[FIP - 397] Frax Finance Annual Budget Request (2024 - 2025)

Authors

Frax Core Team

Summary

This proposal seeks to authorize a revised maximum annual budget of 4,100,000 FRAX for Frax Finance for the fiscal year 2024-2025. The revised budget reflects significant cuts across various categories to ensure financial prudence while continuing to support essential operations and initiatives. The budget is intended to cover four key categories: Development & Operation, Security, Legal & Compliance, and Fraxtal Growth under the Fraxtal Builders Program. Please note that this is a maximum cap, and it is highly likely that not all of it will be used, as we only spent 5,123,990 FRAX last year out of the 9,000,000 FRAX budget that we had during the last fiscal year.

Background and motivation

As Frax Finance continues to grow and evolve, this budget supports our core operations while enabling strategic growth within the Fraxtal ecosystem. The allocation focuses on maintaining our development and operational capacity, ensuring security, managing legal and compliance obligations, and selectively supporting key initiatives within the Fraxtal ecosystem.

Details

Budget Categories

1. Development and Operation: This budget will be used to cover the costs associated with the development and operation of the Frax Finance protocol. This could include salaries for developers, costs of new feature development, maintenance costs, infrastructure costs, and other operational expenses.

2. Security (Audits and Bug Bounty): This budget is allocated to maintaining the security of the Frax Finance protocol. This includes the costs of regular security audits by external firms, running a bug bounty program to incentivize the discovery and reporting of vulnerabilities and other measures to ensure the safety and trust of our community.

3. Legal and Compliance: This budget covers legal and compliance costs to ensure that Frax Finance operates within the legal framework. This could include fees for legal counsel, regulatory compliance costs, potential legal disputes, and other related expenses. Notably, Frax Finance has not encountered any significant legal issues to date, and last year, we spent less than 5% of the allotted legal budget. This allocation remains in place to ensure we are prepared for any unforeseen legal requirements.

4. Fraxtal Ecosystem Grants (Fraxtal Builders Program): This new budget category aims to support the growth of the Fraxtal ecosystem through the Fraxtal Builders Program. Although limited, this budget supports critical initiatives within the Fraxtal ecosystem, focusing on strategic growth and development. And it can be boosted by allocating Frax Finance grants from Superchain grant programs.

Budget Allocation

	Budget Share Percentage	Proposed Budget (2024 - 2025)	Frax Finance Latest Annual Budget (2023 - 2024)
Development and Operation	73.2%	$3,000,000	$3,000,000
Security	9.8%	$400,000	$1,400,000
Grants	0.0%	$0	$600,000
Reserve Emergency Fund	0.0%	$0	$1,000,000
Legal and Compliance	12.2%	$500,000	$3,000,000
Fraxtal Ecosystem Grants	4.9%	$200,000	$0
	Total	$4,100,000	$9,000,000

Additional Notes

• This proposal represents the maximum caps for each category, not necessarily the exact amounts that will be used.
• This proposal does not cover the costs of liquidity incentivization. Kindly refer to the Votium and WETHR proposals for budget allocations related to liquidity incentivization.
• All previously approved budgets are still in effect and considered in our ongoing operations. This proposal is designed to supplement and build upon the existing financial strategies.
• This proposal does not account for FXS. The team plans to continue utilizing their current treasury allotment of FXS for core development compensation. If more/less FXS resources become necessary in the future, a specific governance proposal will be initiated.

Vote

• For: Authorize a maximum annual budget cap of 4.1M FRAX (2024 - 2025)
• Against: Do nothing.