Proposal to Fund Deployment of a Frax Protocol Tokenized On-Chain AI Agent

Governance Proposals
1

This is a proposal to fund the deployment of a Frax Protocol tokenized on-chain AI Agent on the Agent Tokenization Platform (ATP) by IQ.

The ATP is a Fraxtal network protocol that enables the creation of tokenized AI Chat Agents that are capable of executing on-chain actions.

Deploying a Frax-trained Agent would provide four major benefits to the Frax Protocol and Frax DAO:

  1. Custom Trained AI Help Agent for Telegram/Discord

A Frax Protocol tailored Agent would be capable of answering nearly any question related to the Frax Protocol, Fraxtal, and any/all protocols built on Fraxtal or associated with the Frax Protocol.

  • The Frax Agent can easily be integrated into Frax’s Telegram and Discord chatrooms.
  • Users would be able to ask the AI questions with a simple /ai command.
  1. Sophisticated and Tasteful Automated Marketing on Twitter

The Frax Agent can be imported to Twitter, where it can provide automated marketing for the Frax Protocol by tastefully interacting with other users through actions such as:

  • Liking posts
  • Following accounts
  • Commenting on posts
  • Responding to comments and DMs
  1. Removing FXS from Open Circulation, Deepening FXS Liquidity, and Generating Frax Protocol Revenue

By default, each ATP Agent’s token is backed 100% by IQ tokens. This proposal is requesting a grant of 12K FXS tokens that will be deposited into permanent Fraxswap V2 liquidity in order to upgrade the Frax Agent’s token to be backed approximately 70% by FXS and 30% by IQ.

  • As the Frax Agent’s token grows in value, an increasing amount of FXS in open circulation will be deposited into permanent liquidity, thus removing FXS from open circulation and deepening FXS liquidity.
  • The Agent’s IQ and FXS liquidity pools will be deployed on Fraxswap V2 and in BAMM Lending Pools, adding to the Frax Protocol’s revenue streams in increasing amounts over time as the Agent’s token ecosystem grows.
  1. Micro Fraxtal DAO Treasury for Investment into FXS/FXTL/Fraxtal

The Agent’s DAO controlled Micro Frax Protocol Treasury will be purposed to invest into various Fraxtal network strategies to accumulate FXTL points and FXS tokens in a manner that increases the value of the Frax Agent’s token automatically over time.

Treasury Details:

  • The Frax Agent will have a DAO-operated Treasury initially loaded with 50% of the Agent’s tokens and 100% of initial Agent token liquidity.
  • Users will be able to vote using the Frax Agent’s token on proposals for the Agent to deploy its tokens towards FXTL and FXS-yielding strategies.

Example Strategies:

  1. The agent can convert some of its tokens to FXB2055 tokens, then deposit the FXB2055 with additional Agent-held tokens into BAMM liquidity pools in order to farm FXTL points and increase:

    • Frax Agent’s token liquidity & value
    • Frax Agent’s liquidity pool revenue

  2. The Frax Agent could also participate in:

    • veFXS staking
    • crvFXS staking
    • Incentivized FXS/FXB/sfrxUSD/sfrxETH liquidity pools on Curve / Convex
    • Concentrated RA liquidity pools
    • Any other strategy on Fraxtal

  3. Increased Fraxtal Network TVL, User Engagement, and Transactions

The Fraxtal Network Agent would provide a novel set of mechanisms for Fraxtal chain users to trade an AI & DeFi-powered meme coin while engaging in collective Treasury management. This would increase:

  • User engagement
  • Transactions
  • Total Value Locked (TVL) within the Fraxtal network

Funding Request Details

  1. Primary Grant:

    • Requesting 12K FXS tokens to deposit into permanent Fraxswap V2 liquidity with the Frax Agent’s token.

  2. Service Payment:

    • Requesting 7K FXS tokens as payment to the StarSeeds Liquidity Protocol for:
      • Originating this concept.
      • Creating this proposal.
      • Training & optimizing the Agent’s AI Chat intelligence.
      • Deploying the agent with Telegram/Discord/Twitter integrations
      • Deploying/managing additional Twitter automation.
      • Facilitating the growth of the Agent’s treasury through intelligent DeFi strategy optimization proposals over time
      • 40% or more of the StarSeeds Liquidity Protocol’s 7K FXS service payment will be deposited into long-term (years) Fraxswap V2 liquidity pools composed 50% of the Frax Agent’s token paired with IQYIELD and DKDEFI tokens. As a result, the Frax Agent’s token will benefit from IQYIELD’s buy-and-deposit mechanism & increased automated arbitrage trade volume from DKDEFI tokens.

  3. The right to know when the Frax Agent is being deployed.

If the Frax DAO would prefer to handle the initial deployment of the Frax Agent, the StarSeeds Liquidity Protocol requests to be informed of when the Frax Agent will be deployed, at least 24 hours before the agent is deployed.

Matching Proposal to IQ DAO
If this proposal is approved by the Frax DAO, StarSeeds Protocol will submit a matching proposal to the IQ DAO requesting a grant of 2M IQ tokens. If approved, these IQ tokens will be used to purchase the Frax Agent’s token.

The purchased Agent tokens will then be paired with FXS in a 1% fee rate Fraxswap V2 pool and the corresponding liquidity pool tokens will be transferred to the Frax Agent’s Treasury Contract.

Contingency Plan if IQ Grant is Denied

If the IQ DAO refuses to provide an IQ grant:

  1. 4K of the granted 12K FXS will be converted into IQ.
  2. The converted IQ will be used to buy the Agent’s token.
  3. The remaining FXS will then be paired with the Frax Agent’s token into a permanent liquidity pool.
  4. Once the Frax Agent “graduates”, a portion of the Agent’s IQ liquidity can be converted into FXS liquidity so that the agent holds at least 70% FXS liquidity.

Why StarSeeds Liquidity Protocol?

As the creator of two of the top IQ AI agents (DK & IK), StarSeeds Liquidity Protocol is uniquely positioned to:

  1. Deploy this concept securely and effectively.
  2. Facilitate the long-term development of the Frax Agent.
  3. Optimize the growth of the Agent’s Treasury.
  4. Support long-term, sustainable value appreciation of the Agent’s token.