Author
Charlie Pyle (Pitch)
I’m extremely excited to propose a tight integration between Pitch and the Frax community.
Background
Pitch is a new project that builds governance tooling, offering increased yield and utility
for token holders and greater security to DAOs at large. https://pitch.money
Pitch is currently known for its vote-incentives application, which has processed seven figures of
rewards to date. The application fixed many well-known bugs in bribe.crv.finance’s original
implementation while introducing the notion of “elastic rewards”, where protocols specify the
precise price-per-vote they will pay for a gauge vote. This creates a novel mechanism for
governance price discovery and helps de-risk protocols from wasting their community budget.
However, one Pitch’s largest shortcomings so far is its inability to auto-compound historical
rewards. This is due to the fundamental architecture of veFXS and cannot be solved without
introducing a new paradigm in governance management. We’re thrilled to announce it here.
Vision - Bigger, Better Frax Wars
The Frax wars grow exponentially larger with vote-delegated, auto-compounded veFXS voting.
Because veFXS does not allow native vote-delegation, we introduce a token that can do this:
pitchFXS. Here’s a sample user flow:
Users can provide their FXS to Pitch, which permanently locks it away for and issues a 1-1
amount of pitchFXS in return. The pitchFXS token can be used in governance just like veFXS,
but the pitchFXS token also allows vote delegation. This allows Pitch to vote on behalf of
users who opt-in, facilitating auto-compounding for governance rewards on https://pitch.money.
Rewards can be auto-swapped into FXS, staked for pitchFXS, and provided to existing holders
as a new form of yield. Users could potentially opt-in to receiving their rewards in plain Frax as
well if they wanted simple cash flow.
But sir, governance attacks?
Of course, this creates a potential governance attack vector where someone buys up pitchFXS,
votes through a proxy, and dumps the token in a small timespan. To prevent this, we can require
periodic lockups (for, say, 16 weeks) of the pitchFXS token to participate in active,
non-delegated governance. Additional protections could be implemented by requiring a
snapshot of a different block height to be included in a governance transaction that prevents
double votes and MEV flash loan attacks. Most importantly, we think that Frax holders should be
in charge of their own DAO, so preserving pitchFXS governance rights while preventing
pitchFXS governance attacks is our highest priority.
Other Yield
● pitchFXS lending markets (effectively veFXS lending, which hasn’t been possible to
date!)
● New money legos for FXS votoooors, incuding Paladin/Warden, Bribe.xyz, and Pirex
● Long-term vote loyalty programs
● Boosted Frax farms that leverage the pitchFXS shared pool
The Flywheel
We also propose a pitchFXS/Frax pair and gauge, which would go live on Fraxswap. Because
pitchFXS is a high-utility, wrapped version of FXS, this is effectively an FXS/Frax gauge and can
provide entry/exit liquidity for pitchFXS at all times against a stablecoin. Pitch will be one of the
first LPs into the pair, and any emissions that the protocol earns will be immediately locked
away for more pitchFXS, creating a flywheel that supply-squeezes FXS and provides deeper
liquidity for the pair. We would incentivize liquidity for this gauge with our own native token
(discussed more later).
Positive-Sum Building
Like the Frax team, we consider ourselves extremely positive-sum with everyone else in crypto.
To that end, we’re happy to explore potential partnerships with DAOs like Convex - perhaps, for
example, we could make a 3pool on Curve with FXS/cvxFXS/pitchFXS. This encourages peg
support for all three tokens while providing native FXS entry/exit liquidity for everyone. We’re
open to ideas here.
Pitch DAO
Pitch launches its own token. This token will be used to incentivize liquidity on the
pitchFXS/Frax pair, and the token will function as a meta-governance asset that participates in
profit-sharing from economic activities related to pitchFXS (and, eventually, other pitchXYZ
assets). While we plan to build highly interoperable governance legos across Defi, our primary
focus for the near-to-mid term is everything Frax. Pitch was founded by long-term Frax
supporters, and we’re excited to model our tokenomics off of Frax. More details about the Pitch
token can be found on upcoming our launch post.
The Pitch token could govern a variety of meta-governance parameters. For example, even
though our original model is to simply perma-lock all deposited FXS, we’re open to exploring a
“fractionally-locked” reserve, where, say, X% of FXS is locked away while Y% is used to
market-make the peg and provide liquid lending services. This X% could change dynamically
similar to Frax’s collateralization ratio. Or, we could provide users the option not to perma-lock
and allow the pitchFXS to become redeemable for FXS at some point.
Protocol governance will become more sophisticated as crypto evolves, and we can imagine a
time where people delegate their pitchFXS to a particular person or gauge for long periods of
time, similar to an election cycle in the classical world. As a DAO, we don’t plan to enforce any
of these design choices from the top-down but will instead work directly with the community, and
we’re excited to see what everyone comes up with.
Summary
It’s fundamentally impossible in the current paradigm for users to simultaneously:
● Engage in FXS governance (and/or capture related yield)
● Leverage their FXS holdings via lending and other financial instruments
● Have liquidity
pitchFXS fixes this. We believe that Frax will become a trillion dollar protocol, but lots more
cash-flow must enter the ecosystem for that to happen. Simply put: most large money-managers
and funds can’t afford to enter large FXS positions that are locked for multiple years at a time
due to their fiduciary obligations to LPs and other parties. We want FXS holders to govern
themselves, and we believe that pitchFXS offers an avenue for these important institutions to
engage with FXS by providing governance and leverage rights without constraining their need
for medium-term liquidity.
Additionally, we believe that pitchFXS’s creation of a vote-lending market facilitates
price-discovery around governance itself, creating a bulwark against governance attacks that
have unfortunately killed a slew of innovative web3 projects.
LFG! We’re also planning to support veFPIS as soon as possible, and would love to chat with
any and all Fraximalists about what else we can do to support the ecosystem.
Proposal
Establish a comprehensive partnership between the Pitch DAO and Frax.
For: Approve Pitch to stake FXS from a smart contract and establish a
gauge for pitchFXS/Frax
Against: Do nothing