Authors

Frax Core Team

Summary

This proposal suggests the introduction of a 10% protocol fee on Fraxlend, Frax Finance’s lending platform. This initiative is aimed at aligning Fraxlend more closely with industry standards, particularly the practices of major players like Aave, and leveraging its value to support our goal of achieving a 100% Collateralization Ratio (CR) for the FRAX stablecoin.

Background and Motivation

Since its inception, Fraxlend has operated without a protocol fee, focusing on growth and user acquisition. However, as we evolve and aim to fortify our financial stability and service quality, introducing an protocol fee becomes essential. Setting an protocol fee at 10% positions Fraxlend competitively in the DeFi lending market and generates revenue that can be reinvested into the platform and the FRAX ecosystem.

Proposal Details

• Smart Contract Compatibility: Our existing Fraxlend smart contracts are already equipped to support this fee structure, allowing for a smooth implementation process. Protocol fee is a percentage of interest which goes to Frax Finance DAO.
• Fee Implementation: Introduce a 10% protocol fee across all lending pairs on Fraxlend.
• Revenue Utilization: The revenue generated from this fee will contribute to the stability and growth of the FRAX stablecoin, aiding our pursuit of a 100% Collateralization Ratio.

Voting

• For: Implementing a 10% protocol fee on Fraxlend.
• Against: Do nothing.