Role of PODL in RadioShack Swap
Disclaimer: Tokenomics are subject to change without notice at any time.
There are two competing objectives at play in the early days of RadioShack Swap:
Objective #1: Provide fair tokenomics to early protocol participants and keep swap fees low
Objective #2: Prevent a large hostile player from cornering the RADIO token (by purchasing a disproportionally large % of it) while the protocol is in its infancy
A low initial market cap is vulnerable to various forms of attacks by hostile whales, including pump and dump schemes (there are many examples of protocols that failed due to this exact reason). For example, a $20M initial market cap, is highly susceptible to manipulation by a small-sized whale with a $2M position.
A much more intelligent approach is NETD (first introduced by Atlas USV), which accomplishes both Objectives 1 and 2. One of the core elements of NETD is to have a large initial supply, but lock up a large portion of it in various lockboxes. The protocol owned tokens get diluted, sold, or given out as incentive reward over time as various new participants gain market share. Furthermore, PODL tokens are not staked and therefore get diluted over time. In short, the protocol's smart contracts and wallet (not particular users) are the largest whale at the beginning of the protocol to protect users from other hostile whales. However, the protocol's influence diminishes and asymptotically approaches zero as the user network grows and gains strength.
For RadioShack, NETD needs to be further strengthened to account for the fact that the RADIO token is particularly liquid and available tor potential hostile actors since it's the main token of the swap:
Since the RADIO token is highly liquid by definition (it's paired with all other tokens in the Starfish Topology), the protocol remains vulnerable to malicious whales in early days when the TVL is low. A large player can attack the starfish by attacking all its limbs -- essentially buying a large portion of RADIO tokens in various liquidity pools using all tokens that are available in the swap.
Meaning, being highly liquid is both a blessing and a curse. Contrast RADIO with a less liquid token: A less liquid token is also less vulnerable to threats from hostile whales because a whale cannot successfully acquire a large portion of the tokens. In RadioShack, however, a large portion of the tokens are locked in the smart contracts.
To neutralize this threat of hostile takeover and concentrated position building by large and hostile actors, 50% of the entire initial supply of RadioShack is dedicated to Protocol Owned Defense Lockbox (PODL). PODL tokens can be: 1) used to pair with various other tokens in liquidity pools to thicken the limbs of the Starfish; 2) create new limbs by onboarding new tokens into the swap; 3) sold for various tokens and then paired with additional RADIO tokens to thicken the liquidity (for example, swap RADIO for USDC and pair the newly acquired USDC with additional RADIO to create more liquidity for the RADIO-USDC pool); 4) Be given to partner protocols (such as Atlas USV) to incentivize providing liquidity for the Starfish Topology; 5) Execute any other strategy that helps the protocol achieve liquidity while preventing large bad actors from taking advantage of the protocol in its early, vulnerable days.
Overtime, as the platform gains strength and more and more of RADIO tokens in PODL are paired in liquidity pools or are rewarded to partners to incentivize liquidity, the role of PODL diminishes.
Last modified 6mo ago