C2tP (Convex Finance)
Sam (Frax Finance)
Dennis (Frax Finance)
Now that the FraxBP is live and the Frax Finance whitelist proposal will end soon (https://dao.curve.fi/vote/ownership/196). We would like to define how the FraxBP Protocol Owned Liquidity farming revenue will be handled as well as incentives for Frax and FraxBP related AMM pools.
Original Curve governance proposal can be found here: Deploy a "FRAXBP" Pool & whitelist Frax for veCRV Staking - Proposals - Curve.fi Governance
As stated by Sam of Frax in the Curve governance forums, Frax will move to be even more symbiotic with the Curve ecosystem. Up until now, CRV farmed was sold to FXS. This FXS was used for further incentives and/or platform revenue. Frax will now shift into a new strategic position with farmed rewards to eliminate this sell pressure while still allowing itself a means to utilize the token’s value.
As Frax farms CRV and CVX emissions from FraxBP, Frax will:
- Lock all CVX as vlCVX
- Lock at least 5% of CRV as veCRV
- Use remaining CRV to acquire(direct deposit or purchase at team discretion) cvxCRV
The cvxCRV can be used as voting incentives. The cvxCRV not used for incentives will be staked for revenue.
The veCRV rule is only a minimum.
The ratio of how much is locked, staked, or used as incentives is determined by the Frax team while looking at current market conditions.
This setup gives the Frax team a large leeway in how it can fund the FraxBP and hold on to what it can given the ever changing market conditions. Making sure the FraxBP is well funded is a higher priority than increasing treasury assets. The held treasury asset balances and types can be reassessed again at a later point once the ecosystem around FraxBP has grown and stabilized.
Frax will continue providing voting incentives for Frax pools on the Votium platform. As described in the original Curve proposal, Frax will also strive to be an active partner for pools that decide to pair with the FraxBP by contributing to voting incentives for FraxBP metapools. In addition to this, with the enactment of the Curve whitelist proposal, any veCrv Frax locks can be used for promoting Frax pools or metapools on the Curve gauge system.
Along with FXS allocation from treasury, Frax may also use a portion of cvxCRV farmed from the FraxBP for incentives on the Votium platform up to a maximum value of $10,000,000, as has been previously decided in a past governance proposal.
Frax will continue to provide voting incentives for Frax pools. However, with the advent of the base pool, Frax can now also provide incentives to FraxBP metapools.
For Ethereum Mainnet:
Metapools may receive a share of incentives based on organic TVL of the FraxBP in each pool. A maximum of 20% of yield from the FraxBP protocol owned liquidity may be applied to each metapool and 50% of such yield applied to all metapools in total.
(Note: Organic TVL, TVL not affected by incentives or gauge weight from Frax, is determined by the Frax Team.)
For non-Ethereum chain pools:
The FraxBP for each chain may receive increased incentives based on the total TVL of FraxBP in all metapools on a given chain.
Non-Ethereum chain metapools are structured differently on Curve’s crosschain implementations and thus already automatically earn the base yield of the base pool gauge weight proportionally. This is something Ethereum mainnet metapools do not do because of gas costs. Thus we will attempt to mimic such a concept on mainnet by adding voting incentives to mainnet metapools. However, keeping Protocol Owned Liquidity at a healthy level is also important thus, at max, half of the incentives from FraxBP revenue may be applied to metapools.
Frax veCRV Gauge Weight:
The Frax team will have discretion on how to effectively use veCRV gauge weight to promote Frax pools or metapools.
For: Enact FraxBP farming and Frax pool voting incentive strategies described above.
Against: Do nothing.