Discussion: Updating RAD Tokenomics
Last week, a new product within our ecosystem was announced. In addition to the recent product launches across the Radworks Ecosystem, I would like to start the conversation with regards to refining the tokenomics model for the $RAD token.
The goals of this initiative are:
- To Strengthen Governance with Long-Term Commitment
Empower long-term aligned RAD holders by increasing their influence in governance decisions. - To Incentivize Reliable Node Operation
Encourage active and dependable participation from infrastructure providers by rewarding nodes that meet defined performance standards, inspired by work token models. - To Enable Value Participation Across the Ecosystem
Create opportunities for RAD holders to benefit from the value generated throughout the Radworks Ecosystem, aligning incentives across all participants.
The core idea: RAD holders lock tokens to unlock governance power and participate in value generated by Radworks-related services. But with a crucial addition: only those who both lock tokens and operate reliable infrastructure are eligible. This dual requirement of RAD commitment and real network contribution fosters long-term alignment between users, node operators, and token holders.
Background: RAD and the Radworks Ecosystem
RAD has historically been a governance token for the Radworks treasury. With the growth of products like a) the Drips protocol and application for funding open source software and b) the emergence of the Radworks App for secure and verifiable front-ends, the ecosystem is now starting to generate distributable value.
Proposal to introduce veRAD to Radworks
I am proposing that Radworks introduces veRAD, a vote-escrowed token system that rewards long-term participation and active node service. The key parameters are described below:
- Lock Duration: Lock RAD for 1 week to 4 years to receive veRAD. Longer locks = more veRAD (linear scale).
- veRAD Decay: Voting power and reward share decrease over time as the lock approaches expiry.
- Eligibility Filter (Uptime): To receive rewards, nodes must meet a minimum uptime threshold during each epoch (e.g., 95% availability). Nodes that do not meet this operational requirement will not be eligible for that week’s rewards, regardless of veRAD balance. These eligibility requirements may evolve over time through governance to include additional metrics such as latency, data throughput, and delivery success rate for certain RIDs and NIDs related to the new Radworks app.
Governance Power
In this model, 1 veRAD = 1 vote in Radworks governance. veRAD holders guide major decisions including:
- Treasury allocations
- On-chain contract upgrades
- Emissions schedules and parameters
Value Generated and RAD Emissions
Additionally, as long as the eligibility filter is met, veRAD holders receive a portion of RAD (and potentially USDC) based on their pro rata share of the total veRAD, half of which derived from value generated across the Radworks Ecosystem (Community services & products) and half of which is derived from the community treasury (Treasury Portion).
The Community Portion consists of 50% of the cross-community value created from:
- Radworks App (frontend infra)
- Drips App
- Potentially from Garden hosting & compute (to be announced)
The remaining 50% of the value created across the above-mentioned applications will be used for continuous development and operations.
For the Treasury Portion (ie RAD emissions), I would like to propose the following schedule that attempts to kickstart veRAD participation and locking, while the new services are finding their footing in the market, by providing meaningful rewards without exhausting the treasury.
| Year | RAD | % of Total Supply | % of Current Supply | % of Treasury | Weekly Rewards |
|---|---|---|---|---|---|
| Y1 | 2500000 | 2.5% | 4.8% | 5.2% | ~48077 RAD |
| Y2 | 2000000 | 2% | 3.85% | 4.17% | ~38461 RAD |
| Y3 | 1500000 | 1.5% | 2.88% | 3.13% | ~28846 RAD |
| Y4+ | 750000 | 0.75% | 1.44% | 1.56% | ~14423 RAD |
Weekly Epoch Distribution
- Rewards (RAD) are distributed weekly, based on veRAD balance snapshots.
To streamline rewards and minimize complexity, Radworks may also introduce a RAD buyback mechanism instead. In this model, protocol funds (USDC/ETH) are used to purchase RAD from the open market before distribution, enabling all rewards to be delivered in a single token. This simplifies the user experience and consolidates economic value directly into the RAD token.
- If you hold 2% of all veRAD, you receive 2% of that week’s reward pool.
- This system supports predictable and compounding engagement, while keeping governance aligned with epoch cycles.
Node penalties
To maintain the integrity of the reward system, the model may introduce gradual penalties for node operators who are found to be misbehaving. The penalty severity can escalate based on recurrence or severity of the violation, and all enforcement actions would be transparent and governed by community-approved protocols.
Let me know your thoughts.