I strongly oppose this proposal for several key reasons:
Financial Risks
Investing $5 million at a $5 billion fully diluted valuation in a project without a proven track record is extremely risky and unreasonable. Such a high FDV relative to the current market capitalization suggests significant potential for future dilution, which could negatively impact token value. This valuation level is reminiscent of the exuberant and unsustainable valuations seen during the 2021-2022 crypto bull market.
Limited Governance Influence
With only a $5 million investment at this valuation, Frax would have minimal governance power or influence over the project’s direction. This lack of meaningful control limits our ability to protect our investment or guide the project’s development.
Political Neutrality Concerns
Associating with a politically charged project could alienate a significant portion of the crypto community. Approximately 50% of potential users who oppose the political figure associated with this project may avoid Frax entirely as a result. Crypto protocols should strive to maintain political neutrality to ensure broad adoption and avoid unnecessary controversy.
Opportunity Cost
There are far more effective ways to allocate $5-10 million for marketing and ecosystem growth that don’t carry the same risks or political baggage. We could explore partnerships with established projects, fund development initiatives, or launch targeted marketing campaigns that align more closely with Frax’s core mission and values.
Cost to $FXS holders
This investment will be financed directly or indirectly by $FXS holders. $5-10m is A LOT of sell pressure and given the token reacted with a -10% just because of this proposal, I can’t imagine the impact on the token if/when the proposal would be implemented
In conclusion, while the proposal may offer some short-term attention, the potential risks and downsides far outweigh any perceived benefits. I urge the community to reject this proposal and instead focus on more strategic, less controversial initiatives that align with Frax’s long-term goals and values.