Authors:
Michael Henry
Overview
Frax is holding a significant amount of USDe on it’s balance sheet that is earning a very insignificant amount of interest. Frax should diversify away from holdings that have low-interest generation.
Position Overview:
As of this post, the existing position is:
- USDe Staked in Convex: $27,697,548 earning 0.51%
Additionally, Frax has allocated $44,838,530 of FRAX towards those pools, bringing the total amount allocated to $72,536,078.
Reallocation:
After this vote, I suggest we reallocate some of the USDe to the following pools but these ideas are not in any way binding. Nor are these current yields necessarily indicative of the yields Frax will generate from them.
- $4,000,000 to Curve crvUSD-FRAX currently earning 11%
- $2,000,000 to Curve DOLA+FRAXBP currently earning 12%
- $4,000,000 to Curve DOLA+FRAXPYUSD currently earning 14%
The rest should be used to restore the peg or be put into the Curve sDAI pool.
Closing Thoughts
FRAX is sprinting towards 100% CR and needs to hyper-optimize how it allocates it’s funds and make sure that no money is being inefficiently supplied. Therefore, I recommend that we exclusively allocate capital where it can generate the highest yield which in this case is the Fraxlend AMO.
Voting:
- For: Reduce the USDe position to a maximum of 10,000,000 USDe and 10,000,000 FRAX.
- Against: Keep existing USDe allocations