FRAXswap Early Liquidity Budget

As we all know it will soon be time for the “BIG 3” to be added to the FRAX ecosystem.

FPI (including the FPIS airdrop)

And this is something the team and us investors have been excited about for months.

In this thread i would like to put forward the idea of creating a budget that the team may use to help attract early investors and maybe even early users of the FRAXswap platform when it goes live.

I would like to propose we give the team permission to mint up to an additional 1,000,000 FXS (around $22m at today’s prices) to create a budget that could be used to help attract liquidity and users to FRAXswap in its first few months after launch.

If this budget gets voted in then the team will have permission to use the budget any way they choose as long as its being used to help FRAXswap gain liquidity and/or users.

Some examples of how the budget could be used are.

  • addition FXS rewards for early LP stakers, tapering off over a few months.

  • a random airdrop with a snapshot taken in the first few months and LP stakers getting rewarded.

  • early users are added to the airdrop.

  • the budget could be used to reward people that help promote the big 3.

  • this budget could fund a twitter giveaway, “retweet this post and 5 people will win 100 FXS”.

  • we could reward the first few protocols that trade on FRAXswap and post about it on twitter.

I would like to point out that if this does go to vote and it does pass then the team can still choose to veto it and there is nothing forcing them to carry out any action if they feel no action is needed.

My reasons for thinking a budget is needed is pretty simple. FRAXswap is built for large whales and protocols to use when they are doing large token swap. For them to be able to do this from day 1 we will need to have a good amount of liquidity. So we need to hit the ground running and be able to provide a service to the bigger investors from the start.

My second reason is, we are about to hand out a big chunk of $FPIS to investors (including other protocols) and i feel many investors are simply looking to sell and move on, but if we give them an attractive location to stake their $FPIS which maybe has another airdrop or increased rewards then its more likely that $FPIS holders will just stake their airdropped coins which in turn increases the liquidity for the few that still want to sell.


Not sure if I’m a major fan of minting FXS to simply just airdrop the tokens. It’s not a new protocol, it has a big name. While I do agree incentives should exist, airdropping will result in an unnecessary supply shock. I think having LM incentives or behavior incentives would be much more worthwhile and actually achieve optimal behavior. I also don’t see the need of running promotions/marketing tbh.

i understand the scope of the proposal is solely to incentivize FRAXswap, but I’m in favor of giving the team full autonomy over a set amount of FXS. Whether it’s to incentivize the new products, or go after other targeted opportunities.
we’ve recently seem TFL push their weight around and aggressively incentivize various pools + opportunities on multiple chains thanks to the BILLIONS of dollars worth of Luna in their warchest. I believe the frax team can do more with less.
Giving the team a separate FXS budget to go along with the protocol profits will only benefit FXS holders and FRAX supply long term.

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all ideas are welcome, please give some examples of these types of incentives :slight_smile:

would it really be a supply shock?
we voted to min up to $350m in FXS to help increase liquidity when we expanded on to other chains. clearly not all of that was minted but it the puts the $22m in this proposal in to perspective

i see it like this ,
when Mcdonalds is promoting its self, it shows the new burger’s and talks about the new burgers and this new product attracts people in to the take-away and then they see all the other food options.

well right now FRAXswap is our new burger, if we promote that then it will attract eyes, and them eyes will see the coins offered on FRAXswap and they will mostly be FRAX protocol coins at the start.

Interesting proposal. I think it would be helpful if we heard from the team as to how they plan to roll out and promote the big three in the coming weeks and months. Perhaps they have an existing plan that is better than this suggestion, or perhaps it is worse. We’re missing a major variable imo.

i suspect the team have a plan already, i would be shocked if they didnt.

but i see it this way.

1, the team have a plan and it works and they dont need to use the extra funds from this proposal … thats great, they are not being forced to use them.

2, the team have a plan and the plan does not go as expected, then the team have the extra funds to make changes or add to their plans.

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This is an interesting idea. One question I have though is would this actually be minting new FXS in the sense we’re raising the the total FXS supply to 101M or just using 1M from the existing treasury/community fund for these incentives?

it would be for minting new FXS and bringing the circ supply back up to just under 100,200,000 if the team use the maximum allocation from this proposal.

it may seem a lot, but we did vote to mint up to $650m of FRAX + FXS only a few months ago, so its really not that big when you put it in context

the team do have access to the war chest funds that can be used for FRAXswap too, and they are already using them funds to buy up assets (wBTC and ETH) that are likely to be used to fund help kick start some of the FRAXswap pools and they could use this fund to help kick start the FXS pool as well as many other things if they see fit.

Is there a reason we wouldn’t just use the FXS in the existing community pool? Not sure how much is allocated for LP incentives and the gauge but according to Seba’s dashboard looks like we have around 33M FXS in the treasury right now. Wouldn’t this sort of thing be the perfect use case for those funds without having to mint new FXS?

that 33m is allocated already.

thats mostly the emissions for the next 2-3 years for the gauge and other LP’s

i would like to correct myself … FXS has a hard cap of 100m circ supply , so the minting would stop if FXS total supply hits 100m and could only restart minting once the supply has dropped below the circ 100m hard cap.

this was highlighted when the $650m proposal was posted as it was a proposal to mint 20m FXS per chain for 10 chains (give or take).
FXS minting

Is it though? According to the docs we’re currently issuing 20.7k FXS/day from the FXS pool and the gauge. That should be around 5.67M for the remainder of the year. Rewards cut in half for next year so that should be about 10.35k FXS/day or 3.77M FXS for that year. Year after that will cut in half again to ~ 1.88M. Adding that all up through 2024 should issue around 11.1M FXS. Shouldn’t we have around another 22M available for other incentives?

im not going to dispute the token distribution as its all allocated in the white paper.

but i can assure you we dont have an 22m FXS just laying un-allocated

I can’t say for sure exactly how much is still unallocated either but I’m quoting directly from the docs and doing some math and there’s nothing about 100% of the remaining community fund being allocated to exiting LP rewards.

Maybe Sam or someone else on the team can provide some clarification.

I see your point. It’s usually not a good idea to blindly allocate more capital to something that you have next to know visibility on. I implicitly trust the team, but I’d also like to see them be more communicative with Fraximalists; it would likely have an outsized impact on FRAX and FXS, imo.

Sam has stated in the past that there are some instances where there may be slightly more than 100m FXS, due to some dynamics in the system, but it sounded like it wouldn’t be more than 1-2% and only for some technical reason. I may have misunderstood, but clearly remember him stating this at some point a few months ago. No big deal, just to be aware.