Watch the recap video on youtube to learn more about all of the topics covered this week, as well as an interview with Rob from Revest.
sfrxETH just wins
A new feature was introduced to Frax Facts that compares how the APY of sfrxETH lines up compared to peer LSD protocols. If you’ve been keeping up with our weekly Frax Check’s, as expected, sfrxETH, is the reigning champion. Flywheel has covered more about this new feature and its ramifications in our latest highlight.
frxETH/ETH ratio discussion
Sunomono, expressed his concerns about the imbalance in the frxETH/ETH Curve pool’s. Mainly arguing that the 80:20 imbalance brings a large risk and would cause frxETH to depeg. The imbalance of the pool is the main strategy of the AMO which Frax intentionally implements. Ideally, you would want to attract more ETH and so, the design of the imbalance was specifically done so that whenever there is an imbalance, Frax would slightly push up the bribes to incentivize more people to put more ETH into that pool.
frxETH Redemption Feature Soon™️
After a long discussion with an LPer in the main chat after expressing his thoughts over the 80:20 eth/frxETH pool balance, Sam came to mention that in the next 2 weeks, the contract for a new redemption contract (set to be used in frxETH v2) will be complete. This new contract is meant for users that prefer a queue to get a pure 1 to 1 redemption for any size of frxETH. Because of the nature of the feature, it’s speculated that the speed of redemption contract will be slow in a similar manner as Fraxferry.
Flywheel interviewes Kain Warwick
This week we hosted Kain Warwick, Synthetix founder and DeFi OG. Sharing stories from the early days and where Ethereum and other primitive protocols went wrong during the last DeFi summer.
Sam K went on a Twitter Spaces about LSDs
This week Sam went on a Twitter spaces hosted by Origin DeFi to talk about LSDs with other panellists from peer protocols Lido, Rocket Pool, and Origin DeFi. The panellists took a deep dive to explain LSDs, LSTs and what’s to come for the DeFi ecosystem.
Bankless puts FXS as their #1 pick for the next cycle
This week Bankless published an article on their 10 Altcoins that will survive in the bear market. Highlighting the fact that regardless of market conditions, Frax continues to build an expanding DeFi ecosystem with unique products build from the ground up. It’s impossible to ignore the signs that show the strength of Frax from being the third largest LSD with its innoative design to the upcoming releases of frxETH v2, BAMM, and Fraxchain.
This week Travis Moore teased and Sam confirmed that Fraxbonds will be included in the highly anticipated FRAX v3. As Sam mentioned, these types of bonds will be quite different from the bonding model which we have seen with OlympusDAO’s OHM where users are able to trade various assets for OHM at a discounted price, these bonded assets then provide extra liquidity and reserve assets to the treasury. We are awaiting further information on the mechanics of Fraxbonds as well as when it will be deployed.
This week, Sam confirmed that frxBTC is on the roadmap but would not be released anytime before Frax v3. Admitting that “there is no real way to make money from Bitcoin”, it is not a priority for the core team at the moment. On the contrary, you can earn interest from ETH because of its PoS and other yield-bearing tokens.
Swaap Vote Passes
Swaap is a protocol which focuses on delivering the best market-making strategies for all types of LPs. Their recent proposal to add the future FRAX/ETH pool on Swaap v2 to FXS gauge controller was passed. What does this mean? It will reinforce FRAX as a ‘connector token’ in the DeFi ecosystem, improve the FRAX/ETH execution through the creation of a direct liquidity venue which entails lower gas and lower spread, deepen the liquidity on FRAX, and create a new opportunity for FRAX holders to earn yield. Frax core team member and Fraxlend lead Drake Evans gave his public endorsement and said that Swaap was the only protocol out of the dozens that truly has a product that can help grow Frax. At the finish line, the proposal to add the Swaap gauge would go on to pass.
FIP-256 - Optimizing FIP-77’s TWAMM Parameters Passes
As mentioned in last week’s article, Ouroboros’ proposal to optimize FIP-77s TWAMM Parameters has been passed! Essentially, this would allow for Frax to buy back more FXS when its cheaper rather than linearly purchasing FXS regardless if the market price is high or low. The community appreciates having an activist investor and experienced fund manager who genuinely cares about the future of Frax to propose and execute this strategy. In fact, we are excited to be hosting Ouroboros on the Flywheel podcast next week so make sure to subscribe to our substack to be the first to know when its released!
