Edit: The initial proposal has been refined based on feedback from: Fraxtal: Turning (Air)Drops into a Rain of Growth
Core sommary: Fraxtal, a newly launched blockchain network, aims for exponential growth through a strategic flywheel approach. This involves attracting projects to foster a self-sustaining ecosystem with community support, stakeholder engagement, and ecosystem expansion. FXS holders under the DAO collaborate to increase liquidity and buy pressure, providing grants to agile projects for rapid deployment on Fraxtal, with a total budget of 1 million USD. The proposal highlights the potential for quick revenue streams through blockspace incentives, allowing projects to scale via on-chain activity and generating revenue for the subDAO’s growth and reinvestment. The goal is to position Fraxtal prominently in the evolving blockchain landscape.
The foundational Frax team has recently unveiled a groundbreaking Layer 2 solution, driven by a robust vision for exponential growth. Acknowledging the pivotal factors for success, including heightened user activity and liquidity, the team has innovatively introduced FLOX & FXTL points to elevate engagement. This strategic initiative sets the stage for Frax’s competitive positioning in the market, focusing on onboarding projects and establishing unique selling propositions. The subsequent flywheel approach outlined below leverages the innovative features introduced, aiming to maximize Frax’s potential through continuous growth and ecosystem development.
- Projects Launch on FRAX: Attracting projects to initiate on Frax lays the foundation for a robust ecosystem.
- Community Support: Signaling that projects airdropping tokens to veFXS holders will receive substantial marketing and community backing fosters a symbiotic relationship.
- Stakeholder Engagement: Encouraging more veFXS stakers not only boosts buy pressure for FXS but also attracts broader attention due to the steady rise in its value.
- Ecosystem Expansion: As FXS gains traction, there’s an inherent incentive for projects to join or contribute to the flourishing Frax ecosystem, creating synergies.
- Increased Activity: Growing activity in airdrops, staking, and feature utilization cultivates a robust DeFi environment within the FRAX ecosystem, accompanied by a more targeted marketing push.
- Community Growth: An active community leads to a larger marketing push, attracting strategic partners and offering more airdrop opportunities as projects witness swift adoption and revenue generation.
- Repetition: This cyclical process perpetuates continuous growth, establishing a self-sustaining and thriving ecosystem, especially during a bullish market phase where airdrops act as fuel for growth.
By collectively nurturing this flywheel effect, we have the potential to propel Fraxtal to new heights, positioning it as a prominent player in the evolving blockchain landscape. Moreover, by adding airdrops to FLOX & FXTL, the ‘yield’ for veFXS will increasingly become higher due to the compounding airdrop. FLOX’s innovative designs allow projects to efficiently and effectively distribute their tokens to users. If there is more on-chain activity, the blockspace rewards will increasingly become higher, allowing for a positive reflexive loop.
The main question arises: Why work on this if the core team can also attract projects? Because the core team is already busy with a myriad of tasks. As FXS holders under the DAO, our core objective is to increase liquidity and buy pressure for FXS and ensure the long-term growth of the Fraxtal ecosystem. There have been many complaints about the lack of price action for FXS. By coordinating together under this proposal, we can speed up the process and help bootstrap the network. The fundamental aim is to create buy pressure for FXS. The route for this is to (1) find projects with a plan or an MVP, (2) provide them with a grant to launch on Fraxtal, and commit a specific amount of tokens to the FLOX mechanism to be distributed to users.
What kind of projects are we targeting? Mostly, we are looking for ambitious projects who want to launch something with not necessarily high barriers. In other words, if a developer wants to fork specific code from an existing product and launch it on Fraxtal with a specific use case/niche, this is acceptable. Through the blockspace incentives, these teams will be able to generate revenue quickly and innovate around the initial product. We want developers to be able to quickly deploy with an MVP/V1, use airdrops for on-chain activity, and then use blockchain incentives to bootstrap their growth further. Our job is to find the right projects that fit specific needs on Fraxtal and have product-market fit. Rewards will be milestone-based and won’t be given out all at once.
What would be the amount for each project and the total budget? I would say around 1 million would be a good start, providing 50k - 150k USD in FXS per project. This can be changed based on feedback. Again, we are not necessarily just targeting projects that will have to spend many months/years developing something from scratch. More so, we are looking for agile projects who already have been thinking/working on an MVP or see existing code and aim to fork it and innovate with it on Fraxtal’s tech stack. An example would be an NFT marketplace similar to Stargaze on Cosmos with similar tokenomics, which may be a good idea for Frax as there currently isn’t a similar NFT marketplace. The developer can decide to develop everything from scratch or use existing code and iterate on this code, explaining how it would be innovative and fit with Fraxtal’s ecosystem.
How would the filtering process work, and who would be in charge, and how can teams apply? We can set up a sub-DAO focused specifically on this effort. I can be part of this process and also get other council members involved who have experience with this and would like to be involved in selecting and helping bootstrap projects. We will set up similar criteria to what we expect, what domains we are searching to innovate, and a multisig for distribution. A form similar to Arbitrum grants (see https://arbitrumfoundation.notion.site/Grant-Application-Form-de318b3dfaea409abbf424c958b3724b) will be created that covers all aspects of the selection process and guidelines. Teams can apply through the Frax website, which could refer them to another page specifically explaining the process and a sign-up form.
Reward structure for council members/Sub DAO There are different ways to approach this. My initial approach is that council members do not receive any rewards but get part of the airdrop/blockspace incentives from the projects that launch. This allows the council members to align incentives in a way that if the project succeeds (i.e., gains adoption), the subDAO/council members will generate a revenue stream. With this revenue stream, they can potentially reinvest and grow the subDAO and specialize in this niche to help with Fraxtal adoption. Alongside the core team, Frax will have a BD arm under the DAO that can expand in manpower and help Fraxtal get to the next level. There could initially be a low fixed fee to motivate council members if needed. As Fraxtal expands we could change the rules based on results of the first initial distribution of capital.
The proposed approach involves the DAO facilitating (1) the attraction of high-quality projects and (2) incentivizing their engagement with Frax, particularly through airdrops to FXS stakers. As mentioned above, if the FXS price rises, the cost to fund these projects decreases, ultimately recuperating expenses from the overall growth of FRAX and helping bootstrap the network. Further discussions and refinements are crucial. At this stage, I invite users to provide feedback, both from the community and FRAX team members, before progressing to a more specific proposal and a DAO vote. Your insights and perspectives are crucial in shaping this approach and ensuring its success.