FIP - 40 Funding Frax Core Development, Community Outreach, and Grants

Summary

5% of the FXS supply is in the hands of the Core Team Treasury to be deployed for the sole purpose of growing the Frax Protocol to become one of the most important cryptocurrency projects in the world.

In order to achieve that mission, we propose staking 4.5m FXS in veFXS for 6 months to attain yield and allocating that yield. We will use the veFXS yield to fund expansion of the team, bringing onboard community moderators/business developers/outreach, new developers, and create the Frax Grants+Incubator Program. The remaining 500k FXS not staked will be used for similar initiatives. This allows the treasury to fund these programs regardless if veFXS yield crashes or if there is a protracted bear market, allowing the Frax Protocol to continue its mission of becoming one of the most important protocols no matter what.

After 6 months, this exact proposal (with any modifications/adjustments) will go live for another community vote before further allocation of funds so that the project team & extended contributors are held accountable to FXS tokenholders.

The core team will NOT VOTE using the staked veFXS or treasury address so this proposal will NOT affect the team’s ability to sway governance in any way.

Background

The Frax Team Treasury is composed of 5m FXS. This treasury has largely been dormant for the first year of the Frax Protocol. Now that almost all FXS tokens have been released other than the community allocation through gauge emissions, we propose kickstarting the allocation of this treasury in a strategic manner to exponentially grow the pace of FRAX development & further decentralize the work, collaboration, and involvement of the extended community.

Governance Proposal

For: Deploy FXS Treasury to veFXS and fund team expansion, grants, incubator etc.

Against: Do nothing

3 Likes

I have nothing against this. Whatever helps the protocol grow gets a vote from me.

1 Like

the APR in veFXS is likely to drop to sub 3% next week, maybe its best to put some in to TOKE or the FXS/ FRAX LP, of split it between the 3 options just to get some sort of return.

50% veFXS
25% TOKE
25% FXS/FRAX LP

but i should point out we already voted NO to putting funds in TOKE.

Hmm I like your idea of the FRAX-FXS LP but we wouldn’t want to lose direct FXS exposure to pure FXS. So veFXS & TOKE are the only options. What if we just start with veFXS to keep it simple and use the yield, however small, to fund growth of the ecosystem+new devs? I think it will create a lot of value for the protocol to reinvest in core team growth.

i been thinking about this, and it seems a bit pointless.

you propose we lock some FXS in to veFXS so the protocol can start taking a cut of its own profits and use these funds to help build the protocol.

but wont it just be simpler to take a cut of the profits at source? . so rather then paying 100% to the veFXS stakers we could just pay veFXS 98% and then send 2% to the treasury.

doing it this way will avoid the veFXS apr taking a dump every time we move funds in to the staking pool.

It’s literally the same thing economically. We can just take ~5% of the profits directly from the protocol and then use that to build out the core team I guess. But it is not as automated or decentralized.

Or in this method, I simply propose we can stake the treasury FXS which is about ~5% of FXS and get the same amount of revenue as everyone else in the normal protocol function and use the earnings to grow the team and project.

The economic math is identical as you pointed out. I believe my suggestion is more automated and egalitarian since the treasury would be earning the same rate as everyone else in real time. We could take the revenue upfront and put it in the treasury to grow the team. But that is equally “pointless” since that does make the veFXS APR take the same hit since it is profit that isn’t going into the yield pool. In the end of the day, it is exactly the same thing just different words to describe it.

1 Like

the maths is a bit different.

if you took 5% of the AMO profits then it will always be 5% of the profits.

but if you take 5% of the FXS and lock it in veFXS then the amount it earns wont be a constant 5% of profits as other things change the rewards we would earn. eg the amount of time the FXS are locked for or the % of the FXS thats locked in the veFXS pool and for how long its locked.

as more and more protocols buy up FXS and lock it for 4 years in veFXS the % of the profits paid to development will drop.

Let me give you an example what I meant when I said everything is the same:

Suppose the protocol has $10m of revenue to distribute to veFXS stakers in the past week.

If the core team stakes 5m FXS for 6 months they get ~5.6m veFXS. The total supply of veFXS right now is 69m. This means that the core team’s treasury earns about 5.6/69=8.1% of the $10m of profit.

This does indeed lower the yield rate for other veFXS stakers.

Now, if governance allowed the core team to simply take 8.1% of the profits for core team expansion, then the economics of it would be identical. Instead of staking veFXS to get that yield, the core team would simply take it through governance. I am personally not a fan of that because it is more interventionist and creates different rules for different classes of people. I’d rather the core team simply stake with the rest of users and earn the proportional revenue the protocol allows them to earn to expand the core team. That’s the reason I came up with this system. Yours is also a legitimate way to do things. It is just, in my opinion, more interventionist.

ok,

my next question,
is it better to stake a bigger % of the 5m tokens for a shorter time, or would it be better to stake a smaller amount for a longer time frame?

if we where to stake 1.25m for 4 years it would earn around the same sort of rewards but would leave a larger amount of funds unlocked that can be put to use if needed.

also , do we have still have 5m tokens? if so what have we used to fund the development up to now?