Frax V3, WETHR, Flux Finance AMO - This Week in Frax - March 31

A late explosion of news in the week lays out part of the roadmaps for Frax's future

Samuel McCulloch
Samuel McCulloch
March 31, 2023

Frax V3 👀

We’re putting this first because of the importance, but we were SHOCKED when Sam dropped the tweet.

WETHR (see below) had just been posted to Curve forum and no more than 30 min later this tweet rocked our timelines. The hype was real in the Frax TG and Sam K tried to keep it tight lipped, but leaked a few things once he started getting peppered with questions.

First, Frax v3 is an upgrade for FRAX the stablecoin. It’s a part of a wider roadmap for the Frax protocol.

Sam gets asked if Frax v3 is going to be on the roadmap.

Next, Frax v3 is more than just stability mechanism updates. It’s about making Frax safer, especially in light of the events of the last 18 months. We’re really interested to see how Sam is planning to shift Frax away from USDC and other fiatcoins to USD. There’s no current alternatives, so a new solution must be cooking.

He also mentioned on-chain governance, which we he covered in one of our recent interviews. This would allow veFXS holders to veto any multi-sig actions before they get executed.

Sam is asked about Frax v3’s stability mechanism

The switch to USD is not about a master account, its a “pure crypto design for v3,” which might be the most interesting part. How they approach this, we’re going to be covering closely.

Last, user “N” asked the question we all were wondering.

WETHR details posted to Curve governance forum

Frax has announced the initial details of its WETH replacement program on the Curve governance forum. First, it asked for new gauges for the following pairs:

frxETHstETH (stableswap)
frxETHrETH (v2)

Once added, these pools will “get FXS bribes through Votium proportional to their TVL using a similar algorithm to the FRAXBP system.” This is the beginnings stages of frxETH’s DeFi takeover of liquidity. If all LSD ETH pairs against frxETH due to the highest yields, Frax wins. We don’t even have to have the highest TVL, but frxETH becomes the core liquidity component required for every LSD.

Coinbase is calling

Coinbase published a blog article requesting builders to come to their L2 ecosystem. The first “Idea for Builders” was flatcoins and Frax was specifically named as one of the protocols that they would be excited to see deploy there.

A “flatcoin” is a term first used in a conversation by Sam K and Balaji many years back.

A flatcoin is a stablecoin that is pegged to something other than fiat currency. Last year Frax deployed the first “flatcoin” when it launched FPI. Deploying FPI to Base would require the protocol to create the token and system contracts on the network. The DAO could then vote to open up a Fraxferry channel. Even with FPI being deployed to Base, the collateral backing it would remain on ETH.


🗳️ Currently Voting


Friends of the show Reserve are continuing world domination with their eUSD Curve pools. Pool TVL has nearly 10x in a week and that’s even before the FXS gauge is live. There’s 1 day left to vote for this proposal, but it’s received 33m votes, so it’s guaranteed to pass at this point.

[FIP-201-4] New Fraxferrys’ to be deployed on zkSync

A bunch of new Ferrys are about to open up to zkSync for FRAX, FXS, sfrxETH, and frxETH. Voting is open until the 1st for these new deployments.

📤 Upcoming

Flux Finance proposes a new AMO

This is the longest AMO proposal ever to be posted to the governance forum, clocking in at 8 whole posts with appendixes. Flux Finance is proposing creating an AMO for their lending markets. What makes this proposal contentious is that the collateral backing their loans is wrapped tokenized US Treasuries called OUSG. AMO deployments are different than any other protocol function as the deployed FRAX is unbacked and creates more risk to the peg.

Deployment of AMO funds into Flux would also go against Frax’s commitment to only hold funds in an FMA. Off-chain assets, while profitable, create centralization risk. A better option for Flux would be to apply for a single sided fFRAX gauge. Individuals could choose for themselves if they wanted to provide liquidity and take on the pool risks.

Fraxlend launching on Arbitrum!

Westwood finally has his pleas answered as the Frax team proposed deploying Fraxlend to Arbitrum to support ARB. This will be the first cross-chain deployment of Fraxlend and it can’t have come at a better time. It will be the first or one of the first major lending markets for ARB. Very exciting!

Educational Ecosystem Grants

DeFi Dave announced his Educational Ecosystem Grant last week, but after getting some feedback, he updated it to include additional funding for Dune Dashboard deployments.

Unlock the StakeDAO sdETH gauge

StakeDAO is shutting down their sdETH strategy and the community has proposed unlocking the $2.5m LP. This is not a rage quit, but an unlock without fees. The StakeDAO team is a close partner of Frax and has helped onboard a lot of liquidity into the ecosystem. This proposal might pass as a result without having to include rage quit taxes.

Best of Telegram

Sean Kelley asks about the Frax logo in names

Sam K answers a question about Fraxferry wait times

Sam K responds to front end issues

A discussion about FPI maintaining its peg.

Sam K gets asked about the Mint Cap for FPI later in the conversation

Best of Twitter

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