Increase Fraxlend AMO allocation for a pair ( GOHM/FRAX - Variable Rate )

Authors

Mark11 (Fraximalist)

Summary

Increase max authorized allocation of Fraxlend AMO for the following Fraxlend pair.

Fraxlend Pair Name Fraxlend Pair Address Current Max Authorized Allocation Proposing Max Authorized Allocation
FraxlendV1 - GOHM/Frax - Variable Time-Weighted Interest Rate - 11 0x66bf36dBa79d4606039f04b32946A260BCd3FF52 5,000,000 FRAX 10,000,000 FRAX

Background and Motivation

Fraxlend is a lending platform that allows anyone to create a market between a pair of ERC-20 tokens. Any token part of a Chainlink data feed can be lent to borrowers or used as collateral. Each pair is an isolated, permission-less market that allows anyone to create and participate in lending and borrowing activities.

Automated Market Operations (AMOs) make FRAX one of the most potent stablecoin protocols, creating maximum flexibility and opportunity without altering the base stability mechanism that made FRAX a leader in the stablecoin space.

Fraxlend GOHM/FRAX-VariableRate pair is one of the protocol’s fastest-growing isolated markets, which can be monitored here.

Authorizing the limit does not require the AMO to provide the specified liquidity, it will be authorized and available to be injected, consistent with the AMO operations framework, to meet demand.

Proposal

  • For: Increase max authorized allocation of Fraxlend AMO for the mentioned pair.
  • Against: Do nothing.
1 Like

There is a limitation of fraxlend AMO amount to keep the protocol secured. If gives more to GOHM/FRAX than has to be less for wbtc, weth or sfrxETH/frax pairs.
It would be better for frax protocol if allocated more AMO to sfrxETH/frax pair.

Luckily we don’t have to choose one or the other - because at the we can do both gOHM and sfrxETH they are both good collateral

We are not in the vicinity of the limit to Fraxlend AMO liquidity limitations in terms of protocol security for maintaining the peg - we would need orders greater injection than current

I don’t think we need to increase the allocation cap for this pair since AMOs investment has not yet reached the current cap for it.

1 Like

There is a limitation the protocol can inject, according to its PoL value

The borrowed FRAX is backed against the debt of the gOHM - there does need to be a limit of liquidity to protect the peg but we aren’t in that realm yet

There is demand for current cap imo and we seem to be ramping up to it - happy for this to be put on ice for a week or two to see how demand goes

1 Like