Supporting Growth: Proposal for Radix Incentives Campaign | The Radix Blog

Summary: The Radix Foundation has unveiled a substantial campaign offering 1 billion XRD in incentives over the next 18 to 24 months, aiming to utilize part of the Stablecoin Reserve to enhance authentic DeFi activities.

• Participants can earn rewards by actively engaging in on-chain tasks such as trading, lending, and providing liquidity—efforts that help fortify the network.
• Holding XRD amplifies rewards with a multiplier (up to 3x), but mere holding isn’t sufficient; active participation is mandatory.
• The initiative is engineered to be resistant to Sybil attacks, deter farming, and evolve in response to community insights and network needs.

The Radix Foundation is set to launch a significant incentive program on-chain, planned to commence in 2025 and extending for 18 to 24 months. This overview discusses our preliminary thoughts and provides essential background before the Token Holder Consultation regarding the reallocation of the Stablecoin Reserve consisting of 2.4Bn XRD, previously earmarked for a stablecoin initiative.

The outlined incentive scheme aims to distribute 1 billion XRD in various phases to reward genuine engagement and significantly increase liquidity within the Radix ecosystem. While drawing attention is part of the strategy, the ultimate objective is to foster long-term, impactful growth through authentic economic pursuits.

This initial draft is the result of weeks of insightful dialogues and contributions from the Radix community, particularly dApp developers and external parties. Their input has influenced aspects ranging from reward mechanisms to measures preventing misuse. It’s crucial to highlight that this is a foundational proposal; specifics will be refined through continuous feedback and adjustments.

The Objective: Authentic Usage Over Mere Metrics

A multitude of crypto incentive initiatives typically reward superficial actions—be it bots, opportunists, or repetitive “farming” that fails to generate substantial value. Radix aims to circumvent this issue.

This campaign instead rewards behaviors that genuinely contribute to enhancing the network. By engaging in trading, lending, or liquidity provision, users contribute authentic value, and we believe that incentivizing such actions will facilitate network growth, mirroring the successes observed in other initiatives.

There are two interconnected avenues for claiming your portion of the 1 billion XRD reward allocation:

Participants can gather weekly “Season Points” (SP) by undertaking qualified on-chain activities, each accompanied by its own weekly reward allocation. Multiple activities will be ongoing concurrently, with some being season-long and others time-limited. Examples might include lending wrapped USDC on a dApp, trading on decentralized exchanges (DEXs), or utilizing perpetual platforms.

The SP you accumulate weekly will depend on your level of activity relative to other participants, likely assessed through percentile rankings (e.g., based on how your engagement measures against others involved in the same task). The more economic activity you generate across as many activities as possible, the larger your share of the weekly rewards.

Additionally, possessing XRD (or LSUs, LSULPs, etc.) enhances your rewards but does not generate points directly. Instead, the total amount of XRD you hold will multiply your earned SP, with a cap set at 3x (more details to follow). This signifies that simply holding or staking does not yield rewards; active participation is essential.

To clarify, the intention is for users to regularly engage in meaningful activities week after week with tangible capital, and holding XRD will significantly enhance those accumulated rewards. We are still finalizing the exact activities and assets that will qualify and anticipate updating this list as per community feedback and network demands.

We expect the highest reward categories to focus predominantly on essential DeFi activities involving widely-used assets and dApps. Nonetheless, we are also considering broader categories such as total network fees paid weekly, the number of distinct dApps interacted with, and occasional “one-time” rewards for unique actions that don’t fit neatly into other categories.

Let’s dive into more specifics regarding the points multiplier that rewards XRD holding…

Points Multiplier for XRD: Scalable Rewards Based on Commitment

To partake, users must hold a minimum amount of XRD, currently suggested at $50, to prevent spam and make exploitation economically unviable. Beyond this threshold, the multiplier follows an S-curve determined by the supply percentile of each linked account:

• The most significant growth of the multiplier occurs between $5,000 and $100,000 worth of XRD. This can adjust weekly in response to fluctuations in XRD price to maintain a consistent USD value.
• Beyond $100,000 worth of XRD, the multiplier’s growth significantly tapers off, preventing undue advantage from larger wallets.
• The multiplier reaches a maximum of 3x.

