Frax in Review - Feb 6th, 2023
BAMM leak, sFrxETH proposal on Aave v3, Convex single-sided staking and more.
We see you Frax Bull
Sam K new interview with The Empire
For another week we’re leading the FiR with another BIG interview with Sam K. The Empire dropped the episode this morning right as we were writing. This is an interview you should share around, Sam K lays out the mission and goals for Frax very clearly. For anyone not into Frax, or is trying to learn about Frax, this should be one of the first places they start.
Lets go over some of the big highlights:
• Stablecoin Maxis -The reason Frax is a stablecoin maxi, is that at end of the day, the most useful and profitable part is the ability to generate a liability that people can use as a currency. This is all just modern day banking activity for the crypto generation. The goal for Frax is to build all of the risk free assets in crypto, so that regular investors will want to hold spot.
• Borrow AMM (BAMM) - A brand new product that will be released sometime in 2023 :0 Sam K announced BAMM where “you can borrow “stuff ‘ and have spot liquidity without external oracles. The idea is to capture the long tail of the market. Sam K said that the goal should be that BAMM should not be risky for the protocol.
• The multi-sig is getting fully decentralized in q2. It will be governed by veFXS holders.
Marc Zeller proposed adding sFrxETH to Aave V3
Based on the current setup of FrxETH at this moment, Marc recommended:
“While we suggest the community to wait for the feedback from risks teams Gauntlet (@Pauljlei) & @ChaosLabs, the ACI suggests the following risk parameters to start the conversation. These parameters define a non-borrowable asset with a 60% LTV.”
Additionally, he recommended a supply cap, also that it not be considered fit for emode. This final part is important as emode provides safer leverage for LSDs. FrxETH should be less competitive as a result in Aave. Once the team decentralizes the validator option, emode will be added.
Convex FXS single-sided staking
Last week we talked about how C2tP is aware of the peg issues between cvxFXS and FXS. Since then a vote has been put up on Convex governance to do two things:
• Move the 10% Convex Frax protocol fee from the cvxFXS-FXS curve liquidity pool to a single sided staking cvxFXS contract.
• Move the veFXS fees from the cvxFXS-FXS curve liquidity pool to single sided cvxFXS staking contract.
Up until now, all rewards have been sold back into the LP pool. This, along with additional sell pressures, have driven the spread wide. Creation of a single staking option for cvxFXS will lessen sell pressure and allow for more interesting positions to be created.
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Thank you to everyone who supported us in chat :)
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Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.