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Radix Publishing has been provided with the following notice on behalf of the Radix Foundation and RDX Holding entities.
TLDR:
- A Radix endowment fund is being established to support the financial stability of Radix ecosystem entities and reduce reliance on treasury tokens being sold.
- The process of selecting an institution with a balance sheet in excess of $1bn in crypto is underway.
- A large institution strategically aligned with the success of the Radix ecosystem unlocks opportunities to grow TVL, liquidity, and strategic partnerships, such as tier 1 exchanges.
Collectively RDX Holdings and the Radix Foundation are excited to announce the planned creation of the Radix Endowment Fund. This will be a 1.5Bn XRD fund that is being established to support long term ecosystem growth while securing financial support for the entities involved in the development and growth of the Radix platform and ecosystem.
The genesis and selection process for the endowment fund was started in Q1 of this year, following institutional engagement with key stakeholders at these firms. The key criteria in the selection of the manager was for it to enable Radix to enhance institutional adoption by helping to develop products, build partnerships, and aligning technologies for their use on Radix.
The shortlisted managers have in excess of $1Bn of digital assets under management with significant volumes traded on centralized exchanges and will provide support for exchange adoption of Radix through an institutional lens. The selected manager will also support in driving ecosystem utility, institutional accessibility, and end-user attractiveness to contribute to further adoption of Radix.
All mandates are XRD based, and as such, the manager will be targeted to ensure a return in XRD, as opposed to any other assets that form part of their strategy - thereby growing the endowment for the benefit of the contributing entities. It is expected that the XRD holdings of the endowment will increase over time.
The goal of the endowment is to create a sustainable source of token generation that can be used for the ongoing development of the Radix ecosystem. This will allow for the reduction of the reliance on the use of treasury tokens to fund the activity and runway. The endowment will also help drive external investment or co-investment into the Radix ecosystem.
The mandated structure is a segregated portfolio company, where the XRD assets are ring-fenced from the manager’s own assets to provide security over the assets being allocated to the fund.
The contributing entities will maintain ownership of all assets that are transferred to this segregated portfolio company, along with the assets generated within it, whilst ensuring it is in a bankruptcy remote structure.
The first step in forming this endowment will be selecting the institutional partner who will be responsible for the independent management and performance of this treasury of tokens.
The selection process for the institutional partner is nearing the final stages. Any shortlisted partner must already manage $1Bn+ in crypto assets, have a proven track record in the crypto industry, and will be evaluated based on their:
- Proven track record in generating long-term, risk-adjusted crypto returns.
- Ability to facilitate commercial partnerships with key providers and partners, including: custody infrastructure, staking infrastructure, market makers, ETPs and other funds, tier 1 exchanges and stablecoin issuers.
Once selected, fund allocation strategies will be developed by a leading panel of portfolio managers responsible for generating returns in excess of the rewards available from staking.
The selected partner will use Copper Custody, a regulated crypto custodian, to hold the XRD assets, and Twinstake, to provide the staking infrastructure across which tokens may be deployed and staked as part of the overall strategy.
As part of a wider agreement with Twinstake to support the Radix network, this will require a minimum staking balance to be staked to Twinstake nodes by the Fund manager at all times.
With token price increases, or as others stake via Twinstake, the fund manager will be able to unstake some of its position and redeploy the XRD into other alpha generating strategies
To reduce the impact this will have on node runners and network decentralization, the Radix Foundation nodes will be reduced by two, reducing the amount of tokens staked by approximately 122m XRD, and freeing up two slots in the top 100 validator set.
After the reduction of Foundation Nodes, the starting staked position of the Fund Manager, on behalf of the Endowment, to the Radix network will increase net network staking by approximately ~620m XRD.
It is acknowledged that this will impact staking emissions to delegated stake from approximately 7.7% to 6.7% per annum. The auxiliary value expected to be provided by the selected fund manager, to Radix and the ecosystem, is believed to offset this impact on overall staking emissions.
In addition to managing the endowment and providing long-term financial stability to the entities contributing to the growth and development of Radix, the right manager will work with partners to drive institutional buy-in at an early stage, for new products being launched on Radix. The manager should also support institutional use and alignment of technologies created on Radix at scale.
The creation of this endowment is the next step in developing Radix's institutional focus. It allows the selection and alignment of an institutional partner with over $1 billion of crypto under management. In doing so, Radix unlocks access to significant liquidity, TVL, and strategic partners, all of which are crucial for the long-term success and value of the Radix Network.