This system incentivizes substantial commitment to Radix without allowing passive large holders to dominate. And remember: merely holding does not earn SP; it solely increases the rewards attained through genuine use.

Ultimately, the mechanics behind this multiplier curve and the method for awarding SP based on user percentile rankings make it prohibitively costly to “game” the incentives initiative without being a legitimate participant. Now, turning to…

Anti-Farming and Sybil-Resistance Built-in

Incentive campaigns commonly attract misuse, such as airdrop farming and Sybil attacks, where users create numerous fake accounts to maximize rewards. While entirely eliminating these exploits is often impractical, our goal is to make them unprofitable without resorting to high-friction methods like KYC. We’ve created a structure where authentic, economically meaningful participation is naturally prioritized.

Key strategies against abuse include:

• Weekly SP evaluations that facilitate dynamic adjustments based on observed participant behavior.
• Wallet linking to disincentivize spreading assets across multiple accounts. This setup also alleviates concerns about differing types of wallets, such as hardware wallets vs. trading hot wallets.
• Minimum holding and transaction criteria to significantly mitigate spam.
• Incentive structures that promote diverse, sustained involvement rather than mere gaming of the system.

Why This Campaign Is Important

This initiative isn’t merely about enhancing superficial metrics. It aims to catalyze genuine and sustainable growth within the network:

• Boosted liquidity and trading activity will reinforce DeFi on Radix.
• Increased active engagement will support and draw in additional dApp developers.
• Greater capital flow and tangible activity on-chain will cultivate lasting value and resilience within the Radix ecosystem.

We believe this campaign presents Radix with a prime chance to effectively expand its user base and economic participation, continually adapting alongside our ecosystem.

Consequently, the Radix Foundation encourages your support for this proposal in the upcoming Token Holder Consultation, which will run from 12:00 UTC on May 9th through 23:59 UTC on May 19th.

Frequently Asked Questions

Q: Where will the funding originate?
The proposed 1 billion XRD is sourced from the existing Stablecoin Reserve (2.4B XRD), initially allocated for a paused stablecoin venture.

Q: What is the campaign’s primary objective?
To foster meaningful, sustainable development within the Radix ecosystem by rewarding real on-chain interactions, particularly related to liquidity and DeFi practices.

Q: How can participants earn rewards?
By executing qualifying on-chain actions like DEX trading, lending, and liquidity provision. Weekly, participants receive Season Points (SP) based on their activity comparison to others.

Q: What is the significance of XRD holdings?
Holding XRD provides a multiplier (up to 3x) on the SP earned from activity. Simply holding XRD will not yield any rewards; active network usage is necessary.

Q: What prompts the $50 minimum holding requirement?
To deter spam accounts and ensure exploitative behaviors are economically unattractive. The aim is to maintain a low barrier to entry while safeguarding the system’s integrity without high-friction solutions like KYC.

Q: Will large holdings dominate the rewards?
No. The multiplier curve flattens above $100K USD worth of XRD, and it caps at 3x, preventing excessive advantage from substantial holdings.

Q: What activities will be prioritized for rewards?
Mainly high-value DeFi activities, such as trading, lending, and liquidity provision. There are possibilities for inclusion of additional categories like network fees and usage across multiple dApps.

Q: How is misuse addressed?
The approach incorporates dynamic weekly SP adjustments, wallet linking, minimum thresholds, and varied reward categories to minimize Sybil and farming exploitation.

Q: Is this proposal finalized?
No! This is an initial draft intended to spark discussion. The final structure will be adjusted based on community input and further design iterations.

‍