What are you voting for?

• Extending 500,000 XAI of Credit to the FRAX silo.

FRAX

Name: FRAX

Ticker: $FRAX

Contract Address: 0x853d955acef822db058eb8505911ed77f175b99e

Description: $FRAX is a partially-collateralized stablecoin released by Frax Finance

LT: 90%

Absolute Parameters

Oracle: Chainlink FRAX/ETH price feed

Liquidation: Silo’s liquidation engine can liquidate $FRAX collateral efficiently.

Protocol-Wide Parameters

As discussed in SiloDAO’s adopted Risk Framework, no individual silo will receive a credit line extension exceeding 2,348,150 $XAI (1,643,705 $XAI after application of liquidity buffer).

Silo-Specific Parameters

$FRAX has relatively high on-chain liquidity across multiple exchanges and is a constituent of FRAXBP, the Curve base-pair which $XAI is paired with. Since it is a base-pair, the only on-chain swap which is relevant is direct swaps in our XAI-FRAXBP Curve pool.

Simulating sales on Curve indicate that swaps at our protocol-wide limit of 2,348,150 $FRAX would incur slippage of ~2.4%.

Recommendation

$FRAX is the largest partially-collateralized stablecoin with a ~$1b market capitalization and a good history of not de-pegging.

Given the protocol-wide parameters were designed around being able to absorb maximum acceptable slippage on $FRAX, the protocol-wide credit line is our upper limit. Initially, we recommend the deployment of a 500k $XAI credit line that can be scaled up according to utilization. Frax is already inherently tied to XAI as our liquidity is attached to FRAXBP.

We recommend continued assessment of on-chain liquidity of both $FRAX and $XAI to ensure that it remains within a safe range that will allow liquidations to occur as normal.