IQIP-12: Launching FXS Rewards for IQ-FRAX Liquidity Providers on Fraxswap

Background

The IQ token is now listed on Fraxswap, the most innovative and capital efficient Time Weighted Average Market Maker for trustless monetary policy in DeFi. Everipedia and Frax Finance have significantly grown alongside each other in the past year. We are taking it a step further by introducing the IQ token to Fraxswap.

Moving liquidity to Fraxswap is a game changer for the IQ token, with greater capital efficiency and liquidity, the IQ token can grow much faster. Fraxswap will help IQ traders execute large orders efficiently as it allows people to average in, or slowly exit a position with its TWAMM function. Additionally, migrating the pool to the FXS gauge system will allow IQ/FRAX liquidity providers to earn more FXS emission rewards through the Frax gauge reward system.

The FRAX gauge system allows FXS holders to stake for up to 4 years to generate veFXS and vote where future FXS emissions are directed. Users can vote for FRAX gauge weights with their veFXS balance. They can distribute their voting power across multiple gauges or a single gauge. This allows veFXS holders who are the most long term users of the protocol to have complete control over the future FXS emission rate.

This system strongly favors LP providers who continually stake their rewards for veFXS to increase their pool's gauge weight. Essentially, FRAX gauges align incentives of veFXS holders so that the most long term oriented FXS holders control where FXS emissions go until the full community FXS allocation is distributed.

The Plan

We propose to launch FXS rewards for IQ-FRAX liquidity providers on Fraxswap. Launching FXS rewards for IQ-FRAX liquidity providers on Fraxswap will allow Everipedia to scale and further improve the liquidity and growth of the IQ token.

If the proposal passes, BrainDAO will allocate $200,000 of IQ per biweekly voting period at core team’s discretion to pay FXS holders to vote in favor of FXS rewards for IQ-FRAX liquidity providers through Frax’s gauge system. To ensure the program is sustainable, the core team will not put up more rewards than the DAO makes from its LP after the first 2 cycles. Voting in favor of FXS rewards for IQ-FRAX liquidity providers will ensure that IQ-FRAX liquidity providers receive a large share of FXS rewards from the FXS gauges. Since BrainDAO will provide liquidity to the IQ-FRAX pair this will allow BrainDAO to earn FXS rewards which can then be reinvested into sustainably increase the number of votes in favor of the gauge. Thus, allowing BrainDAO along with all IQ-FRAX liquidity providers to earn an increasing amount of rewards.

Ultimately, this will allow the IQ token to develop deep liquidity on Fraxswap with liquidity providers being incentivized with FXS tokens to provide liquidity.

Benefits

Launching FXS rewards for IQ-FRAX liquidity providers on Fraxswap should increase the liquidity for the IQ token. It will provide rewards for BrainDAO and all IQ-FRAX liquidity providers which incentivizes people to acquire IQ tokens creating additional utility and demand for IQ. As the value of FXS rises, the value of the rewards will increase, which should increase the demand for IQ from yield farmers.

Vote Options:

YES, launch FXS rewards for IQ-FRAX liquidity providers on Fraxswap

DO NOTHING