Frax Finance

Author

Sam Kazemian

Background

The Frax Protocol needs a method to hold cash deposits and other low-risk cash-equivalent assets (such as reverse repo contracts and treasury bills) in order to execute its FRAX v3 RWA asset strategy. The Frax Core Developers have been working to create traditional financial infrastructure that can serve this purpose.

Earlier this year, Financial Reserves and Asset Exploration Inc (dba FinresPBC) was incorporated in the US state of Delaware as a public benefit C corporation to accomplish this mission.

FinresPBC has been set up to be a conduit to accomplish this task for the Frax Protocol. FinresPBC is not a for profit entity: its incorporation documents state that its public benefit mission is to bring traditional financial assets (colloquially known as “RWAs”) onchain for the benefit of the public. Thus, any yield generated from assets it holds on behalf of Frax Protocol will be returned to the protocol (minus costs/fees incurred to operate the public benefit business). Therefore, FinresPBC’s public mission is to provide the Frax Protocol access to safe cash-equivalent assets and near Fed rate yields for the benefit of all without seeking to make profit from this relationship or charge fees (other than to pay for minimum costs related to serving its mission). Additionally, FinresPBC’s mission is to continue expanding its traditional infrastructure including meeting requirements for a Federal Reserve Master Account (FMA) in the future.

FinresPBC does NOT partake in any Frax Protocol development, smart contract engineering, or in any way participate in Frax Finance operations. FinresPBC’s involvement and relationship to the Frax Protocol is solely restricted to holding cash-equivalent reserves and/or issuing token representation of such reserves. FinresPBC is NOT a developer lab or corporation responsible for or maintainer of the Frax Protocol smart contracts/open source code.

FinresPBC does NOT partake in any additional for profit activity or hypothecate reserves held for the Frax Protocol. FinresPBC is not a profit maximizing organization. It’s sole public benefit mission is to give onchain users access to offchain “cash-equivalent RWAs.” FinresPBC will not hypothecate, lend, pledge, or conduct business activity outside of its sole public mission to provide onchain access to offchain RWAs.

FinresPBC’s current banking partner is Lead Bank (lead.bank) an innovative regional bank that has opened its doors for crypto businesses to conduct safe, compliant traditional financial activity. FinresPBC is actively expanding its banking and financial relationships with compliant & crypto friendly financial partners (including full-service banks) and will announce new partners as appropriate. Any traditional financial entity that is interested in exploring a direct relationship, please reach out directly.

Currently, FinresPBC is capable of conducting the following for the Frax Protocol: 1.) Hold US Dollar deposits in FDIC Insured IntraFi savings accounts & earn yield on such accounts. 2.) Mint/Redeem Paxos USDP stablecoins & earn yield. 3.) Mint/Redeem Circle USDC stablecoins & earn yield. 4.) Hold/Purchase/Sell United States Treasury Bills in segregated brokerage accounts & earn yield.

Reporting, Auditing, & Attestations

No later than every month, FinresPBC will give a full asset breakdown and report of all reserves it holds for the Frax Protocol including expanded view of yields it has earned on such reserves as well as maintenance fees/costs incurred to hold such reserves and conduct such transactions.

Reports will be published publicly on this forum & sent to the Frax Core Developers to publish on Frax Facts and relevant protocol front end data sources deemed appropriate by the community.

Summary

Approve FinresPBC to be FRAX v3’s Offchain Partner & Custodian for the above mentioned transactions.

Proposal

• For: Onboard FinresPBC for FRAX v3

• Against: Do Nothing