Frax Finance

Authors

YieldNest Core Team

Summary

This proposal advocates for the allocation of Protocol-Owned Liquidity (POL) in frxETH/ETH L1 to the YieldNest ynETH (Audited by Chain Security) 7x boosted vault. YieldNest will create a gnosis-safe multisig wallet where the frxETH/ETH will be received, and the ynETH will be distributed to the original deposit address from FRAX. The objective is to cement and expand the collaboration and alignment between FRAX and YieldNest. YieldNest is offering a 7x boost on YieldNest points (seeds) (EPOCH 01) for any ETH transferred to ynETH from FRAX (Standard boost is 5x). All ynETH is also earning ETH staking rewards on top of the boosted seeds. The frxETH/ETH POL is open-ended; it is up to the team/comptroller’s discretion what amount of allocation is given.

YieldNest is a Liquid Restaking Protocol (LRP) that provides simple-to-understand, risk-adjusted restaking strategies that offer user-controlled, liquid, and risk-adjusted exposure to curated AVS categories. YieldNest aims to build a long-term relationship with FRAX, explore various restaking strategies, and deploy the LRTflywheel on the Fraxtal chain for full integration with the FRAX ecosystem. See below ynETH and ynDeFi as an example AVS category that can be built with the YiledNest protocol. Try our testnet to experience the protocol.

Proposal Details:

Allocate a portion of FRAX’s POL in frxETH/ETH (YieldNest will create a gnosis-safe multisig wallet where the frxETH/ETH will be received, and the ynETH will be distributed to the original deposit address from FRAX) to be deposited into the YieldNest ynETH vault for an initial period of 3 months. This will leverage the boosted yield opportunities provided by YieldNest’s unique seeds program offered to FRAX. In EPOCH 01, during the first seven days, FRAX will get a 7x boost (Standard boost 5x); afterward, FRAX will get the standard two seeds per hour and potential other boosts moving forward.

Background and Motivation

YieldNest is a Liquid Restaking Protocol (LRP) that provides simple-to-understand, risk-adjusted restaking strategies that offer user-controlled, liquid, and risk-adjusted exposure to curated AVS categories. YieldNest aims to build a long-term relationship with FRAX, explore various restaking strategies, deploy the LRTflywheel on Fraxtal for full integration with the FRAX ecosystem, and develop protocol-specific Active Validated Services (AVSs) to enhance decentralization and increase capital efficiency for the FRAX protocol.

The strategic allocation to YieldNest’s ynETH vault is in line with FRAX’s objectives to maximize returns on its POL by engaging in collaborative and high-yield strategies. This initiative promises substantial returns across various market conditions and will fortify the partnership between FRAX and YieldNest, enhancing the market positions of both protocols.

Voting

• For: Authorize FRAX to allocate the specified POL in frxETH/ETH to the YieldNest ynETH 7x boosted vault
• Against: Do not authorize POL allocation and maintain the current liquidity strategy