This Week in Frax - March 24, 2024

Samuel McCulloch
Samuel McCulloch
March 23, 2024
This Week in Frax - March 24, 2024

Welcome to Flywheel, the best place for Frax education, analysis and alpha. We write about Frax and its DeFi partners bringing you the most up to date info straight to your inbox.

What's in This Email

  1. The Singularity is Upon Us
  2. Everyone is Getting the FPIS Merge Wrong

Earn 20% extra Kelp Miles (along w/ Eigen Points) using our link 🧜‍♂ī¸

The Singularity is Upon Us

Last night Sam Kazemian and the Core Dev team posted Frax Singularity Roadmap Part 1, a roadmap of the upcoming year.

The "Frax Singularity Roadmap Part 1" outlines a comprehensive and unified vision for the future of Frax. This roadmap is presented as a guiding beacon for Frax, marked by the launch of Fraxtal and hitting 100% CR. Frax generated $45 million in revenue to achieve this milestone, and Kazemian acknowledged the sacrifices made by FXS holders to bolster the protocol's health. Kazemian set a massive target of $100bn FRAX supply by the end of 2026 as a goal the community should work towards.


Fraxtal, described by Kazemian, is the operating system of the Frax ecosystem, and completes the core offerings of the protocol, allowing the community to pivot towards exploring larger opportunities and products. Fraxtal's role is the nucleus of the Frax Nation and the Fraxtal Network State, establishing a sovereign digital space for the community. Fraxtal will be a developer-friendly Layer 2 (L2) platform built on Ethereum, offering unique incentives and features like account abstraction and privacy functionality to enhance user and developer experiences. Furthermore, Kazemian said that 23 new L3's are coming to Fraxtal, each with its own identity and culture.

Fee Switch

Also in the proposal it was recommended to turn the fee switch back on.

FXS Liquidity Engine (FLE)

A new term was introduced for a type of protocol owned liquidity, FXS Liquidity Engine. According to the proposal, this system would do the following:

Revenue allocated to the FLE is used to buy back half FXS & half Frax Assets to increase the liquidity depth of the pair. The amount allocated to the FLE is based on the trailing price of FXS. If FXS 30-day trailing price is lower than the prior month, then 25% of protocol revenue is allocated to the FXS Liquidity Engine instead of veFXS. If the 30-day trailing price is higher than the prior month, then 25% more of protocol revenue is distributed to veFXS instead.

Initial pairs for the FLE will be:

  • FXS-frxBTC
  • FXS-sfrxETH

Gauge votes will go live with this proposal for FXS-frxETH and FXS-FRAX

sFRAX & sfrxETH Updated Yield & sfrxETH LRT Functionality

A new 50% cap rate and a 5.4% IORB floor rate for sFRAX, positioning it as a benchmark DeFi rate. Rates in DeFi have skyrocketed these past weeks, with Ethena leading the charge offering 50-60% APRs. Frax is going to take advantage of these high rates by raising the ceiling on sFRAX up to 50% maximum. Frax will also add sUSDeFRAX POL through the Curve AMO and this revenue will be used to fund sFRAX up to a $250m cap.

Also in the proposal Kazemian said that "Frax Ether v2 will have direct restaking support officially turning sfrxETH into a liquid restaked token (LRT)." Eigenlayer will be natively integrated for sfrxETH, allowing higher APRs, earn FXTL points if used on Fraxtal and also EL points. Also he wrote "Frax is also working with EigenLayer to design a Fraxtal AVS that uses both FXS and sfrxETH restaking making Frax one of the only full stack integrations on each level of EigenLayer and giving FXS chain-level staking utility"

Everyone is Getting the FPIS Merge Wrong

In the Singularity post came his proposal for the FPIS merge to remain at a 1:1 ratio, which would have valued the sister protocol to Frax at 800% its current market cap. Kazemian's first proposal was extremely contentious and was heavily argued in the Telegram chat.

The problem is that all of the rage is misguided. Merging FPI back into Frax will increase revenues, offsetting any future dilution.

After a long debate, the rate has been set at 2.5 FPIS to 1. This comes after feedback from multiple parties about the merge and how it should be conducted. It's been one of the most heated discussions of Frax in its history and with the general approval by major parties and the community, now we can continue to focus on building.





More from Flywheel

View More

Subscribe and join the Flywheel family

Always Free. Never Spam.

Harness the power of the flywheel.

Not financial advice. Flywheel content is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions.

Flywheel and affiliates are not liable for any investment losses or damages resulting from your reliance on any information provided.

2023 Šī¸ Flywheelpod Inc. All rights reserved.