Welcome to the end of the year.

We at Flywheel want to extend our heartfelt thanks to all of our supporters, readers, podcast watchers, merch buyers, event go-ers, Spaces listeners, and all the Frax enjoooyers who make our work possible.

2023 has had its ups and downs, but now with the year closing, we've never felt more positive going into a future year than in this present day. The resiliency of our community is unmatched and we grow stronger by the day. We're building an infinitesimally high crypto structure brick by brick (block by block 😄), and our community roots established by Flywheel are constantly grasping at every crack, digging into the alpha, growing alongside a billion dollar protocol.

What binds us is the core mission and ideology of Frax, building a new decentralized monetary economy embedded with the Ethos of Ethereum, censorship resistant, immutable, open, transparent, trustless. When we talk about alignment, Frax is the pinnacle of what an app should strive for that is built on the EVM. It's no wonder then how Frax has been able to cement itself as one of the major incumbents across a growing vertical of products, assets and services all supporting growth of our industry.

When Frax launched in 2020, I don't think any of us could have predicted frxETH, Fraxchain, BAMM, Fraxferry, the Curve Wars, Convex's dominant role, or any of the other later integrations and deployments. It's been a wild ride so far and honestly, we're still in the early innings for Frax.

At the end of this year, it feels like we are entering into a new epoch of Frax's lifespan, the core Ethereum products are ossifying with frxGov, Frax v3 and the upcoming launch of frxETH v2. We've seen mastery of incentive mechanisms that are laying the blueprint for stablecoin maximalism expansion to a host of new assets. And now with the upcoming launch of Fraxchain, the design space the protocol will support will become near limitless.

This is probably the last year that we Flywheel focus solely on the Frax protocol as a core product with our reporting. Once Fraxchain releases, a flood of new apps, developers, protocols, and services are set to emerge that will shape new narratives for the rest of the decade. Our reporting will expand to focus on these new environments, rich with ideas propelling the ecosystem to heights we've never seen before.

To say we are bullish and positive for the upcoming year is an understatement. We're about to see an explosion of new development of Frax supported apps driven by completely novel incentive mechanisms. In our latest TWIF show, we commented that Sam Kazemian's Telegram reactions and comments are reaching new levels. We've never seen this many 🔥 and 👀 since frxETH was launched in 2022 and we love it.

The vibes are high as we transition to the new year. Frax's product roadmap for the first half of 2023 is jam packed with new releases. While it does provide some early indications, we have no idea what Flywheel will be writing at this time next year... and we couldn't be more excited.

Thank you all for joining us in this journey, supporting Frax and Flywheel. You are the reason we show up to create content everyday and we couldn't be more proud of our community.

Airdrops?

Look but don't touch

We're just a few days away from the launch of the first round of FXBs on chain. The newest Frax asset most likely will be launched on Jan 1, 2023 based on information in the current docs to align with the yearly expiration and rollover.

This week the Core Dev Team posted up two new governance proposals to add gauges for the new Curve pools on both Ethereum and Arbitrum.

[FIP - 311, 312] Add Curve FRAX/FXBs on Arbitrum to the FXS gauge controller

Summary Proposal to add Curve FRAX/FXB_20241231 and FRAX/FXB_20261231 pools on Arbitrum to the FXS gauge controller. Background And Motivation Adding the Curve FRAX/FXB pools to the FXS gauge controller on Arbitrum is a strategic move by Frax Finance to enhance its liquidity and market presence. Additionally, the FXS gauge’s ability to distribute ARB tokens positions it as a vital instrument for Frax Finance to allocate current and future grant-funded incentives within the ecosystem efficientl…

Frax Finance Governanceamirnader

[FIP - 313, ..., 315] Add Curve FRAX/FXBs on Ethereum to the FXS gauge controller

Summary Proposal to add Curve FRAX/FXB_20240630, FRAX/FXB_20241231, and FRAX/FXB_20261231 pools on Ethereum to the FXS gauge controller. Background And Motivation Adding the Curve FRAX/FXB pools to the FXS gauge controller is a strategic move by Frax Finance to enhance its liquidity and market presence. Pool Details FRAX/FXB_20240630 Curve Pool: Curve Pool Address: https://curve.fi/#/ethereum/pools/factory-stable-ng-46 Pool / Token: 0x4ef4c7519023f30a78647eeab321d6cfabc2513c CRV Gauge: TBD…

Frax Finance Governanceamirnader

Ethereum will be host to 3 FXB expirations, FRAX/FXB_20240630, FRAX/FXB_20241231 and FRAX/FXB_20261231. All three of these pairs will also be added to Fraxlend once they launch and have sufficient liquidity to handle liquidations.

