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In its early months, the project developed a strong interest in leveraged GLP positions.
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Looking ahead, Vesta aims to explore perps and other leveraged products.
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The project focuses on driving innovation in the DeFi space through research and development.
What is Vesta's process for adding new assets as collateral?
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Vesta follows a collateral risk framework to onboard new collateral. This framework consists of seven steps, starting from the governance forum and ending with a quantitative risk score.
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During the collateralization process, the protocol analyzes metrics such as liquidity depth and centralization risk, while continuously monitoring market data like trading volume and volatility.
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If any metric becomes unbalanced, parameters may be adjusted accordingly.
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The protocol also implements minting caps to manage the stablecoin’s exposure to any single asset.
What benefits does adding $VST on the Radiant platform bring to $RDNT holders?
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$VST is a soft-pegged stablecoin, meaning its value can fluctuate slightly around a target but not significantly.
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It is asset-backed, and the protocol is over-collateralized, making sharp devaluations unlikely.
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Lending protocols provide exposure to certain assets or amplify exposure to specific assets—such as $GLP in this case.
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The dynamic between loan demand and supply creates opportunities for speculation on the value of $VST.
Risk Scope
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Risks associated with using Vesta as collateral are conservatively managed, with low collateral caps.
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Stablecoin stability and the security of Vesta’s collateral are prioritized in risk management strategies.
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Radiant’s cross-collateral model presents challenges, so it is recommended to implement a borrowing capacity cap based on Vesta’s current liquidity, expanding it as liquidity grows.
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This cap will limit the potential impact of any black swan events or market manipulation on other assets.
Strategies Using Radiant x Vesta
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Listing the $VST token enables potential use cases where Radiant users gain access to more interesting underlying assets or collateral supported by Vesta.
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By minting $VST using $GLP, users can maintain their exposure to $GLP while borrowing against $VST, a stable form of collateral.
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This opens up additional collateral options for Radiant users, who currently have limited choices available.
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By enabling access to assets offered by Vesta, Radiant users can diversify into different types of collateral.
Vesta's Growth Plans
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Upcoming modules such as Vesta’s savings module and lending protocol will align LP incentives with those of the protocol’s users.
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Vesta is currently focused on becoming an innovation hub, developing new products, and growing its ecosystem.
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The savings module will provide backflow rewards to ecosystem stakers and help strengthen the $VST stablecoin peg.
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A short-term borrowing capacity cap of $2 million is proposed, growing to $20 million, then $50 million, and ultimately reaching $100 million as liquidity expands.
What’s Next for Vesta?
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Upcoming initiatives include the savings module, staking module, and spot leverage engine.
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The goal is to expand $VST liquidity and make it a valuable asset for ecosystem stakers.
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Vesta’s roadmap focuses on building products and features that the community enjoys using.
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