How frxETH becomes the next wETH
This new proposal is a massive step forward for frxETH as it seeks to establish a strong relationship with other LSD protocols within the ecosystem which would introduce an AMO for frxETH/stETH on Curve. Moving forward this will mean that frxETH would be partially backed by stETH via its inclusion as a Curve LP token. Partnering with stETH is a massive positive sum partnership as it is the largest LSD there is with the most liquidity providing a win-win scenario for both frxETH and stETH.
FIP-254 - Frax Ecosystem Educational Incentives Program Amendments Passes
Another proposal pushed out by Defi Dave in collaboration with Nader, aims to amend the program and extend it to the end of the year. This will allow more community members to contribute and spread their knowledge about the Frax ecosystem. Anyone interested in participating in the program will have a greater opportunity to contribute to the community and share their knowledge. We encourage everyone to participating and you can do so by entering here.
FIP-258 - Flywheel Grant Amendments
Yes, here at Flywheel we published a proposal which formalizes the production of This Week in Frax, changes the cadence of Frax Check, expand the budget for events, and maintain SamKazBot. More information (and your valued support) can be found on Snapshot where it is currently up for vote.
We had some massive news this week as Curve broke headlines for its mention by The Bank of International Settlements (the central bank of central banks), Swiss National Bank, Bank of France and Monetary Authority of Singapore. These banks stated that they are exploring the use of Curve v2 AMM for their CBDC pools in order to achieve simultaneous trading and settlements. This exploration is called “Project Mariana" a hybrid function market maker (HFMM).
Twitter user @StormlightTower created a diagram to represent where Curve would fit into all of this.
With this breaking news, the Frax community was quick to begin the discussion within the main chat. Sam came in to say that there won’t be any retail CBDC coming into the space for the next couple of years, if ever. He continued by explaining the two types of CBDCs.
1. Retail CBDC: Actual digital cash tokens that can be held by users that can be sent and settled by Fed software. No depositing in bank accounts needed.
2. Wholesale CBDC, which is a 24/7 settlement at the Fed by entities that can hold real dollars”
Overall it is very exciting for Curve to receive such recognition and further supports the notion that Frax made the right decision to early on embed itself in the Curve and Convex ecosystem.
Future yield today with Resonate w/Rob M from Revest
Rob explained that “Revest is to resonate what a video game engine is to a video game.” Revest is the engine for FNFTs. You can take any complicated locked position, and the it is able to turn that position from your wallet to be represented in an NFT which can be fractionalized if one chooses to sell. They built Revest as a system to power any individual use cases like options, interest rate swaps and the list goes on. Revest is a way for people to come in and connect with the DevTools to issue their own financial NFTs. Resonate is their system in which people can come and get their future yield on a yield bearing assets, this is what they are specifically doing with Frax. What Rob and the team are aiming to do on Optimism, Frax already does on mainnet— allowing users to go to a farm and lock up LPs through convex. In collaboration with Frax users will be able to get all these extra rewards compared to just farming LP tokens.
Rob mentioned that Frax wants to have deeper liquidity for frxETH LPs. If you have frxETH LP’s on Optimism or on mainnet, you can bridge the frxETH to Revest using Fraxferry or Optimism’s native bridge. Once bridged, users can head to the Frax tab and lock it up for up to a month. The current APY is an impressive 7.93% on the frxETH/ETH LP, Thats 2.97% more than Frax’s current 4.96% APY. The extra yield and rewards are possible because Frax is paying a little premium due to the reason that it is locked yield. Similar to Convex when you get a little more rewards because the tokens are locked TVL. Its important for the protocol to keep assets locked in a single place where they need liquidity. Currently the TVL is around 20,000 and the team launched last week. If you are interested in earning 7.93% in juicy yield you can head over to app.resonate.finance, click on the Frax tab which will bring you to the tab where you zap to get you LPs then deposit and the earning begins!