FIP - 77 - FRAX x Arable Protocol

Purpose

This proposal's purpose is to approve the funding of $100K FRAX into an unbalanced FRAX/arUSD liquidity pool in partnership with Arable Protocol. In partnership with this approval, the Arable Protocol will provide arUSD liquidity to complete the pool and enable FRAX and FPIS as collateral, enabling FRAX/FPIS holders the ability to mint arUSD.

Summary

Arable Protocol proposes:

• The creation and funding of an unbalanced FRAX/arUSD pool based on Arable’s swap contract.
• To integrate FRAX and FPIS assets as supported collateral at Arable Protocol.

Background

Arable Protocol is reshaping the DeFi space. Our goal is to make multi-chain farming simple, economical, and available to all. With a simple yet powerful user interface, both experienced and new farmers can effortlessly stake yield farms from various chains. Arable allows for multi-chain yield farming on a single platform and chain without leaving the App. With ever-rising gas prices and bridging fees reducing revenues, it's time for a revolution!

Arable Protocol is based around a synthetic ecosystem and its liquidity is created through the minting of the stable asset arUSD. Utilizing arUSD, users can swap between a variety of synthetic cryptocurrencies and LP tokens and farm on synthetic yield farms that track the APR of their native chain counterparts. Collateral is required to back minted arUSD in an over-collateralized fashion. We propose to add FRAX and FPIS as collateral options to Arable’s current collateral options, including USDT, WAVAX, and Arable’s own governance token, ACRE. To find out more, please refer to https://medium.com/@ArableProtocol/35e2c39a0c87.

To incentivize the utilization of FRAX as collateral, we propose the creation and funding of an unbalanced (no slippage or impermanent loss) FRAX/arUSD pool based on Arable’s swap contract. The Frax protocol will add a one-sided deposit of $100k FRAX, which will be matched with $100k arUSD by the Arable Protocol for a total liquidity of $200k.

Rationale

1. Increasing volume and liquidity for both protocols. By supporting FRAX and FPIS as additional collateral options by Arable Protocol and the creation of a FRAX/arUSD liquidity pool, such a partnership would result in increased liquidity for and visibility of our respective protocols.
2. Arable Protocol and the Frax Finance community have strongly aligned interests and will benefit from more exposure to each other's communities.
3. Exploration of further co-marketing opportunities will lead to increased visibility of each other’s communities and user bases.
4. Building trust through partnership. By developing a long-term partnership, we can build trust with each other by ensuring fair and level compensation between the two protocols.

Poll

• For: Allocate $100K FRAX into FRAX/arUSD liquidity pool
• Against: Do nothing