Frax Finance

Original Governance Discussion:

https://gov.frax.finance/t/fip-unlock-eth-frax-pool-and-integrate-it-into-the-gauge-system/98

Authors:

Justin Bram, Brazy

Summary:

This proposal seeks to unlock the FRAX<>ETH liquidity providers, create a UniV3 gauge for FRAX<>ETH, and transfer a portion of the emissions to the overall gauge system to increase the gauge emissions to 25,000 FXS/day. This would NOT affect the overall daily FXS emissions, it would only affect the emissions controlled by the gauge system.

Proposal:

At the moment, the overall gauge system has emissions of approximately 16,400 FXS/day, which came from the original UniV2 Frax<>USDC pool. The Frax<>ETH pool is also receiving rewards of approximately 16,400 FXS/day. We propose to end the FRAX<>ETH emission, and transfer about 52% of these emissions into the overall gauge system. As a result, the gauge system would be responsible for approximately 25,000 FXS/day of emissions. The remaining 48% (approx. 7,890 FXS/day) would go to the Frax Protocol Treasury. This will help the protocol build a big war chest, and it would be beneficial for the long-term health of the protocol. Every FXS we save now is one that we can use later to pay for locked liquidity or investments in the protocol. This also buys us more time to develop the protocol and revenue sources so that we can sustainably pay for locked liquidity when the initial liquidity incentives run out. Furthermore, we propose to approve a UniV3 gauge for FRAX<>ETH. This would allow veFXS stakers to vote on how high the emissions for this pool should be. This gauge should be launched whenever the team is ready to implement it. The current FRAX<>ETH pool is quite costly from a protocol perspective and provides little benefit aside from locking up FRAX. According to Uniswap analytics, this pool typically only sees between $1-2M of volume each day. We could support the demand with a much smaller pool. Because of the large FRAX<>Stablecoin pools, this liquidity isn’t especially useful. If this proposal were implemented and the new pool was only minimally incentivized, users could use the FRAX → USDC/DAI → ETH Uniswap route for large transactions.

Benefits: Increases the number of rewards available to the gauge system Reduces the amount of FXS that enters the open market daily Allows the community to decide how the Frax<>ETH pool should be incentivized Allows the community to support emissions for new integrations and pairs (example: Sushi gauge)

Drawbacks: A large amount of locked up Frax will be unlocked

For: Unlock Frax/ETH pool and Shift Rewards to Gauge System, targeting 25,000 FXS/day.

Against: Do nothing