Arbitrum will only have access to FRAX/FXB_20241231 and FRAX/FXB_20261231. These assets might be added to Fraxlend in the future on Arbitrum, however, market structure should be robust and highly liquid before that deployment can occur.

Fraxlend on Arbitrum New Additions?

We shared last week that Vaultcraft had been added as a partner protocol to support locked Frax lending liquidity for Fraxlend on Arbitrum. This was the first new incentive support for the money market on Arbitrum. While we have no official indications from the Core Dev Team when new assets might be added, there have been several votes already passed to support new assets.

[FIP - 261,262] Authorize Fraxlend AMO for new pairs on Arbitrum ( GMX, WBTC )

Authors Frax Core Team Summary Authorize Fraxlend AMO to deposit minted FRAX into the following Fraxlend pairs with mentioned max authorized allocation. Fraxlend Pair Name Chain Fraxlend Pair Address Max Authorized Allocation WBTC/FRAX - Variable Rate V2 Arbitrum TBD 5,000,000 FRAX GMX/FRAX - Variable Rate V2 Arbitrum TBD 2,000,000 FRAX Background and Motivation Fraxlend is a lending platform that allows anyone to create a market between a pair of ERC-20 tokens. Any token part of…

Frax Finance Governanceamirnader

FIP-261/262 authorized AMO support for GMX and WBTC, and these most likely will be the first to be added. Both markets already have deep liquidity to handle liquidations, oracle support and are widely used on the L2.

[FIP - 231, ... ,233] Authorize Fraxlend AMO for new pairs on L2s ( sfrxETH/FRAX - Variable Rate V2 )

Authors Frax Core Team Summary Authorize Fraxlend AMO to deposit minted FRAX into the following Fraxlend pairs with the mentioned maximum authorized allocation. Fraxlend Pair Name Chain Fraxlend Pair Address Max Authorized Allocation sfrxETH/FRAX - Variable Rate V2 Arbitrum TBD 5,000,000 FRAX sfrxETH/FRAX - Variable Rate V2 Optimism TBD 5,000,000 FRAX sfrxETH/FRAX - Variable Rate V2 BSC TBD 5,000,000 FRAX Background and Motivation Fraxlend is a lending platform that allows an…

Frax Finance Governanceamirnader

FIP-231 authorized AMO support for sfrxETH on Arbitrum, however, liquidity constraints might delay this asset addition until towards the end of the STIP or after as the Curve pool only has 2.3m worth of liquidity added.

Once more liquidity is added by market participants to this pool, it could support a lending pair. We're expecting that the Arbitrum STIP rewards should help grow this pool and eventually support a robust Fraxlend lending pair.

Currently the staking rate for the pool is 13.1% base and 40.31% fully boosted with a 3 year lock. That's not bad for an ETH+ETH Stablecoin pair in our opinion. We're optimistic that TVL will grow more over the next several weeks and hopefully break $10m by the end of the incentive program.

Dinero Proposes pxETH/frxETH gauge

The Redacted team added a new proposal for its Curve LP to pair frxETH against pxETH.

pxETH is a liquid staking token developed by Redacted Protocol under its Dinero Protocol. It serves as a fungible receipt for Ethereum (ETH) deposited into the Dinero protocol, which is then staked to support Ethereum network validators. Holders of pxETH can deposit it into an auto-compounding vault to receive apxETH, a token that accrues Ethereum staking rewards, including MEV tips and block rewards. This mechanism allows for the tokenization and utilization of future apxETH yields and pxETH withdrawals within the DeFi ecosystem. pxETH can be exchanged back for ETH either instantly or by unstaking from validators.

Watch our interview with 0xSami from last year to learn more about Redacted.

Moonwell Voting on How to Improve Frax Liquidity and Deal with Bad Debt From Nomad Hack

Gauntlet is running a community discussion to address the aftermath of the Nomad exploit and its impact on Moonbeam's assets and the FRAX market. They are exploring options to manage the bad debt and improve FRAX's liquidity.

They proposed four strategies: utilizing Nomad collateral from the bad debt, using protocol reserves, a combination of both, or taking no action.

The Nomad collateral available totals approximately $2.3 million.

Recovery involves community governance decisions, transferring assets to a Multisig wallet, completing KYC, and exchanging assets for FRAX, which faces challenges due to limited liquidity on Moonbeam. The protocol reserves amount to around $466,000.

Opportunities

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