[FIP - 440] FXTL Points Resolution

Governance Proposals
1

Authors

Frax Core Team

Summary

This proposal serves as an official update to the Frax North Star Proposal V2.1 (FIP - 428) and establishes a formal governance resolution to postpone FXTL point conversions until key ecosystem health milestones are achieved.

The purpose of this resolution is to set clear expectations for the community, and ensure that FXTL conversion occurs only when it meaningfully benefits holders, the Frax ecosystem, and the long-term North Star roadmap.

This resolution does not cancel FXTL; it defers the conversion to a more advantageous future point.

Background and Motivation

FXTL point conversions were outlined in FIP-428, where ~1.918% of each user’s FXTL balance would convert weekly into FRAX, up to 57,534 FRAX/week, with rates determined by floxCAP and veFRAX weighting.

While the mechanism is sound, activating it now (e.g. FRAX at an all time low market cap) would not achieve its intended purpose.
At current market conditions and ecosystem scale:

  • FXTL conversions would yield very low dollar value,
  • FRAX sell pressure could increase,
  • Emissions would not contribute meaningfully to Fraxtal growth or frxUSD expansion.

Frax is currently in a transition phase, focused on scaling frxUSD, deepening Fraxtal liquidity, and strengthening FRAX value accrual. Launching FXTL conversions prematurely would undermine these priorities and create disappointment for participants.

A postponement ensures FXTL activates later, when it can deliver real value and align with broader ecosystem maturity.

Proposal Details

Formal Postponement of FXTL Conversions & Public Clarification

FXTL point conversions will not begin at this time. Activation will be reconsidered once any one of the following ecosystem milestones is achieved:

  • FRAX price reaches $10,
  • Fraxtal chain TVL reaches $500 million,
  • frxUSD total supply reaches $1 billion.

Until one of these thresholds is met:

  • No weekly FXTL burns or FRAX conversion emissions will take place.
  • FXTL continues as the primary incentive mechanism for Fraxtal activity, builders, and ecosystem growth.

Upcoming Comprehensive Tokenomics Update (North Star V3)

Within the next month, the Frax Core Team will publish the North Star V3 tokenomics update, which will:

  • Prioritize FRAX value accrual and utility,
  • Outline the next phase of Frax Finance growth,
  • Provide a comprehensive update on each section of North Star V2.1

Voting

  • For: Postpone FXTL point conversions until key ecosystem health milestones are achieved.
  • Against: Do nothing.
1 Like
4

This proposal risks breaking a clear, written commitment published in the official docs:

FXTL points will be tokenized no later than 12 months after Fraxtal chain genesis.

Postponing tokenization beyond the stated date (it is March 11, 2026) would constitute reneging on an explicit public commitment.

The risks cited in the rationale (sell pressure, low FRAX price, etc.) were all foreseeable contingencies when the promise was made. If the Core Team believes the original timeline is no longer optimal, the postponement should be restructured as a bonus for those who agree to wait until the milestones are met, or equivalently a penalty for those who redeem early.

Anything else risks establishing a precedent that Frax only honors its public promises when market conditions are favorable.

5 Likes
5

I have been involved in the Frax project since day one and I continue to believe deeply in the team’s vision. However, I think that changing or postponing something that has already been approved — and especially never implemented — can undermine the team’s credibility in the eyes of both the community and the market.

Over the past 12 months, I have made several investment decisions based on the North Star framework and the dynamics outlined in the FXTL model. Now, seeing such a deep and unilateral revision exposes me to risks and potential losses that were not foreseeable. And what may happen to me can easily happen to many other supporters who also believed in and invested according to the direction set by the team.

In this regard, the reliability of governance and the stability of the rules are fundamental. A governance system only works if approved decisions are respected. Changing key mechanisms after they have been announced — and without ever testing them publicly — creates uncertainty and risks making future votes less credible. Investors must be able to trust that the rules won’t suddenly change; otherwise, any roadmap loses its value and stops being a dependable point of reference.

