FIP-82 Locked FXS, Auto-Compounding staking pool

A few weeks ago Pancake launched a product that i feel would work really well for FRAX protocol.

Its a time locked, auto-compounding single coin staking pool.

Its on the BSC chain so if we could adopt it people could buy FXS on exchanges like binance or kucoin, send the FXS to their wallet and then lock it. No bridging, No swapping for native coins, No locking in a LP then locking LP tokens and best of all it only cost $0.20 in fees to do all the transactions needed to get locked in. Its simple and Cheap.

Pancake have built this so they can lock up CAKE tokens, but i would like to propose that we commit some time to see if we can build something like this for FXS.

As this is on BSC and not on ETH its unlikely we will be able to give this pool voting power like the veFXS pool, but if we direct a small fraction of the veFXS rewards to this pool then i think it will become a viable option for smaller retail traders.

Now im not expecting smaller traders to provide much buying pressure to FXS, but a pool like this could attract a lot more people to the protocol and could increase awareness of FRAX and really opens the door to people from lower income countries.

So my proposal is as follows.

I propose we commit some time to investigating if we can build a single coin , locked, auto-compounding staking option on the BSC for FXS , like the current CAKE locking option that pancake offers.

If we can build it then

  1. we build it with upto 3 years lock time
  2. we offer rewards boost for longer locks
  3. we add the pool to the new FRAX UI
  4. we redirect 10% of the veFXS rewards to this pool
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Interesting idea. Can you directly link to the Pancake pool/feature so others can analyze? I think there’s something useful to build here with autocompouners (I think Redacted Cartel calls these things pounder vaults). Just wondering if this is something that should be built as a core team feature or if it is better suited as a primitive built on top of one of the many teams creating products in the ecosystem like Pitch, Votium, Convex, Hidden Hand, Temple, etc.

the pool contract is here >

the pancake IU is here >

im not coder, but im assuming a lot of the contract can be copied and edited to suit.

Maybe its something Seba and his work mate could take on ?

it maybe a simple idea, but it could be something thats good at absorbing FXS from the exchanges and getting it locked up.

Can you explain the point of these users locking? Do they have gov voting rights etc? Why is this different from normal vefxs? Is it just to be a cheap lock solution?

There needs to be an actual reason/benefit of locking. Removing supply from available liquidity isnt really a goal you should strive for, it’s just what happens when you have attractive tokenomics that people want to get involved with.

The ETH network prices out most crypto users due to the fees, the fees to stake, claim and unstake in veFXS are higher then other fees because the transaction is more complex.

Right now the fee is $50 , so if someone wanted to buy and stake $1k in to FXS it would take them around 1.5 years to earn the money needed to cover their fees if they locked for 4 years (assuming the fees dont go up more in that time frame). This completely prices these investors out of the FRAX ecosystem.

This pool has an auto-compounding function , this means stakers wont have to pay $50 in fees to compound there rewards each month like they do in veFXS staking, making it more attractive to investors that have a little more invested.

Because this pool is auto-compound it also reduces the idea of people farming tokens and unloadng them every time the price is high as their rewards are locked for the full time of the staking.

Then team have expressed an interest in having FXS staking options on a wide selection of chains and i see BSC as a viable option as we already have FXS on the chain and there are a number of major exchanges that support the token on BSC.

We could see if there is an option to make this a BSC version of veFXS and allow voting rights to the gauge and governance, and maybe thats something we could add to the proposal if its an option.

when speaking to the team about it in the past they seems to think it was a good idea to push FXS staking to smaller chains to help build out the ecosystem and build adoption.

sams post

People do want to get involved and this will be the simplest and cheapest way they could do that.

I personally think FRAX tokenomics are pretty good and FXS is good token thats likely to increase in value, so i would be attracted to the option of staking it and earning more FXS. if others have the same view they will be more likely to buy and stake FXS if its not costing them a hunderd $ in fees to get started.

