Authors
Ionic Protocol Core Team
Summary
This proposal seeks to onboard and activate an AMO that lends FRAX to the Ionic Protocol Fraxtal Market. We propose authorizing a lending AMO to deposit minted FRAX into the Supply Liquidity pool on Fraxtal, with a maximum authorized allocation of 2M FRAX to start. This will allow for users to leverage loop yield bearing assets using this supply liquidity and benefit from Ionic’s token flywheel to earn $ION emissions.
Depositors can acquire veION positions by locking their $ION to direct emissions and ultimately become key players in the emerging ‘Ionic Wars’. ION emissions are determined to each chain from their globally proportional votes, so Fraxtal users collecting voting power allows Fraxtal to get more ION emissions and provides a great way to bootstrap the Fraxtal ecosystem with liquidity incentives. To further accelerate this, Ionic proposes to use Ionic’s veION voting power to direct additional ION emissions to this market, to help the Fraxtal Treasury earn $ION tokens and acquire voting power as well.
Background and Motivation
Ionic Protocol is a decentralized, non-custodial money market protocol focused exclusively on the OP Superchain ecosystem. Users can participate as depositors or borrowers, as well as voters. Depositors provide liquidity to the market to earn passive income (Supply APR + Emissions), while borrowers can borrow in an overcollateralized (perpetually) manner to loop assets and leverage yields in a fully optimized way.
Whilst Protocols can incentivize Voters to vote on their pools, both Suppliers and Depositors can earn $ION emissions on select markets. A novel veToken Model custom made for Lending allows participants to acquire large positions in the liquidity flywheel of the Protocol to direct increased emissions to their positions of choice over time using veION.
This integration will enhance the overall utility and stability of the FRAX and Fraxtal ecosystem and help to attract more DeFi power users to Frax Finance assets, further growing the Fraxtal user base and ecosystem. The $ION flywheel enables new DeFi strategies for FRAX, frxETH and sfrxETH to acquire additional Protocol Owned Liquidity using Treasury Assets in form of $ION and enables new multilayer vote escrow strategies when combined with Velodrome LP positions.
Algorithmic Market Operations (AMOs) make FRAX one of the most potent Stablecoin derivatives, creating maximum flexibility and opportunity without altering the base stability mechanism that made FRAX a leader in the space.
Proposal Details
This proposal involves minting FRAX and depositing it into a designated Fraxtal lending market on Ionic Protocol. The goal is to provide sufficient liquidity for FRAX in order to overcome supply-side shortages in lending, thereby fostering growth on the borrowing side. By kickstarting the market for larger borrowers, we aim to create a more dynamic and robust lending environment for FRAX, frxETH, wfrxETH and sfrxETH on Ionic. Ionic will use its own veION voting power to direct emissions to Fraxtal to kickstart the velocity there.
Simultaneously this initiative supports the Ionic Protocol and the Superchain ecosystem at large by helping to kickstart the protocol’s vote escrow system successfully.
Risks
Associated risks:
Smart Contract Risk (Counterparty)
Oracle Manipulation Risk
Liquidation Risk
Links
Landing - https://ionic.money
App - https://app.ionic.money
Docs - Welcome to Ionic | Ionic Documentation
Tokenomics - Stage 2: $ION | Ionic Documentation
Audit - Audit | Ionic Documentation
X - x.com
Discord - Ionic
Telegram - Telegram: Contact @ionicmoney
Linktree - ionicmoney | Twitter | Linktree
Voting
- For: Approve the onboarding and activation of the Ionic AMO with a max authorized allocation of 2M FRAX.
- Against: Do nothing.