[FIP - 277] Onboard FinresPBC as FRAX v3's Offchain RWA Partner

1.) FinresPBC is doing the converting/investing/holding.

2.) No. FinresPBC is NOT a customer/retail facing entity. Its only “customer” (aka relationship) is Frax Protocol onchain and its various offchain banking/tradfi partners. Think of FinresPBC as a bridge/adaptor for the Frax Protocol to the outside/tradfi world. FinresPBC’s scope is not to service offchain customers/users. Its only mission is to connect offchain partners onchain to the Frax Protocol.

3.) This question deserves a much longer response and is not easy to answer here in a single forum post but the short answer for now is that we are slowly building up our ability to work with large banks and traditional financial entities this year. And over time, when we are qualified to, we will pursue the bank charters/FMA applications as necessary. One step at a time. The current structure is the first step toward the final goal.

4.) FinresPBC has an internal compliance process for all operations it conducts and makes sure to comply with all traditional financial laws that must be adhered to in order to continue its relationship with its banking and tradfi partners. If the received stablecoins weren’t KYC/AML how do you expect Circle/Paxos would work with FinresPBC? They wouldn’t. We have a compliance process in place clearly.

5.) That would be great. When rates are 0% again and there is another bull market/growth phase in the global macro economy, there will be much less need for FinresPBC and Frax Protocol can go back to more of its onchain AMO/overcollateralized lending strategies. Recall that in a bull market overcollateralized loans were the bread and butter of Maker and all stablecoins. Users paid double digit interest rates to borrow dollars (DAI/FRAX/USDC) from Aave to leverage their ETH in a 0% Fed rate environment. We expect the same thing to happen in a bull market with ETH LSDs and overcollateralized loans.
In a 0% Fed rate environment, there will be less need to hold tbills or deposit dollars in FMAs and IntraFi accounts. Most operations would go back onchain and the decentralization of the Frax Protocol would increase as the RWA component would shrink based on market demand (in a zero rate environment market demand for RWAs is low).