[FIP-03] Request to add FRAX as a lendable asset

Governance Proposals
1

Summary

FRAX is the inventor and first fractional stablecoin that uses a hybrid of algorithmic and collateralized mechanisms to stay on a price target. FRAX is currently the #5 largest stablecoin by market cap (1.03B), according to Coingecko. FRAX has also never lost peg a single time in its 26 months of existence (defined as more than 1 cent price deviation on each side). FRAX is already available for lending in Aave, Fraxlend, etc.

In this proposal, we request to add FRAX as a lendable asset in Flux Finance.

References/Useful links

Website: https://app.frax.finance

Documentation: https://docs.frax.finance

Github: GitHub - FraxFinance/frax-solidity: Solidity implementation of the Frax Protocol

Communities:

Specifications

Frax being a decentralized stablecoin is a good fit to be used as a borrowable asset as an alternative to currently existing stablecoins supported by the Flux Protocol.

  • Market Cap: ~$1.03B
  • 24h Volume: ~$20M
  • Volatility: stablecoin (extremely low)
  • Date of deployment: Dec 20th, 2020
  • Number of cross-chain token holders: 25,000+
  • Address: 0x853d955aCEf822Db058eb8505911ED77F175b99e

Market parameters:

  • Interest rate curve that follows the one used on DAI and USDC:
    • 0% utilization → 0% APY
    • 90% utilization (kink) → Overnight Benchmark Funding Rate (OBFR) - 50 bps
    • 100% utilization → OBFR + 300bps
  • Borrow Cap: No cap
  • Collateral Factor (LTV): 0%
  • Reserve Factor: 0%
3 Likes
2

Would Frax be open to incentivizing these pools with FXS early on?

1 Like
3

Awesome, have been waiting for this proposal.

The initial idea looks great, but I am slightly disappointed you did not outright include more information about Frax for those uninitiated - for example a brief overview on what backs Frax, what are the benefits of Frax, and what risks Frax might have for the protocol.

You can imagine that once more users are aware of the opportunity with Flux Finance, a wide range of other decentralized stables will flow in and apply to join. Would love to understand better what would be the benefit for Flux here for specifically choosing Frax?