Using AMO to fill Tokemak $FRAX pair reactor

Posting this here as I believe the team can execute this under the existing AMO program, so it shouldn’t have to go up for vote.

Every Fraximalist should be familiar with Tokemak as $FXS was one of the first reactors. The team is one of the most giga-brains I’ve come across in Defi and they have built something that I believe solves a major problem for any protocol trying to deepen liquidity; not only can they alleviate teams from trying to manage their own liquidity, they can help cut farming emissions by a significant amount. The team has a slew of great articles on their Medium page here: Tokemak – Medium

Last night Tokemak launched base pair reactors, which are stable coin reactors where those stables can be paired with the other token reactors to create LP pairs (i.e. FRAX + OHM). FRAX, FEI, DAI, UST, and LUSD were added to ETH and USDC base pair reactors.

From the announcement of the base pair reactors: Tokemak is a kingmaker for stablecoins: the Pair asset with the most TOKE staked to it will naturally attract the most TVL for that stablecoin, thereby appointing that asset the one with the most pairings and liquidity across DeFi.

By being the first stablecoin to load a reactor with millions (or tens of millions) of its stable, FRAX could drive the TOKE side of the reactor’s APR up significantly, which would drive the APR higher in order to seek balance, and when TOKE is voted, those folks become Liquidity Directors and have a say in how FRAX is directed.

FRAX has $TOKE that could be voted into both the $FXS and $FRAX reactors to help direct liquidity, while earning healthy yields of $TOKE all the while.

As I believe we’ve seen with MIM, width and depth of distribution matter. Tokemak seems to have a unique solution to a widespread problem. It could help both Tokemak and Frax if we added a material amount to the $FRAX reactor to give the TOKE side a kick higher.

Looking forward to hearing comments from others.

4 Likes

Strongly support this proposal. As we all know, liquidity is one of the key determinants in which stablecoin will become dominant.

We already have strong liquidity in Curve (thru Convex) and Uniswap. Agree that Tokemak has the potential to become another key liquidity venue.

We already have a lead position being voted the #1 reactor. And we have the ability to mint FRAX where it is most beneficial to the protocol.

If we do this moderately aggresive and early, we can send that flywheel spinnin!

100% support a moderately aggressive allocation of FRAX asap. Guess we should strive for being the dominant stable pair by quite a margin?

1 Like

we will need to put a number on it for the vote, maybe we start at $50m and see how it goes?

1 Like

Sounds ok to me. We can always adjust in a followup proposal.

$50m is a great starting point. Frax can just throw all of our TOKE behind this reactor (I will put mine in as well) so we can help direct it where we think it makes sense.

Personally, I think $50m is not aggressive enough. Double that amount, to make sure we create a big distance to us that is hard to catch up to. Be more aggressive in that first mover advantage.

1 Like

I’d defer to the Frax team on sizing, but $50-100m would definitely posit FRAX as a leading reactor. USDC has $222m in it, but that it is because it was a genesis reactor.

we will be limited by the rate we can mint FRAX and not swing the peg or the CR too far. so maybe the plan should be to do $50m to start and then a rolling $10m a month until it hits a set amount, say $250m or so

1 Like

Makes sense. Do we need to propose this for a vote, or it can fall under the existing AMO program?

I see there’s a UST-Wormhole base pair reactor launching on Tokemak as well. I’m going to clean up the original thread above and submit it for a vote. It’s my first time doing so, so please let me know if there is any adjustment needed to the format or proposal. Thanks.

I like this a lot. We’re already looking into it.

2 Likes

Thanks @samkazemian. Just submitted for a vote. Very happy to hear that you support this.