Summary
This proposal is to get constructive feedback on increasing the use case for FRAX ; The goal itself are the following.
A) Introduce a new revenue stream to the FRAX ecosystem/treasury via mining Bitcoin introduction of an untapped market for treasury use in Defi.
B) Bring Frax onto native BTC(lightning) and by default increase durability, fungibility & solubility of the Frax Stable by adding Liquidity to a bitcoin lightning native secondary marketplace for buying and selling turnkey mining rigs.
Concept(2)
A) Having access to use some of FRAX treasury for the purpose of earning native BTC via mining POW on its balance sheet. This would bring the use case of a TRUE onchain Defi protocol to real world POW while giving the Frax protocol true exposure to generating yield in spot BTC.
B) Having access to use some of FRAX treasury for the purpose of earning BTC via providing liquidity to the Mining rig Secondary market produced by Blockware Solutions all transactions on lightning network.
Reason
A) Currently we are in the best opportunity to get in the mining space because of the current market cycle. Throughout bitcoin history mining has been one of the best ways to arbitrage BTC and one of the best ways to get your true cost basis for your bitcoin down especially when understanding that you are getting started during the ideal scenario of a bear cycle, where your not at the start but still may see 6-18 months from it being over. Currently mining rigs are going for the cheapest they’ve ever been approximately 4k per unit (s19j pro) roughly $40.00 per terahash. These same units just last year where going for roughly $100 per T (for context).
B) Using some of the FRAX protocol treasury assets to use as a liquidity provider for the secondary marketplace. The ability to use FRAX stable as an option to purchase turnkey mining rigs on the secondary marketplace is an ideal use case to bring FRAX on the BTC lightning network. In addition being able to give users the ability to lock FRAX stable for a minimum lockup period to earn yield in spot BTC via trades that are being conducted in the marketplace for turnkey miners could be a great solution for users.
The users of the the locked FRAX would earn yield through participating in the fees associated with the transaction itself of the market participants. There could also be the ability to implement interest rate swaps on the backend with FRAX treasury supply by further along quantifying the data of users hold times on the marketplace and using variable and or fixed interest rates to simultaneously hedge set positions creating additional yield.
Positives
The FRAX protocol would be able to make a profit from both the asset it is mining and the miner itself due to historical demand on miners when we enter in the next bull cycle. The FRAX protocol will be able to “yield farm” by being apart of POW mining and increase spot BTC on the balance sheet, the cap ex can be used for tax purposes(not a cpa but you can verify), an ideal partnership would bring a new perspective to the utilization of treasury earned assets which could bring more users due to a “trust” factor because there is a real tangible asset being used to generate the yield of native BTC. The protocol would be one of the first to organically grow its btc balance sheet by use of POW mining, the protocol would expand to a new reach of users organically so there would be effectively minimal burn rate, the accumulated btc would be DCA’d creating an actual better cost basis of your mining rig along with getting the best spot BTC price you could get as well as seeing your Initial rate of return exponentially shorten assuming the next bull run (2024/havening) is in order.
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Thank you.