This is a revised proposal to FIP 53.
Summary:
This proposal is to whitelist STAX Finance in the Frax Finance VotingEscrow contract to allow STAX to lock FXS (in the form of veFXS), participate in FRAX governance, and provide additional rewards to Frax gauge ecosystem participants.The VeFXSProxy contract for STAX veFXS staking is deployed on mainnet: <0xdf291abc418b074cf7ec304c1608aa5346e4e10b>
STAX is a TempleDAO project.
Abstract
STAX is a protocol built on top of Frax Finance to provide enhanced farming yields via Locked Liquidity and veFXS boost to FRAX LP providers and FXS stakers through the social aggregation of $FXS deposits. It will also provide additional rewards to those Frax stakeholders via $STAX, the native utility token of STAX. We plan to distribute STAX platform fees to $STAX stakers.
For FXS Stakers, STAX provides a seamless onboarding process to veFXS by creating a tokenised wrapper token called staxFXS which will represent the veFXS locked for the maximum time in the VotingEscrow contract. The lock will be continually refreshed to prevent time decay on the veFXS boost to LP positions. The staxFXS token can be staked to receive existing rewards ($FXS) from Frax Finance, STAX platform revenues in the form of $staxFXS, and additional $STAX rewards. Though the staxFXS conversion is a one-way operation, users will be able to swap their $staxFXS back to $FXS at any time through a deep stable swap pool on Curve Finance.
Having a synergistic relationship with FXS holders is imperative to the success of STAX and to create a value-added relationship between the FRAX and STAX communities. FXS that is locked in STAX will be removed from circulation and will be continuously re-locked. By increasing demand for FXS we hope to drive utility and demand for the governance token of FRAX.
For Liquidity Providers, STAX provides a secondary yield aggregator interface to drive more deposits into the Frax gauge. STAX would allow depositors to achieve a high reward boost through the protocol-owned veFXS, and in some LPs the potential of Locked LP Boost while also benefiting from $STAX rewards.
If whitelisted for FXS staking, STAX Team will follow post-launch with veFXS boost and $STAX token rewards in August of 2022 after the liquidity generation event.
Brief Background & Motivation:
TempleDAO (the engineering team behind STAX) was an early backer of Frax Finance by conducting its presale exclusively in FRAX, and became a top holder with one of the largest FRAX reserves ($137M). The current TVL in the FRAX/TEMPLE LP gauge is over $37M. We have been closely allied with the Frax ecosystem and a vast majority of our Treasury is held in FRAX-denominated assets.
Since March, TempleDAO has spent over $600K at Pitch.money on veFXS holder bribes to further promote the Frax ecosystem and increase our FXS holdings. TEMPLE aspires to be the stable growth altcoin in a world of volatility by driving deep liquidity with blue-chip stablecoin pairs and utility for use as a lending collateral. Through STAX, which will bring liquidity to locked Frax gauge LP positions, we aim to facilitate deeper TEMPLE liquidity and TVL, and potentially expand to other LP pools.
Draft STAX Tokenomics
10,000,000 tokens
72% for user LP staking rewards / Pool 2 emissions initially to support:
- STAX LP Pool
- FRAX-TEMPLE Pool
- Locked STAX
14% STAX Treasury reserve
6% Team
3% Liquidity Generation Event Participants
3% Initial liquidity
2% Emissions to Temple Core vault stakers (over X months)
STAX Governance
If whitelisted for veFXS locking, the STAX Protocol would be expected to wield a significant percentage of the veFXS voting power over time. Because STAX would help direct the flow of FXS incentives in the FRAX ecosystem, it is of paramount importance that this economic power is fully decentralized.
STAX governance will be a further iteration of the TempleDAO representative governance model. The $STAX token is intended post-launch to have appropriate governance rights for the STAX platform. STAX voters will be able to direct the vote on the Frax gauge using the STAX protocol-owned veFXS voting power.
At launch, STAX would use its veFXS to vote for the FRAX/TEMPLE LP gauge. At this time, the STAX team is considering a second FRAX pool cross chain (not a FRAX gauge) that also has strategic ties to the FRAX and TEMPLE ecosystems.
Post launch, the locked $STAX token will direct STAX emissions between these TEMPLE pools. Any expansion of STAX beyond the FRAX/TEMPLE pool into other FRAX gauges would be made through representative governance. This transition would take place after STAX voting contracts are battle-tested, and the STAX voter base has matured. At maturity, control of STAX will be passed from the starting 3 of 4 multisig Gnosis safe to a suite of on-chain contracts.
STAX Team
The STAX Team is comprised of TempleDAO builders who have a proven track record of delivering innovative DeFi products such as the Temple Defense which has successfully protected the intrinsic value backing of $TEMPLE through the recent downturn, and the TempleDAO Uni v2 custom AMM which has smoothly handled over $270M in FRAX/TEMPLE LP transaction volume while providing additional features such as minting and price floor defense.
STAX Contracts / Audits
The MVP version of STAX that we have just launched in June is a sneak preview of the full product that will be launched in a few months. The STAX v0.1 dApp currently contains a single gauge LP (FRAX/TEMPLE) and provides a user-friendly front-end for the AddLiquidity method for the Uni v2 LP contract currently deployed for the Temple custom AMM. You may read more about STAX v0.1 in our recent Medium article which can be found on our website below.
The full set of STAX contracts will be derived from the battle-tested Curve code base. We have scheduled an audit with Peckshield in July, which also performed an audit of the original TEMPLE contracts that were successfully deployed last year at our public launch.
Conclusion
In summary, STAX will support $FXS price by driving demand for $FXS and becoming a long-term protocol holder. STAX would accumulate $FXS to boost the FRAX/TEMPLE LP gauge, which continues to be a significant FRAX farm and a driver for locked FRAX liquidity. TempleDAO will be a long-term holder of FRAX, and a key participant in the FRAX bribe ecosystem.
A vote for STAX Finance to gain veFXS whitelist is supportive of FRAX, FXS price, FRAX bribe ecosystem, TempleDAO, and the FRAX/TEMPLE gauge. A clear win for both communities.
For: Add STAX Finance to veFXS whitelist
Against: Do nothing
Additional Information
STAX Team has compiled a list of responses to the very constructive questions and feedback from C2tP for an earlier draft of FIP 81:
STAX v0.1 Website: https://www.stax.fi/