There is also another equally important aspect: reputational risk. Fraxtal is currently expanding and aims to attract new users, developers, and institutional partners. However, decisions that alter previously established commitments can be perceived as a sign of instability or lack of strategic consistency. This perception can discourage adoption and undermine the trust not only of the existing community but also of those evaluating whether to join the ecosystem.

5 Likes
6

Very sound proposal. I think the economics are spot on. There’s no reason to make FXTL liquid when FRAX is so low.

1 Like
7

I respectfully disagree with this proposal and I don’t think it should even go to a vote in its current form, because it fundamentally overturns previously approved plans that have never been implemented.

The FXTL conversion mechanism was clearly outlined and endorsed in earlier governance decisions (e.g. the North Star framework). Many of us made capital allocation and risk decisions based explicitly on those commitments. Now we are being told that these mechanisms will be postponed until very ambitious and undefined future milestones are hit. In practice, this is equivalent to retroactively changing the rules of the game after people have already played according to them.

Good governance is not just about optimizing short-term tokenomics; it is also about credibility and rule stability. If previously approved mechanisms can be postponed or rewritten before ever being activated, then future governance votes lose a lot of their meaning. Why should participants trust or price in any future roadmap if there is a precedent that commitments can be unilaterally deferred when market conditions are not ideal?

If the economics of the original FXTL design need to be improved, that should be handled with a transparent, forward-looking adjustment that respects what has already been promised — for example by proposing modifications for future accrual or by offering a concrete and time-bound alternative, rather than an open-ended postponement tied to uncertain milestones.

For these reasons, I believe this proposal should be reconsidered or substantially revised before being put to a formal vote. As it stands, it sends the wrong signal about the reliability of Frax governance and the durability of previously approved frameworks.

2 Likes
8

You’re right that the original documentation included a 12-month tokenization commitment. That commitment was always subject to governance, and that’s exactly why we are bringing this to a formal vote instead of unilaterally changing anything.

This proposal doesn’t ignore the previous timeline—it asks the DAO whether that timeline still serves the protocol. Activating conversions now would do more harm than good for FXTL holders and the ecosystem, so we are giving governance the chance to update the schedule based on current conditions.

This is the correct process for modifying earlier commitments when circumstances change.

9

Thank you for sharing this, your long involvement and commitment to the project are genuinely appreciated. The concern you raise is valid: governance only works if previous decisions are respected, and any proposed change needs to be handled openly and through the proper process.

That is exactly why this adjustment is being brought to governance, not implemented unilaterally. The North Star framework was created at a moment in time, and circumstances have changed in ways that make the original activation timeline harmful for Fraxtal and FRAX holders and the broader ecosystem. Updating a mechanism through an open vote is not breaking governance, it is governance.

Your point about reputation is also taken seriously. In many cases, credibility is strengthened when a protocol demonstrates that it can adapt responsibly through transparent governance instead of rigidly following a timeline that no longer serves anyone. This proposal exists precisely to avoid negative outcomes for FRAX holders while giving governance full control over whether the update should pass.

10

This proposal is up for voting here: https://snapshot.box/#/s:frax.eth/proposal/0x580ae46eee20bddc797065744928e0c613e53d53bdef6c64d63b61f31b8f9566

11

The initial use of the word “unilateral” is fair in this context, since the proposed change is unambiguously value-dilutive to one clearly defined stakeholder group (FXTL holders) and value-accretive to another (existing FRAX holders who avoid near-term sell pressure), yet only the latter group get a vote.

FXTL holders made irreversible capital and time commitments in direct reliance on Frax’s commitment, published as a hard deadline, not a suggestion or a soft target.

A governance vote cannot retroactively legitimize the breach of that commitment. Credibility cannot be rebuilt once lost.

The Core Team should instead design a proposal that honors the original guarantee while incentivizing holders who voluntarily agree to defer conversions until key milestones are achieved.

I urge voters to reject this proposal given the serious reputational risk it poses to Frax.

12

I don’t see any disclaimers or considerations on the current veFRAX ecosystem health, this looks simply whale manipulation. FXTL conversions allows new participants in such contexts, being an intelect insult to assume economical actors only dumps, pure and simple gate keeping.

That being said an ethic code is necessary for decentralized protocols.