[FIP - 328] Add Curve HFXB/Frax to the FXS gauge controller on Arbitrum

Summary

Add Curve HFXB/Frax LP token to FXS gauge controller on Arbitrum

Curve pool address: Curve.fi
Curve pool / token: 0xc9bf909acf287c64c4799d9f38eeab4a3491c307
CRV Gauge: 0xbCCC8747216F0Bb2853F8324De86E76BD197554d

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Documentation

Background

Hourglass is excited to announce HFXB, the first ever index of Frax Bonds (FXBs). HFXB is designed to aggregate secondary liquidity for FXBs while improving their composability across the DeFi ecosystem. It will also manage FXB rollover and rebalancing for users that aim to maintain exposure to a particular FXB duration. While this post will discuss a particular implementation of HFXB (which benchmarks an average ~6 month duration), Hourglass Frax Bond Indices can theoretically target any duration along the yield curve.

HFXB’s smart contract design resembles an asynchronous ERC-4626 vault, whereby users can periodically deposit sFrax to mint shares of the vault. This sFrax is then deployed via a rebalancing strategy such that the vault’s average duration is within a margin of the target duration. Shares minted from the vault, otherwise known as the HFXB token, can be freely traded on Curve, redeemed for the underlying, or otherwise be composed across DeFi. HFXB vault rebalancing will happen on the most efficient market it can find, whether that be the individual FXB pools on Curve or the time-bound token marketplace on Hourglass. Further details about HFXB can be found in the documentation.

Motivation

HFXB is designed to drive meaningful locked liquidity to the Frax protocol by deepening FXB secondary liquidity and simplifying its user experience. Rather than Frax needing to maintain unique liquidity pools on Curve and Fraxlend for each duration FXB, each of which require periodic rollovers, the protocol can incentivize a small number of indices which perpetually facilitate price discovery and liquidity for the Frax yield curve. This has the added benefit of improving FXS incentive efficiency, and as such we propose that HFXB is added to the gauge controller.

Voting

• For: Add the HFXB/Frax Curve pool to the FXS gauge controller on Arbitrum
• Against: Do nothing

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This proposal is up for voting here: Snapshot