Authors

Vesta core team

Summary

Implement VST-FRAX Gauge ragequit function with 0 withdrawal fee.

Background and Motivation

The Vesta-Frax VST-FRAX pool was a popular stable pool on Arbitrum, contributing to liquidity provision and stablecoin swaps. However, the protocol is set to wind down in Oct 17 2023 as seen here.

In light of these developments, this proposal seeks to introduce a “ragequit” mechanism to the VST-FRAX Gauge on Arbitrum, allowing lockers to exit the pool without a penalty. This feature will offer liquidity providers an organized route to withdraw their assets from the pool, considering the evolving context driven by sunset of Vesta protocol.

Why 0 fee?

Prior wind down efforts such as this implemented the rage quit with a 20% withdrawal fee. The VST-FRAX pool should not wind down with the same amount of fee because this is not merely a wind down of the pool structure, but rather this is a wind down of the asset in the pool.

Vesta’s wind down will decrease the supply of the VST stablecoin to 0. Starting on Oct 17, 2023, a PSM with USDC will be opened and redemption will be enabled. The PSM will allow users to swap VST for USDC on a 1:1 basis. Redemption will allow any third party users to close anyone’s vault position in Vesta. By enabling lockers to withdraw, they will be able to also participate in the redemption process, helping VST fully wind down instead of leaving potentially substantial amount of residual VST in the pool.

Furthermore, early lockers locked into the pool because of high amount of emission enabled by Tetranode’s vote. Given the protocol wind down, Tetra is shifting his vote elsewhere, decreasing the pool’s emission to 0. By adding a withdrawal fee, current lockers who entered with the expectation of high emission will be left with 0 reward for the rest of the lock duration, decreasing the lockers’ faith in Frax’s gauge system. Furthermore, Tetranode will likely move the reward to a new gauge, which people can move into and lock again. Asking for a high withdrawal fee will discourage people from locking in new gauges in the future.

Pool Details

LP Token: 0x59bf0545fca0e5ad48e13da269facd2e8c886ba4 Gauge: 0x127963a74c07f72d862f2bdc225226c3251bd117

Vote

• For: Implement the ragequit function with no fee. • Against: Do Nothing