veFXS Bonus Perks, New Features, & veFXS Discussion

The Tokemak Core faceoff that FXS crushed the competition was a resounding success not just for fraximalists but for token governance. The event was one of the most exciting events I’ve seen. It was as interesting and even more dramatic than Curve & Convex voting. The event definitely captured a lot of the best parts of crypto community coordination.

I think we should propose similar competitions every 2-3 weeks for the next veFXS gauge. We can have the votes hosted on Snapshot like Convex does their gauge votes. We can make veFXS+FXS holders directly vote for the next gauge pair and communities that want a veFXS gauge should actively participate in the process by joining our Telegram and discussing synergies. We can also extend these votes to the actual collateral FRAX should intake as well, not only for gauge pairs.

Additionally, I think we should begin thinking of building extra features/perks for veFXS holders other than just voting on gauges to increase the value of staking for veFXS. @Mark11 had a great idea that veFXS holders should get discounts on interest rates for borrowing of FRAX anywhere. This is a bit hard to implement in any location but can be interesting to think about in a dedicated Fuse pool or some AMO. There’s many ideas as well like allowing veFXS holders to control the AMO expansions/contractions which is already planned for FRAX v3 :smiley:

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I agree, the only thing that comes to mind to replicate some of the excitement of the Ttoke reactor voting for Frax would be to have these be for new gauge pairs that are going to be added.

To me there were 3 key elements that made the toke voting exciting:

  1. Something was at stake
  2. There was a hard cutoff with a binary outcome for protocols that won/lost
  3. The voting was continuous and updated in real time

Current gauge voting satisfies the 1st and 3rd condition but misses the 2nd. There’s just not much thrill to see if an already existing given pair is going to move from capturing 5.3% to 5.8% of the gauge. In addition it’s currently only relevant to people already within the FXS ecosystem, no real potential to market to outside protocols. I think this is worth trying, might not take off but if it does could be a really great way to raise awareness and interest in Frax for outsiders as well as develop new partnerships with other protocols.

Also regarding the improved borrowing rates for veFXS holders- really crazy idea but considering how much liquidity Frax now has I wonder how feasible it would be for the protocol to start managing some of the lending directly. Would be very similar to existing lending platforms, users deposit assets as collateral (maybe which collateral is available could also be something we can hold votes on, although could be more serious risks here) and are able to borrow either Frax newly minted by an AMO or even some of the USDC that backs Frax.

The advantage that could be given here to veFXS holders could not just be a better borrowing rate but also a better collateralization ratio. Instead of having their max LTV on deposited Eth be 82.5% like Aave, maybe for every veFXS you’re allowed to borrow $1 of USDC at 90% or 95%. Obviously specific numbers could be thought out and worked out later.

Love it @samkazemian - the Fraximalists perks can be a game changer - if we had wsOHM as an asset in a pool Ohmies would inhale massive amounts of FXS to get access - this would tie Ohmies and Fraximalists even closer and capture a long term borrowing market at sustainable interest rates providing sustainable yield for Frax for years to come - and since Ohmies would now be token holders of FXS, defection to competitors from the sustainable rates would be very difficult.

If it were per veFXS token rate for borrowing - then as OHM grows the borrowing demand would also grow. Could be a masterstroke solving a problem for Ohmies high rates and driving massive demand for FXS.

I’ve been thinking that a good next step would be to increase the usage of FRAX. Lending currently allows users to borrow FRAX and it could be used to take long positions, let’s say ETH. This would require swap the borrowed ETH for another stablecoin with a more liquid ETH pair. It would be nice to skip this step and directly swap FRAX for ETH (again, it does not necessarily have to be ETH). To achieve this deep FRAX/other tokens pools need to be created.

Coming back to how we could make gauge competition to increase FXS staking benefits and also make press for FRAX. I think we could redirect part of the protocol earnings to buy tokens (or maybe used the ones already earned by the protocol through liquidity mining) and add them to a FRAX/Token liquidity pool, which would then be added to the protocol reserves.

An additional benefit would be to earn the trading fees, and some of the disadvantages would be that the buybacks/burns would take the loss (I like the redistribution to stakers, but not so much the burns, I think it would be better if the boughtback FXS was put to work), and lastly, if things don’t go as expected, maybe “worthless” tokens could win the voting and the protocol would accumulate these worthless tokens. A mitigation for this could be to whitelist the participating tokens and this may help in building partnerships with them (it could be really nice to be whitelisted in curve governance or participate in aave/compound/badger/convex… DAOs).

a side effect of this is increased value to FXS holders who could now have some voting power in the gauge votes.

changing to a snapshot vote would also make it much easier for all FXS / veFXS holders to vote due to no gas fee’s.

would this mean a fresh start each vote, eg would every pair reset to 0% each time until someone votes for it?

Wanted to bump this thread and post my current ideas for veFXS lending perks from Telegram today:

We are internally working on a unique way to do a Kashi-like lending implementation. MIM is a licensed fork of Kashi, but I would rather not fork it like MIM since FRAX has a lot of unique features that MIM doesn’t currently have so we can do interesting things like allow veFXS holders to borrow extra FRAX without paying interest.

For example, veFXS holders can enjoy lower interest rates or extra FRAX borrowing against their veFXS. Similar to the lending version of a farming boost. EX: 1 FRAX extra borrowing for every 4 veFXS. Something like that.

What’s everyone’s thoughts on this?

would it be like an interest free credit line, 1 FRAX for every 4 veFXS held

so if someone has 40,000 veFXS they could borrow up to 10,000 FRAX interest free?

how do we handle things like peoples veFXS amount going down over time if they have maxed out their borrowing amount?

what happens if someone borrows and never pays back? do we lock their veFXS / FXS until the loan is returned ? do we liquidate their holdings after a set amount of time ?

maybe its time to look at the veFXS boost ratio again since the price of FXS has gone up so much.

there seems to be much less value in locking FXS for the boost and investors can earn more by putting the funds they would have locked in veFXS direct in to LP with out the boost.

ideally we could have an adjustable ratio that moves with the price, with a cap at each end of a range.
eg,
FXS $10 and under = 4 veFXS per 1 FRAX. ($10 locked for 4 years, boost $2 of LP )
FXS $200 and over = 0.1 veFXS per 1 FRAX , ( $200 locked for 4 years, boost $80 of LP)

I’d love to be able to vote off-chain since I don’t actually have LP to boost, just a believer in Frax as a protocol. I’m trying to figure out what I can do with my 4 year locked veFXS :slight_smile: