Hey Justin -
Thanks for writing up the proposal. I’ve been thinking about something along similar lines for a while. I support the general sentiment of unlocking the Frax-ETH pool and integrating it into the gauge system.
I’ve also been thinking about FXS emissions and creating a larger FXS treasury for the DAO to manage (or at least buying us more time with the current liquidity incentives). To that end, I think it would be in the long term best interest of the protocol to reduce the FXS emissions from this pool when we combine it with the existing gauges. I’d propose that we target 25,000 FXS per day for both these pools combined (reduced from the current total of 32,876 FXS emitted per day for these two pools). This is roughly a 24% reduction for these pools and 16% for all three core FXS pools.
Looking at the protocol overall, my belief is that ultimately we are paying for locked liquidity and we will likely always want to pay for some amount of locked liquidity. We can debate how much and for how long - I personally think 30-90 days of locked liquidity is probably sufficient, perhaps up to 12 months on the long end - but we can deal with that later. Either way, we will need to find a way to pay for this locked liquidity - hopefully protocol revenue will be sufficient when the time comes, otherwise we can emit more FXS or find another solution. Every FXS we save now is one that we can use later to pay for locked liquidity or investments in the protocol. This also buys us more time to develop the protocol and revenue sources so that we can sustainably pay for locked liquidity when the initial liquidity incentives run out.
Ideally we’d also set the future Frax-ETH gauge to a univ3 pool but we can wait on that - the challenge at the moment is finding the right range that makes sense with people locking liquidity for the long term. This is very likely where we are headed. Perhaps we could approve a v3 Frax-ETH gauge in this vote but implement it later.
Curious to hear what everyone thinks.
TLDR: Two ideas for this proposal:
1. Reduce FXS emissions on the cominbed gauges to 25,000 FXS per day
2. Approve a Frax-ETH Univ3 gauge