Authors

Frax Core Team

Summary

This proposal seeks to create a Karak Restaking AMO for the Frax Finance ecosystem. It proposes allocating up to $50 million worth of sfrxETH and sFRAX, and up to 5 million FXS from the protocol/community treasury, all to be restaked on the Fraxtal network.

Background and Motivation

Karak is a cutting-edge restaking protocol designed to enhance yield generation by allowing users to restake their assets, such as staked ETH, across multiple validators and protocols. This enables participants to maximize returns while securing various decentralized services. Karak’s protocol offers increased capital efficiency and maintains a focus on security and liquidity for staked assets.

Key features of Karak include:

• Restaking for Higher Yields: Karak enables the compound yield of staked assets by restaking them across multiple validators and platforms.
• Decentralization and Security: The protocol ensures security and decentralization, making it a reliable choice for stakers who want to maximize returns while minimizing risk.
• Liquidity Flexibility: Karak allows restakers to maintain liquidity through liquid staking, making it easier for users to utilize their staked assets in other DeFi platforms.

By utilizing Karak’s restaking mechanism on the Fraxtal network, Frax Finance can diversify its yield strategies and improve returns on sfrxETH, sFRAX, and FXS, while also contributing to the liquidity and activity on the Fraxtal network. This integration aligns with Frax Finance’s long-term goal of expanding its ecosystem and enhancing the utility of its assets through innovative partnerships and strategies.

Proposal Details

This proposal seeks to:

• sfrxETH: Authorize allocation of up to $50 million worth of sfrxETH to be restaked on the Karak protocol.
• sFRAX: Authorize allocation of up to $50 million worth of sFRAX to be restaked on the Karak protocol.
• FXS: Authorize the allocation of up to 5 million FXS from the Frax protocol/community treasury to be restaked on the Karak protocol. This allocation will not involve minting new FXS and will be fully drawn from the existing treasury, adhering to the FXS cap of 100 million. This proposal does not, in any way, alter the 100 million FXS cap, and all FXS allocated comes from within the established limits.
• The allocation will be dynamically adjusted by the Frax Finance core team based on market conditions and yield performance, with regular reviews to ensure optimal returns for the Frax ecosystem and its treasury.

Karak Protocol links:

Docs: https://docs.karak.network/

DAPP: https://app.karak.network/

X account: https://x.com/Karak_Network

Audits: https://docs.karak.network/security/audits

Voting

• For: Approve the creation of a Karak Restaking AMO with a maximum allocation cap of 50 million USD worth of sfrxETH, 50 million USD worth of sFRAX, and 5 million FXS, to be restaked on the Fraxtal network.

• Against: Do nothing.