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here is a list of the current veFXS stakers, if you scroll down the list you will see many people that have under 100 FXS, all these people will be giving up most or all of there rewards to ETH fees.

just looking at the first page it show 8 out of 20 have staked
120 FXS or less, so all 8 of these will likely spend years just trying to earn the money to cover the fees on ETH .

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yeah if its normal vefxs voting rights and everything then as a base idea then sure. It wouldnt serve any purpose if it wasnt. But if so, then the question becomes how to integrate it all into the current voting systems(gov & gauge), as well as any future system (if/when snapshot becomes deprecated and moved to all on chain etc). Which isnt exactly a simple solution but probably doable at some point.

not sure how that all fits as far as development priority goes though? For example it would be better to have everyone on all these chains have access to any services Frax provides (savings account, lending, borrowing) more so than governance locking. So devoting engineering time to solve the various problems might not be the best use of time at the current moment but could be something to look into down the line i think.

Your trying to make this far more complex then it has to be and seem to be looking at this from a rich persons point of view.

Small investors dont really care about voting because they see their voting power as inconsequential so i really dont see a need to give this pool or pools like this on other small chains any voting power.

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Then there’s no point to the pool.

If you want something with cheap txs and interest bearing you can do something with Frax. (Ex aave frax)

To support this proposal, Binance has a large user base, which is definitely a requirement of a small investor. Small investors need to go to ETH every time, first buy a certain amount of ETH, and then transfer FXS from Binance to wallet. This process requires at least $50, and then it costs another fee to pledge. From a user perspective, this proposal is quite friendly. It will definitely attract a large percentage of users.

Well lets compare the cost of staking FRAX on AAVE vs this pool proposal.

Lets assume we start with $1000 on a major exchange , and i lets just use the current ETH and BSC fees.

So to stake FRAX on AAVE we will need to buy some ETH and move that to our wallet because FRAX is not on any major exchange , thats 1 ETH fee for moving the ETH ($2.80).
We then have to enable FRAX on uniswap, let sssume this is $0.20
We then have to buy the FRAX, so thats 1 uniswap fee ($24.64)
We have to enable that token on aave, lets just assume this is $0.20
And then we have to stake the FRAX on AAVE, and thats currently quoting me $13.89

So the total cost for this is $41.73 to stake and lets assume its the same to unstake making it $83 in total.

Now lets compare this to staking CAKE in the current CAKE pool that i propose we copy, it cost me $0.19 to go from money on binance to funds staked and locked.
So lets assume the cost go up and it cost $1 in total to stake and unstake.

So , if we started with $1000 and staked in AAVE and we earned the current APR for FRAX (2.24%) it would take us around 4 years for the interest to cover our fees.

Clearly i dont know the APR for the proposed pool, so lets assume its really low and say its 0.2%

If we stake $1000 in the proposed pool it would take us around 50 days to recover the cost of the fees and start making profits.

Other things to note,
FRAX protocol has lending AMO’s and a target interest rate, so the APR % on AAVE is controlled and extra FRAX is added if the APR goes to high, so the chances of the APR on AAVE increasing are low. The investor is also staking FRAX , and can expect the buying power of that to reduce during its time staked due to inflation.

Because the proposed pool is for staking FXS the investor get exposure to the protocols growth and income meaning they can see their investment grow as the protocol grows, and they will also see their APR % grow as protocol profits increase.

So overall, staking on AAVE would cost around 80x more in fees and would take 4 years to earn the fees back , while your assets drop 2-3% in buying power each year

Staking in the new proposal is clearly a much better option for a smaller investor that wants exposure to FRAX protocol.

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The process of buying ETH from Binance and sending ETH and FXS to the corresponding wallet costs about $50. The final pledge of FXS is divided into several steps. The contract of FXS is complex, so each pledge is very expensive. At least 200 usd per process on average. That’s the problem with small investments.

Well that’s not what I said. I said the other chains should focus on Frax services, which would be cheap access to interest bearing tools, loaning/borrowing, etc but focused on the Frax side of things.

Frax services(via the Frax stable coin) should be the focus moreso than fxs.

I don’t really see value added with just a simple fxs lock. Unless it has governance rights, then it means something. But also is not a trivial task.

…thanks btw for the ad hominem when I’m just giving constructive feedback

FRAX has lending AMO’s that try to target a set APR , due to this its much cheaper for smaller investor to stake stable coins on CEX exchanges and the returns are normally higher.

An example of this would be binance busd staking that offers small investors 10% APR or 13.33% if they lock their staking.

This proposal is not about attracting small investors in to stable staking, its about offering small investors a viable option to get exposure to FXS, FRAX protocol growth and profits.

I’m not sure why you have said this. I asked for peoples feed back and i don’t take any of it personally.

I was responding to your post where you said AAVE is a viable option for small stakes investors and trying to point out the issues smaller stakes investors face.

Also I didn’t mean use aave frax on eth. I said focus on frax the stable coin, and gave an example of something interest bearing. Context from my previous message is talking about services on other chains. Aave (or whatever equivalent) is just an example. Cheap txs=other chains, something interest bearing=some frax service or other platform with staked frax etc.

Understand if that wasnt clear though. Anyway, that’s besides the point. Vanilla single side staking fxs with no gov rights doesn’t really make sense to me. I don’t see benefit being added to the protocol

when i made the comment about the “rich persons point of view” i was not trying to insult you. its just common to see people with money seeing things in a different way.

imo we should not exclude people from staking FXS and benefiting from the growth of the protocol just because the ETH fees make the current staking option unattractive.

i also see a benefit in attracting lots of smaller investors in to the FRAX ecosystem. Them having a way to profit directly from protocol adoption gives them reason to talk about FRAX, and 1,000 people who invested $1,000 each will make far more noise then 1 person thats invested $1m

i also understand that there other products that the team is working on and each one will have a different priority and this clearly wont be top of the list, but i still feel offering more ways for people to get involved with the success of FRAX is the way forward.

Formal proposal.

FIP-82 FXS staking on BSC


4 years locked.

Investigate and if possible build a locked, auto-compounding FXS staking pool on BSC.

We currently have no FXS single token staking options that dont involve paying ETH fees. These fees price out a lot of investors.
When faced with the ETH fees the smaller investors are simply choosing not to invest.
Pancake have just launched a locked, auto-compounding single coin staking option for their CAKE token and i feel this would be a good way to provide a simple , cheap option for smaller investors to stake their FXS.

I propose we commit some time to investigating if we can build a single coin , locked, auto-compounding staking option on the BSC for FXS (with no voting rights)

If we can build it then

  1. we build it with up to 3 years lock time
  2. we offer rewards boost for longer locks
  3. we add the pool to the new FRAX UI staking list
  4. we redirect 10% of the veFXS rewards to this pool

Voting options

  • For = action this proposal
  • Against = do nothing

I think this proposal will require significant engineering effort and does not really bring a competitive staking alternative without the right to vote for governance or gauges. The FXS will be locked, but its governance power would not be used.
A better alternative would be if Convex for example would support a cvxFXS-FXS pool on one of the cheaper chains where Curve is deployed.

The more walls an investor faces the less likely they are to invest.

If this pool wet live then people could buy FXS on a CEX, withdraw to a wallet and stake.

3 steps total.

if there was a CVXFXS - FXS pool on a cheaper chain then an investor would have to buy coin that can be withdrawn to that chain (to avoid bridging) then swap to FXS, then stake 50% to make it cvxFXS, then lock the FXS and cvxFXS in the pool and then lock the LP and then claim rewards, sell the rewards for FXS and repeat the steps to compound their investment.

6 steps to start and ongoing steps to compound.

This proposal may or may not be complex to build, but it would create the simplest way for investors to get involved.

i still see no reason to have voting power for this pool as its likely to attract the smallest investor, and they will soon lose interest in voting when they see the governance is controlled by a small number of whales and they cant afford to stake in a gauge pool or claim bribes due to the ETH fee’s.