[ARFC] Add FRAX to Ethereum Aave v3
Title: [ARFC] Add FRAX to Ethereum Aave v3 Author: @oneski22 @TokenLogic Created: 2023-05-10
This proposal is to add FRAX to Aave v3 on Ethereum.
References
General
Project - https://frax.finance/ Documentation - https://docs.frax.finance Whitepaper: https://docs.frax.finance/overview Github / source code - https://github.com/fraxfinance Analytics: https://facts.frax.finance
Chainlink Oracle - 0x0809E3d38d1B4214958faf06D8b1B1a2b73f2ab8
Audits
11/2020 - Certik 07/2021 - Trail of Bits 01/2022 - Trail of Bits
Summary
FRAX is the inventor and first fractional stable coin that uses a hybrid of algorithmic and collateralized mechanisms to stay on price target. FRAX is currently the #7 largest stablecoin by market cap (1B) according to Coingecko. FRAX has also never lost peg a single time in its existence (defined as more than 1 cent price deviation on each side).
FRAX currently has the largest Curve pool on Ethereum mainnet with almost $900M in liquidity and is a Uniswap top 10 token. Additionally, FRAX has already been successfully lent out on Aave v2 on ETH mainnet for many months and is a popular borrowable stable coin with no issues of unpegging or economic problems.
FRAX is also already deployed natively on Polygon, Avalanche, Arbitrum and Optimism where Aave v3 resides.
Motivation
FRAX can use its Lending AMO (similar to Maker’s DAI Direct Deposit Module) to mint protocol controlled FRAX to be lent out on Aave Protocol. Frax Finance has in the past done so in Aave v2 via an Aave Lending AMO.
The Frax Finance team could deploy a similar Aave Lending AMOs to Aave v3 after FRAX is listed.This will provide Aave users with access to FRAX and present an alternative to the three USD stable coins on Aave v3.
Users are able to borrow FRAX and earn yield across DeFi, such as on Curve Finance and Convex Finance.
Specifications
- What is the link between the author of the AIP and the Asset?
- There is no link between the authors and the core teams of the asset.
- Provide a brief high-level overview of the project and the token
- See summary.
- Explain the positioning of the token in the AAVE ecosystem. Why would it be a good borrow or collateral asset?
- FRAX is a popular stablecoin to borrow, with its Lending AMOs it is able to mint protocol-owned FRAX to ensure low interest rates.
- Emission schedule
- FRAX is a stablecoin and mintable/redeemable so it does not have a governance token emission schedule.
- Token (& Protocol) permissions (minting) and upgradability. Is there a multisig? What can it do? Who are the signers?
- There is a multisig which can operate certain AMO contracts but cannot in any way change users’ FRAX balances, cannot freeze or pause any user’s funds, and cannot in any way alter the behavior of the protocol or sweep/rug collateral or value. There are no FRAX whitelists/blacklists in any capacity as it is entirely a bearer asset/decentralized exactly like DAI.
- Market data (Market Cap, 24h Volume, Volatility, Exchanges, Maturity)
Market Cap: ~$1B 24h Volume: ~$6.5M Volatility: stable coin (extremely low) Maturity: Launched Dec-16-2020
Exchanges:
FraxSwap Liquidity
- Social channels data (Size of communities, activity on Github)
- Discord - https://discord.com/invite/eKXUxaKJXT
- Governance Discussion - https://gov.frax.finance
- Governance Voting - https://snapshot.org/#/frax.eth
- Twitter - https://twitter.com/fraxfinance
- Contracts date of deployments, number of transactions, number of holders for tokens
- Deployed December 16th, 2020
- As of Block 1,7231,800: 673,151 Transfers, 7717 Holders
Risk Parameters
| Parameter | Value |
|---|---|
| Isolation Mode | Yes |
| Borrowable | Yes |
| Collateral Enabled | Yes |
| Supply Cap | 15M Units |
| Borrow Cap | 12M units |
| Debt Ceiling | 10M units |
| LTV | 70.00% |
| LT | 75.00% |
| Liquidation Bonus | 6.00% |
| Liquidation Protocol Fee | 10.00% |
| Variable Base | 0.00% |
| Variable Slope 1 | 4.00% |
| Variable Slope 2 | 75.00% |
| Uoptimal | 80.00% |
| Reserve Factor | 10.00% |
| Stable Borrowing | Disabled |
| Flashloanable | Yes |
| Siloed Borrowing | No |
| Borrowed in Isolation | No |
Copyright
Copyright and related rights waived via CC0.
Off-Chain Vote
Discussion
Timeline
Jun 13, 2023Proposal created
Jun 14, 2023Proposal vote started
Jun 17, 2023Proposal vote ended
Oct 11, 2024Proposal updated