In true Frax fashion, a random anon in the Telegram chat drew out never-before-made-public details about the upcoming product release of Frax v3.
Frax v3 had been initially alluded to by Frax founder Sam Kazemian back in March 2023. There had been some unsubstantiated announcements that an official product roadmap was soon to be released at the beginning of the year, and the community was interested to learn what the Core Dev Team had in store for the year. While no official roadmap was published publicly, details have been consistently leaked in the Telegram chat by Kazemian and Senior Dev Drake Evans.
Kazemian first made comments about Frax v3 in response to an anon asking about if the Stablecoin would see updates.
His announcement was fresh off the Silicon Valley Bank collapse and the subsequent USDC depeg that also had knock on effects for Frax for the first time in its existence. Circle’s stablecoin had been the bedrock collateral asset for Frax leading up to the banking crisis. Other collateral types were on Frax’s balance sheet, but USDC represented the lion’s share of exposure.
The SVB collapse was a wake-up call that no single collateral would ever be resilient enough to back the entire supply of FRAX. In April 2023, Frax began its diversification process by adding a FRAX/USDP (FRAXPP) base pool to Curve.
Now armed with two major collaterals backing the stablecoin, Frax v3 is taking security and diversification further by fully disconnecting from “fiatcoins” like USDC and USDP.
Based on Kazemian’s comments, this potentially could take the form of liquidity pool deposits from other protocols, integration of other protocol’s stablecoins or maybe even wrapped treasuries issued on chain. This could be similar to how Maker passes on Tbill yield to the DSR, but instead of a vault, it would be added as rewards to bi-weekly Votium bribes.
For all of the leaks, no clear information is released at this time. Based on the timeline though, we should see a full announcement within a month hopefully.
Kazemian did say that bribing mechanisms will be a key part of Frax v3 and that the yield will be used to “auto-incentivize deep liquidity” similar to exiting liquidity pools like FRAXBP and FRAXPP.
The new FRAX system is designed completely in-house and is not based on any existing mechanism or systems currently in DeFi.
Frax v3 is apparently nearly ready for launch and Kazemian thinks that it should be released within 30 days.
The community response was ecstatic and excited to see the third iteration of Frax’s stablecoin, especially in the wake of the USDC crisis.
Oh and to top it all off there was some FPIS alpha too mixed in.
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