We have learned a lot in recent weeks about Fraxchain. We know that it will be a hybrid rollup using the OP and ZK software stacks and that there will be chain incentives for both users and developers to promote chain growth. We also know that the gas token will likely be FraxETH and maybe even the Frax stablecoin itself down the road. It’s also likely that several Frax products will be available at launch such as FraxETH, FraxLend, FXBs and BAMM. We even hear rumors of a possible airdrop coming soon to FXS lockers! But there is one piece of alpha that no one is paying attention to, that got leaked on the last twitter spaces where we celebrated Frax’s 3rd Birthday. Something I am calling Frax’s ChainLock! Here is the link to the spaces in case you want to listen for yourself.
You see, Sam K said nonchalantly on the call that Fraxchain incentives would be delivered in the form of veFXS or (Locked FXS) to end-users. This makes sense as it would avoid a Sybil attack on the chain. But this got me thinking and prompted me to ask an immediate follow-up question. Will there be a possibility for actors like Convex Finance to come in and offer their liquid staking derivatives as a liquid version of the locked FXS if they claimed their incentives as cvxFXS? Sam said YES!
I could tell not many people on the call understood where I was going with this line of questioning. Think about it, you have a brand new L2 chain that as its being utilized will auto-lockup FXS (The Frax governance token) as veFXS and if claimed as cvxFXS will be locked into Convex forever!!! Yes, I said forever! Remember when Convex locks up a token it’s a one way street! This effectively reduces FXS supply by a LOT!
Imagine if ARB was locked up as Arbitrum is being used! This is what will be happening with FXS! But the difference is there is only 100m FXS max supply and Frax just had its third halving! Supply keeps shrinking and that only means one this for FXS… wen moon!
There are other 2nd and 3rd order effects that this has on FXS.
1.) Convex will be the largest holder of veFXS and control a developing bribe market that would likely be connected to BAMM’s FXS gauges.
2.) Convex would also have a major say in Fraxchain sequencers as well!
Bonus Alpha
All this talk about a Fraxchain airdrop has me pondering, could Frax is partnership with Convex do something similar to Prisma’s now infamous “LockDrop”? Where the airdrop is also issued in veFXS and vests over say 1 year, or you could claim 100% of it immediately as cvxFXS if you lock in to Convex?? I think it’s possible! What does this mean exactly? Well, it means an initial BOATLOAD of FXS get locked up initially as the drop is initiated!
Disclaimer
Everything I have mentioned here is theoretically possible and Sam K even confirmed it was, but this does not mean it will happen or if it does take place, it may not be exactly as I am describing it here. This alpha is largely real but there is still a healthy dose of imagination and speculation mixed in here. But given my experience with calling these events, my knowledge of how convex works and the close relationship Frax and Convex have, I think the odds are better than average.
Until next time anon
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