Partnership Spotlight: Notional Finance
This week we had on Teddy Woodward from Notional Finance. Teddy joined the show to talk about integrating Frax for their leveraged yield vaults on Arbitrum.
1/ The Notional V3 Beta is launching on Arbitrum Monday September 25 and there are big opportunities for the @fraxfinance community.
— Notional (@NotionalFinance) September 14, 2023
Here’s how to put your $FRAX to work and earn returns on Notional V3.
Notional is a protocol on Ethereum and Arbitrum that facilitates fixed-rate, fixed-term crypto asset lending and borrowing through a novel financial instrument called fCash. On Arbitrum they are running a closed beta for their new leveraged vaults.
Big shakeups this week as governance goes on full display. There were two major issues that were brought up by community members and drove the narrative for the week. Lets dive into the drama...
Revest Takes to Main Chat After Losing Governance Vote
Last week we talked about Revest's FPIIP to implement a new locking system for FPIS. The idea came out of the Flywheel Hackathon and was coded into reality over a few weeks. The Revest team was excited to see the launch of their newly built product, but were rebuffed at the polls in a resounding no vote.
As a result, the Revest team took to Telegram and Twitter to air their grievances specifically against C2tp, who voted no with his vlCVX. While C2 is a large voter at Convex, he by no means is the only voter. The Convex ecosystem is governed by a diverse set of entities and Revest did not pre-lobby for their governance proposal beforehand. Additionally, for the Frax ecosystem, Convex does not have a majority stake and can be outvoted if there is enough community support, which Revest failed to gather.
Sam wrote:
I don't think it is a big secret Convex itself has a lot of voting power so I'm not sure saying it yet again teaches anyone a new fact. I get that it's frustrating for votes that don't pass. But Convex Protocol votes based on the distribution of the vlCVX votes so it is not a 1 vote wins all thing. The Convex tokens that the Convex team has obviously hold big sway since they are a decent minority chunk of the largest locker and thus still pretty big. I get that. In any case, I'm sorry the optimizer did not pass, I actually had no specific issues with it. I have a small issue with the Revest proposal myself so that is a different situation if I'm being honest. I'm very open to seeing how we can propose a follow on vote in some way for a 2nd attempt at a gauge for you guys.
After the initial outburst, Sam Kazemian, the Founder of Frax, took to the forums and expressed his apologies for a misunderstanding and miscommunication surrounding the proposal for NFT-based lockers in the Frax ecosystem. He clarified that the initial request for veFXS and veFPIS wrapper lockers was his personal idea, acknowledging a lapse in active engagement and feedback during the Frax hackathon.
The issue at hand was that Revest's FPI locker veNFTs potentially undermining the limitations imposed by the veFXS system, by allowing unlimited creation of any kind of lock and for any duration. Kazemian suggested that a more valuable approach would be for Revest to own the FXS and FPIS tokens on its DAO balance sheet and hypothecate NFTs/tokens against them. New lockers should not undermine or break the existing ve-system. Ultimately, he asked the team to review their design and resubmit once changes were made.
CR to 100% Clouds Unlock sdFrax3CRV-f &Unlock Curve VSTFRAX-f pool (Arbitrum)
The other big governance issue was around unlocks for the Vesta Finance and StakeDao LPs. Vesta Finance recently voted to conduct a full unwind and dissolve. VST would be available for 1:1 redemption for stablecoins ongoing into the future.
Well, @vestafinance has decided on VSP-6
— Witek (@witconomist) September 25, 2023
- Full unwind and dissolution of Vesta Finance.
- All $VSTA holders will have unlimited time to exchange their tokens for a pro-rata share of the total Vesta treasury, valued at around $0.526 per token.
👋 pic.twitter.com/QWq7MloFHu
TVL has been declining naturally in the pool, but there is still $3.7m staked.

Additionally, TG member Luke has been working on extracting a massive amount of data to determine rage quit fees for how much FXS was paid out to the sdFrax3CRV-f pool over the last 2 years.

But.... there are issues
Sam K voiced his opposition to unlocking this or any pool under the current market conditions. His reasoning was that as we are under 100% CR and supply has been shrinking due to market conditions, unlocking any pools would be detrimental to the overall health of the protocol. While the figures Luke put forward are correct, further outflows could affect the FRAX peg.
Sam clarified that he isn’t against future unlocking if market conditions improve and the CR continues to climb towards 100%. FRAX v3 potentially is the solution for this problem and that when CR was at 100% he would support it.
His view is most likely shared by other DAO voters, signalling the end to "rage quits" or other early unlocks for staked LP.
Other Governance Issues
[FIP-289,290] Add Arrakis LST Vaults of frxETH/FRAX to FXS Gauge Controller
Arrakis Finance is a non-custodial on-chain market-making protocol that builds both the infrastructure and the strategies that enables and execute sophisticated algorithmic market-making on Uniswap V3.
[FIP - 291] Add triSDT to the gauge controller
Add an FXS gauge for the following Convex pool: SDT/frxETH/crvUSD
The staking token is a wrapped Convex staking position that receives CRV and CVX rewards.
Curve LP token: 0x954313005C56b555bdC41B84D6c63B69049d7847
Convex pool ID: 233
URL: https://www.convexfinance.com/stake/ethereum/233 1
Q&A with Sam K
FrxETH liquidity
flcl: What's happening with frxETH liquidity? Why was so much removed?
Sam Kazemian: It’s moved to the frxETH-WETH Curve pool instead of the frxETH-ETH original pool because the WETH one has improved EMA oracle code and is used for crvUSD markets. Total liquidity hasn’t changed much overall. It’s just migrating between different pools slowly over epochs. Also, some more POL moved to frxETH-stETH per a previous governance vote to increase yields that ultimately go to sfrxETH holders. Between all those 3 pools, overall liquidity is about the same range as before.
FinresPBC
McKenna: @samkazemian curious why you guys chose FinresPBC instead of BlackRock iShares for short-term treasuries? People like Ondo Finance are utilizing these types of ETFs, is it due to management/intermediary fees?
Sam Kazemian: Yes, management fees are one reason, but other than that, you’d still need a properly set up legal entity to handle and hold the iShares. FinresPBC can hold those if we want. But regardless of whether we want to hold iShares or raw tbills, we still need our own entity like FinresPBC since a protocol can’t hold it by itself.
tan: Check USDT balance sheet, how profitable it is! Don't want to share with anyone.
Frax v3 Launch
Cryptovestor: We must be getting close, October just a few short days away.
Sam Kazemian: We are close, ser. Audit complete. Just improvements and final prep.
Cryptovestor: Will v3 be here in time for October's attestation of assets via Plaid?
Sam Kazemian: Yes, it doesn't matter though exactly if it's before or after Oct 1 since everything is real-time anyway. So balance sheet will catch it whatever date it's launched anyway.
Frax in the Media
Frax gets a big shoutout by CoinGecko
One of the most in-depth reports on LSDs ever, great work by the brilliant team at @Coingecko!
— Frax Finance (¤, ¤) 🦇🔊 (@fraxfinance) September 28, 2023
Oh and the best part “@fraxfinance’s sfrxETH has been the best-performing LSD in terms of average yield, at 6.2% between Oct 2022 to Aug 2023.” https://t.co/zVrVBSXK8w
Pendle is Watching Us
— Pendle (@pendle_fi) September 22, 2023
StableScarab Talks Frax V3
1/ Day 3 of my week-long @fraxfinance ecosystem deep dive in anticipation of FRAX v3. After yesterday’s thread on $FXS, let’s take a look at Frax’s most recent product that's growing incredibly fast, Frax Ether! $frxETH 🧵👇#crypto pic.twitter.com/gq72Z6A4JH
— StableScarab🪲(¤,¤) (@StableScarab) April 6, 2023
Blockworks discusses Frax v3
Lano Technology on Frax
Part 2 of the Frax article explains how Frax Finance grew FRAX in the stablecoin market. It covers the stablecoin market conditions at the time and how Curve AMO played a pivotal role in its growth. Additionally, it discusses the strategies Frax employed on the Onchain platform.… pic.twitter.com/FgY4b3hgK8
— Lano Technology (@LanoTechnology) September 26, 2023

Izu Crypt on Frax v3
𝗦𝘁𝗮𝗯𝗹𝗲𝗰𝗼𝗶𝗻𝘀 𝘄𝗮𝗿 𝗶𝘀 𝗹𝗶𝗸𝗲 𝗮 𝗴𝗮𝗺𝗲 𝗼𝗳 𝗰𝗵𝗲𝘀𝘀
— IZU🎩 (@izu_crypt) September 25, 2023
With Frax v3 audited and launching soon- its about to be crowned King
Here’s a top-down thread on Frax finance innovations (+other bullish catalysts) pic.twitter.com/e1EIUWA0aN
Stablecoin News
Gordon Liao on the State of Stablecoins
JPM collected some useful data regarding the footprint of stablecoins. At around 2% of T-bill market, stablecoin issuers represent a small sliver of the overall market
— Gordon Liao (@gordonliao) September 26, 2023
The missing point is that the crowding-out of T-bill buyers is the crowding-in of bank deposits 🧵👇
1/ pic.twitter.com/VOs56wblcr
MIM Savings Rate
👀 MIM Savings Rate?
— Pasharus (@pasharus_) September 26, 2023
As expected, most non-centralised stablecoins are going to give some yields to holders.
Looking forward to read more on this; couldn't find anything else than just the mention on Arbitrum forum. $SPELL $MIM pic.twitter.com/ax4MCUVZIH
Frax Alpha
Lodestar Finance Recaps Frax Yield Rates
Epoch 5 of the emission gauge is in! ⛵️ It's time for our #WeeklyRateRecap
— Lodestar Finance | Backup Account (@backuplodestar) September 25, 2023
It seems our friends at @Treasure_DAO have taken control of the ship this week, steering us towards heavy incentives for $MAGIC deposits!
https://t.co/rvkEBns9FQ on #Arbitrum pic.twitter.com/aGmfEdlptg