Frax Finance

Summary:

Activate veFXS gauges to supplant the Uni v2 FRAX-USDC farming pair, redirecting the FXS rewards on that pair to the veFXS gauge system which can be voted on by veFXS holders, similar to Curve’s gauges

Background & Motivation:

The veFXS system is currently returning 50% APR on single-asset FXS stakers (at a rate of 1 FXS locked for 4 years), with profits coming from the FXS1559 AMO which currently buys back FXS from the market using interest earned from lending out collateral to Aave, Compound, and Yearn.

The current FXS farming system is incentivizng Uni v2 FRAX-USDC pair with roughly 16,400 FXS/day each, taken from the 60% farming allocation of the FXS distribution. By adding gauges, veFXS holders are able to vote on where the FXS inflation will go, directly proportional to the veFXS vote amount. Additionally, the gauge system will allow for new incentivized asset pairs against FRAX to be added in through governance. The current FRAX-WETH and FRAX-FXS farming rewards on Uni v2 will not be affected by this proposal.

The gauge activation will start with the Uni v2 FRAX-USDC emissions and move them to the first gauge, Uni v3 FRAX-USDC. All locked stakes in the new gauge system and subsequent farming systems will remain locked and not be unlocked. This proposal only affects the Uni v2 FRAX-USDC pair and any new farming partnerships.

If adopted, this proposal seeks to:

1. Activate the veFXS gauges with FRAX/USDC, FRAX/DAI, and FRAX/mUSD as initial pairs
2. Set precedent for the addition of future gauges

This benefits Frax as a whole by:

• Allowing FXS farming emissions to be redirected in accordance to veFXS holders
• Allowing tighter coordination with other stablecoin projects

For: Activate veFXS Gauges

Against: Do nothing