FIP-36 – Frax x Zigzag Partnership

Original Author

0xTax

Subject

Frax & ZigZag partnership: Frax provides liquidity for the FRAX-USDC & FRAX-ETH pairs on ZigZag’s L2 DEX.

Summary

Allow Frax to provide liquidity to the Decentralized Exchange ‘‘ZigZag’’ on the L2s zkSync & StarkNet by minting FRAX and supplying ETH + USDC for collateral.

Introduction

ZigZag is a decentralized orderbook exchange powered by ZK Rollups. Currently, we are the only live DEX on zkSync 1.0. Besides that, we are launching on StarkNet next month as the first and only DEX and will launch on zkSync 2.0. We are aiming for deep liquidity with thick order books which we think could be mutually beneficial with Frax.

Governance Proposal

We propose for Frax to mint 5M FRAX and bridge over the minted FRAX to L2s zkSync 1.0 and StarkNet. Furthermore, we propose for Frax to provide $2.5M equivalent in ETH and $2.5M equivalent USDC collateral as liquidity to ZigZag. This way Frax provides liquidity for a total of $10M to zkSync 1.0 and ZigZag’s StarkNet launch. After StarkNet launch, more FRAX will be minted and more ETH and USDC collateral will be provided as liquidity ($10M) for a total amount of $20M.

As more attention is being given to ZK-Proofs, it becomes clear that this is the final method of scaling Ethereum and a lot of TVL from alternative L2s will flow into zkSync and StarkNet’s networks. For Frax to get a well-established position into this new ecosystem, our exchange introducing FRAX as a stablecoin pair would bring more use case/liquidity and utility to the whole Frax Protocol. This is a great opportunity for both platforms to take advantage of a newly established endgame ecosystem.

This benefits Frax as a whole by:

• Exposure: FRAX trading pairs on zkSync and StarkNet beating other stable coins to the L2s Revenue: through the spread from market making; current revenue is ~$2k a day and revenue will go up linearly as volume increases
• Future potential: As ZigZag grows, we will introduce margin trading in which Frax will also be earning yield off.

Links:

Original forum thread ZigZag Exchange ZigZag’s Linktree

For: Provide $20m Liquidity

Against: Do nothing