Frax Finance

1. Summary: The outcome of this proposal is to make a FRAX pool one of the base pools on Kyber AMM’s stable swap on 4 chains Ethereum, Polygon, Arbitrum and Optimism.

In addition, Kyber has also had a successful campaign supporting Lido wstETH and stMATIC liquidity on 4 chains, and would like to run a similar campaign for Frax sfrxETH.

Through a combination of diverse pairings as well as our custom fee tiers, we can drive more volume through FRAX pools as well as sfrxETH pools.

Background and motivation:

KyberSwap Elastic AMM is a new tick-based AMM with high efficiency pools and liquidity settings which has ranked among the top DEXs across all chains in just four months since launch. With concentrated liquidity, Kyber performs especially well with stable pairs, as proven through the performance of its QiDAO $MAI pools and Lido $wstETH and $stMATIC pools.

Currently, there is a significant amount of TVL locked in both UniSwap and Curve, but this TVL is not being put in an efficient use where it can generate a decent amount of volume. In addition, Frax just launched wstETH-sfrxETH-rETH pool on Balancer with 1M of TVL but the pool does not have any volume till date. With FRAX pools as one of the stable base pools on Kyber, this can be fixed.

2. Kyber Recommendation:

We recommend gauges for the following pairs, which are built to optimize for and increase FRAX and sfrxETH volume:

Ethereum:

Add these following pools:

• FRAX - USDC (Fee tiers 0.01% or 0.04%)
• FRAX - frxETH (Fee tiers 0.04%)

And add one of the following pools:

• frxETH - ETH (Fee tiers 0.01% or 0.04%)
• sfrxETH - wstETH (Fee tiers 0.04%)
• sfrxETH - FRAX (Fee tiers 0.3%)

Polygon Add this pool:

• FRAX - USDC (Fee tiers 0.04%)

Arbitrum Add this pool:

• FRAX - USDC (Fee tiers 0.04%)

Optimism Add this pool:

• FRAX - USDC (Fee tiers 0.01%)

3. Benefits:

• Increased liquidity efficiency: Liquidity is not only optimized for volume across more diverse pairs and custom fee settings, but also benefits from custom routing through KyberSwap’s DEX Aggregator.
• Partnership with a reputable and long term AMM protocol, which currently ranks 5 to 6 out of all DEXs across all chains (rank 2 on both Arbitrum and Optimism), in terms of daily volume. Current daily volume is at around $70m.
• Co-marketing with a project which has a strong community and good traction across the four proposed ecosystems.

4. About Kyber

Our product KyberSwap - an AMM model - also shares several product features as UniSwap V3 in terms of concentrated liquidity, utilizing the tick-based method and using NFTs to represent liquidity positions.

The key differences are:

a. Re-investment curves: Whereas the LP fees on UniV3 are only claimable separately, KyberSwap Elastic has a reinvestment curve: LP fees on KyberSwap Elastic are claimable in a separate compounding pool [full range 50/50], meaning more returns for LPs.

Compounding comparison:

• UniV2/KyberSwap Classic: Fees compound into original position, most earnings
• KyberSwap Elastic: Fees compound separately, middle earnings
• UniV3: Fees don’t compound, claimable separately, least earnings

b. Just-in-time (snipping attack) protection: KyberSwap Elastic also offers snipe/just-in-time protection. When a swap is executed, one can supply liquidity, swap into his own liquidity at a narrow range and skim the pool of fees, so the pool LP makes less:

• More IL because less fees.
• Some aggregators might use JIT as a way to find the best rates.
• Somewhat similar to a front running attack.

Our performance with LM has proven to be very strong on volume/tvl ratio: with only 54M in TVL we can facilitate almost 100M in daily trading volume.

5. Voting instruction:

• For: Add gauge
• Against: Do nothing