Frax x Perp Partnership Pt 2


Perpetual Protocol is a decentralised perpetual futures exchange that recently deployed Curie, their V2 on Optimism. V1 of Perpetual Protocol saw over 40bn in volume traded on a non incentivised basis.

Part 1 of the partnership saw Frax DAO lend Perp 10m in FRAX for market making purposes. See Frax x Perpetual Protocol for further details


To provide further context, we have recently published our proposal of what the next version of tokenomics of Perp looks like.

At high level, there are 2 programs that make things interesting:

  1. Liquidity Acquisition is a method for the new market making entity to borrow stables and scale up its borrowings. This is the scalable version of the pt 1 partnership
  2. Liquidity Mining is a method to incentivise market makers to utilise a specific type of collateral

For Liquidity Mining how it would work is illustrated below:

  1. The FRAX vault would receive a certain amount of PERP depending on the vePERP gauge
  2. There is then a swap for FXS <> PERP (i.e. FRAX DAO receives PERP)
  3. Market makers who deposit and use FRAX as collateral receive FXS rewards

Basically what this means is that Frax is able to get utilisation of FRAX whilst this is effectively paid for by Perp

For further details of the tokenomics proposal please see here: Proposal: Perp V2 Tokenomics - Proposals - Perpetual Protocol



To create demand for FRAX on Optimism in the most cost effective way possible - subsidised by PERP tokens

Token Swap

We’d like to continue with the partnership between Perp and Frax and propose at a high level a 2M USD value token swap between PERP and FXS. This swap is to be done using a 30d TWAP price found using CoinGecko

The reasoning behind this is as follows:

  • An early token swap will allow for Frax DAO to hold PERP which can then be locked up for vePERP and guide emissions to the Frax vault on launch. This means there’s no need to slowly build up PERP through rewards
  • Additionally, PERP plans to utilise the FXS either by staking it as veFXS or by running it through the same liquidity mining program mentioned above and incentivising usage of FRAX as collateral

Additional Token Swap

Additionally, we’d propose an additional 8M USD value swap with the same terms as above if we hit certain metrics. We’d like to propose the following:

  1. TVL of FRAX in the Perp Clearing House to be > 5M
  2. Weekly Volume Facilitated by FRAX collateral to be > 100M

Would propose for these metrics to hold true for a minimum of 7 days (i.e. daily TVL on average should be >5M FRAX and the average weekly volume facilitated should be >100M)

Gauge Whitelist

Secondly, we’d love to get whitelisted as part of the gauge contracts.


I like this proposal, maybe Perpetual should also go for a FRAX-PERP LP gauge, so you also have a good reason to lock up the FXS and vote for your pool.

I have a question regarding who is a market maker. Are all users that trade on Perpetual a market maker and are eligible for the liquidity incentives when using FRAX as collateral, or are only certain parties eligible?

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We did ask for a whitelist to the gauge so could definitely do this as well

Market makers are only people who provide liquidity right now - i.e. makers. We don’t incentivise takers as you otherwise get some weird wash trading incentives that we’d rather like to avoid

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Right now FRAX is holding about $300k in PERP, if we complete both parts of the proposed swap what could FRAX do with its $10m in PERP?

If you check out the link above for tokenomics we are launching a ve model which gives the ability for Frax to generate demand for FRAX as collateral on Perp V2 whilst being purely paid for in PERP. So you would lockup PERP → vePERP and then vote on the gauge to send more rewards to FRAX collateral holders

Hi everyone, just put the vote up on snapshot here: Snapshot