[FIP - 166] Increase Fraxlend AMO allocation for a pair ( FPI/FRAX - Variable Rate - 12)

Summary

Increase max authorized allocation of Fraxlend AMO for the following Fraxlend pair.

Fraxlend Pair Name Fraxlend Pair Address Current Max Authorized Allocation Proposing Max Authorized Allocation
FraxlendV1 - Frax Price Index/Frax - Variable Time-Weighted Interest Rate - 12 0x74F82Bd9D0390A4180DaaEc92D64cf0708751759 15,000,000 FRAX 25,000,000 FRAX

Background and Motivation

Fraxlend is a lending platform that allows the creation of a money market between a pair of ERC-20 tokens. Any token that is part of a Chainlink data feed can be lent to borrowers, or used as collateral. Each pair is an isolated, permission-less market that allows anyone to create and participate in lending and borrowing activities. Fraxlend creates new financial opportunities for all users and promotes FRAX adoption in the DeFi community.

Since FIP - 137 authorized the Fraxlend AMO to issue a new FPI pair ( FPI/FRAX - Variable Rate V2 ), the pool has generated significant protocol revenues, as well as heavy lending and borrowing activity. Current pool utilization stands at 91% with total FPI collateral value at $17.8m. At time of writing, the lender APY is at 5.7% and borrower APY is at 6.2%. Both rates are rising quickly.

Building on the success of the FPI pool, additional AMO injected liquidity would help bring the target pool utilization back down to the nominal range of 75% to 85%. More importantly, raising the liquidity cap would expand and diversify the borrower base to increase financial access for all users.

We note that authorizing the new higher limit does not require the AMO to provide the specified liquidity. The liquidity will be authorized and available to be injected, consistent with the AMO operations framework and protocol risk parameters, to meet user demand as deemed appropriate by the Frax Team.

Proposal

  • For: Increase maximum authorized allocation of Fraxlend AMO for the mentioned pair.
  • Against: Do nothing.
2 Likes

Within Cap, will create an opportunity to allow new prospective borrowers to join the pool. Lower concentration of the large wallets borrowing.

This proposal is up for voting here: Snapshot