Author: Mockingbird
Status: Draft
Network: Ethereum
Summary
This proposal introduces a one time, penalty free unlock for a small set of legacy Convex FRAX vaults that:
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have no CRV emissions on their underlying Curve gauges
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receive no FXS incentives from Frax
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receive no partner bribes
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have very low trading volume and modest TVL
These vaults no longer provide meaningful value to Frax, while users remain hard locked for up to 3 years with almost no yield. The proposal allows users to withdraw their locked positions from these specific vaults immediately, with no additional fee, during a limited window.
No other Convex FRAX or FRAXBP vaults are affected.
Motivation
When these Convex FRAX vaults were launched, Frax and partners were actively incentivizing them. Some users chose the maximum 3 year lock with a reasonable expectation that:
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Frax wanted that liquidity for a long time
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while Frax wanted it, incentives would stay at a reasonable level, similar to other Convex Curve products, even if the exact amounts were discretionary
In practice:
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for a few months rewards were acceptable and long locks received a higher share of FXS
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after that, incentives dropped sharply and have remained extremely low for years
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over the full period, long term lockers have earned much less than if they had simply stayed in other Convex Curve pools without locking
So a short initial boost was followed by a very long period with almost no rewards while capital was fully locked and could not be reallocated. Many lockers feel that this outcome does not match the long term intention that was suggested when these products were promoted.
At the same time, Frax has clearly pivoted:
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Legacy FRAX and current FXB that redeem to FRAX are no longer central to the roadmap
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the main focus is now frxUSD, sfrxUSD, Fraxtal and Fraxlend
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the affected vaults have no CRV, no FXS from Frax, no partner bribes and almost no volume
For these vaults today:
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users are locked for up to 3 years
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the vaults earn essentially nothing
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the liquidity does not help Frax
This is a lose-lose situation. The proposal aims to close it in a narrow, clearly defined set of vaults.
Specification
A one time, penalty free unlock is introduced for the following Convex FRAX vaults on Ethereum:
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Convex FRAX vault for FRAX/FXB20261231
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Convex FRAX vault for FRAX/crvUSD
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Convex FRAXBP vault for eUSD/FRAXBP
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Convex FRAXBP vault for OHM/FRAXBP
Behavior:
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After this FIP is executed, a special unlock window of 60 days is opened for these four vaults
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During that window, any currently locked position in these vaults may be withdrawn immediately, ignoring the original unlock time
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No additional fee or penalty is applied for using this special unlock
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After the 60 day window, these vaults return to their normal behavior for remaining positions
This proposal:
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does not change lock mechanics or rewards for any other Convex FRAX or FRAXBP vault
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does not add new incentives or emissions
Optionally, the DAO may also decide to freeze new deposits into these vaults and mark them as deprecated.
Rationale
The scope is intentionally narrow.
These four vaults:
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are Convex FRAX vaults with a 3 year lock option
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have no CRV emissions
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do not receive FXS incentives from Frax
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have no partner bribes
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show very low trading volume and modest TVL
They are legacy products that no longer have a real role in the current Frax strategy.
Users who locked for 3 years in them have already paid the price:
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they have been stuck for a long time in almost yield free positions
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they have missed other opportunities in Convex and in the newer Frax stack
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their liquidity has provided almost no recent benefit to Frax
Allowing a penalty free unlock in this context does not weaken the logic of locks in active products. It addresses only vaults where the economic justification for the lock has already disappeared in practice.
A one time unlock:
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cleans up abandoned products
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frees capital that can move into frxUSD, Fraxtal and other relevant venues
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shows that Frax is willing to treat long term lockers reasonably when it pivots away from products it previously promoted
Implementation
The Frax core team, together with Convex, will implement the changes needed so that the four specified vaults behave as described in the Specification section, and will announce the exact start and end dates of the 60 day unlock window once the FIP is approved.