This Week in FRAX - February 18-24th, 2023 #2

veFPIS, Metronome, Gearbox, Ragequit, Euler, and more...

Samuel McCulloch
Samuel McCulloch
Feb 24, 2023

veFPIs launches, 5m FPIS deposited in first week

The middle child of Frax stablecoins, (FPI & FPIS) launched its value accrual and governance system veFPIS this week. The rollout was extremely smooth and went off without any major issues. As of writing this article, 5 mil FPIS or 34% of supply has been locked for an average of 1.69 years. Even with 50% of the total airdrop amount being locked, the yields for veFPIS are well above 180%. With more than 200k USD worth of rewards distributed each week, veFPIS is undoubtedly the most slept on product in crypto right now. We’re really excited to see its growth and increased yield derived from excess FCR profits.

Gearbox adds Frax as a passive deposit asset!

Governance roundup

[FIP - 188] Increase CR to 100%

In a move which was controversially, but entirely expected, the Frax DAO has voted to increase the Collateralization Ratio of Frax to 100%. The proposal, put forward by Hameed, makes the following changes to the protocol:

  1. Frax retires the decollateralize function. No FXS minted to achieve the target.
  2. Retains protocol revenues to increase CR, pauses FXS buybacks
  3. Authorizes up to $3m per month in FrxETH purchases

I. Increase the target collateral ratio to 100%. This is the long-term target of the protocol and will require time to reach. No FXS will be minted to achieve this target. As part of this change, the protocol is retiring the algorithmic backing of FRAX and the decollateralize function.

II. Retain protocol revenue to fund the increased CR, including pausing FXS buybacks. veFXS yield remains the same.

III. Authorize up to $3m per month in frxETH purchases to increase the CR.

At the end of the day, the protocol will still function as it always has. What will be lost is AMO capital efficiency. Without the addition of FrxETH, this change probably would have been less palatable, as it would have drastically reduced revenues and weakened the overall long term health of the project. With the massive bump in revenue from FrxETH expected, closing a $90m gap to 100% CR is no longer detrimental and is instead beneficial to the overall health of Frax.

[FIP - 192] Metronome <> Frax: Partnership and Incentives Strategy

Metronome is a multi-collateral, multi-synthetic platform that creates new opportunities for yield and leveraged. Their newest product msETH, is a loan asset taken against sFrxETH to gain additional leverage. By “looping” debt from the collateral, high levels of leverage can be achieved against a highly correlated asset.

Metronome is asking for 4 voting cycles worth of CVX totaling 165,000 stake. The vote ends tomorrow and yet to achieve quorum.

[FIP - 189 … 191] Boosted FRAX-USDC Balancer Euler boosted pool AMO + FXS Gauge + Trial Balancer ecosystem bribe program

Check out the video in this week Frax In Review, Dave and Kiet were a little unsure about how the proposal would work, specifically the AMO’s. Sam walked them through how the Balancer BB pools work and what this would mean for Frax.

[FIP - 195] Move Locks Back to 3 Years for 3x Boost

This essentially undoes FIP 91 - Set gauge max lock limit to 1 year and 2x time boost, first proposed by C2tP in June, 2022. The idea back then was that the long 3 year lock was disincentivizing new LPs from locking. It seems that belief was not what the market wanted and now 1 year later, this proposal has passed and all new locks will have the option of a 3 year lock with 2x boost.

Implement FRAX/mUSD pool ragequit function with 20% fee

If you don’t succeed try, try, try again until you can’t propose anymore. Just this week, the most recent ragequit pool was hammered down now by the DAO. mStable is shutting down, but collateral is at risk. Should we allow users to unlock with a penalty? So far the answer has been no. However, we might just see how deep of a discount

Flywheel in review


Frax Launches veFPIS Staking & Explainer of the FPI Ecosystem
Today marks the launch of veFPIS, the newest product in the Frax ecosystem. With over $250k in rewards distributed each week, the yields for locking for 4 years are in the triple digits as of publishing. With a maximum of 10% of the supply available to stake, this could be one of the hottest Frax products for the next several months.


"U-PEE OH-..." - FraxCheck #27
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Eigenlayer Releases its Long Awaited Whitepaper: Here's What You Need To Know
On Monday, February 20, the Eigenlayer team dropped their long awaited whitepaper which describes what we discussed with Sreeram in episode #39.

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