Frax Finance

Authors

Frax Core Team

Summary

Commit Frax DAO to select proof of stake Ethereum mainnet (PoSETH) after the merge in place of any proof of work alternative fork (ETHPoW).

Background

Much controversy has been made over what might happen if there is a contentious hard fork at the ETH merge between a proof of work ETH chain and the newly created merged proof of stake ETH mainnet.

While the Frax core team understands the chance of any kind of contentious or viable ETHPoW chain is near 0% or single digit percent probability at best, it is useful for market participants that the Frax DAO signals which choice of fork is its preference unambiguously if there is one. As of writing, the only potential possibility of a viable fork is some form(s) of proof of work ETH alternative that does not merge the beacon chain with the geth execution clients thus keeping just the execution layer and proof of work consensus in place.

FRAX is the 5th largest stablecoin in the world and 20%+ of Curve’s TVL, a Uniswap top 10 token, and a critical piece of the Ethereum ecosystem. Thus, it makes sense to clearly make FXS holders’ desire public knowledge through governance. It has been claimed that prominent fiat stablecoins such as Tether and USDC will only accept redemptions on PoSETH: https://blockworks.co/stablecoins-will-only-have-value-on-pos-ethereum-post-merge/. It would also be useful for FRAX to signal the same and have Frax DAO commit to capturing all significant value on ETHPoW, should it exist, and bring it to PoS ETH for FRAX redemptions making PoS ETH the canonical fork choice of all possible ETH forks post-merge.

Proposal

If there is significant value Frax DAO controls on ETHPoW chain(s) (should any exist) then the core team will attempt to convert all assets on ETHPoW into ETH on PoSETH then deposit it into the DAO treasury msig as protocol controlled value to honor FRAX redemptions and increase the CR.

• For: Support FRAX redemptions only on PoSETH and sell any significant value the protocol controls on ETHPoW into ETH and transfer to PoSETH protocol treasury.

• Against: Do nothing