[FIP - 341] Frax Singularity Roadmap Part 1

Author

Sam Kazemian & various Frax contributors and community members

Motivation

The Frax Singularity Roadmap aims to unify all aspects of Frax into a unified vision and roadmap. This is the first in a series of posts outlining the vision. The Frax Singularity Roadmap should be the guiding light of the Frax community.

Post-Singularity Frax Era

The launch of Fraxtal and achievement of effectively 100% CR are milestones that start a new era in Frax. Fraxtal is the substrate that enables the Frax ecosystem; it is the operating system of Frax. Fraxtal completes Frax’s core product offerings – Frax is strategically adding new subprotocols and Frax assets but all the necessary building blocks are now in place. The community can now focus on larger opportunities and paradigm shifting products as well as issuing native Frax Assets across all of the crypto universe.

In order to get here, Frax has generated $45m+ to achieve effectively 100% CR. This was a huge effort on everyone’s part, including a significant sacrifice from FXS holders to improve the overall health of Frax. The FRAX stablecoin has been largely dormant during this process and FXS revenue sharing was cut by 90% to conserve assets. That can now change entirely.

Frax: The Only Full Stack Protocol

Fraxtal is the home of Frax Nation & the Fraxtal Network State. With Fraxtal, the Frax community has a sovereign home, culture, and digital space they can call their own. This is why Fraxtal is being built. Frax already issues its own currencies & is fully governed and owned onchain by FXS stakers. Now, Frax has its own full-fledged network in Fraxtal.

Soon, L3s of Fraxtal will go online. L3s are like fractals and similar to sub-communities that have their own distinct identity & culture but part of the overall Frax Network State. They benefit from earning Frax Asset yields, RWA yields, Fraxtal settlement+security guarantees, and a constant stream of FXTL points to their L3 contract on Fraxtal based on its popularity, usage, and TVL. All this together governed by FXS which represents an interest in the digital nation of Frax.

Fraxtal stands on the shoulders of Optimism to create one of the most developer friendly L2’s on Ethereum. While most L2's simply mirror Ethereum's incentives, we’ve gone further and innovated on base incentives to create the most compelling possible experience for developers and users - and we will continue innovating. By owning the entire stack, Frax can introduce features like account abstraction, new precompiles, privacy functionality, aggregated DA, and Superchain interop. These features will dramatically improve the on-chain experience & make Fraxtal the preferred location to hold, stake, and transfer crypto in the coming months and years.

*With the above in mind, centralized exchanges and payment service providers that integrate Fraxtal chain deposits/withdrawals early can get allocations of FXTL points until the program concludes.

Kickstarting Fraxtal

Fraxtal's innovative Flox Blockspace Incentives have just finished its first epoch of allocating FXTL points to users and popular smart contracts. This makes Fraxtal the only network to automatically distribute rewards block by block to users & developers for using the chain. These incentives run for many years & will become known as a core innovation of Fraxtal as users and developers will become accustomed to earning rewards to use blocksapce, unlike any other network.

The road to $100B+ Fraxtal TVL starts now and with the target of EOY 2026. All Frax Assets including FRAX, sFRAX, frxETH (and new Frax Assets) will be issued on Fraxtal first going forward. The Frax Core Developers are actively moving to issue Frax Assets on Fraxtal including native 4626 yield vaults, minting, and redeeming. When Frax assets reach a new ATH supply, so will Fraxtal TVL. This is a unique synergy only possible because of Frax’s full stack system. Frax Assets will permeate every chain but the base contracts and assets will exist on Fraxtal mainnet.

Fraxtal’s Fractal Scaling Roadmap

Fraxtal is targeting 23 L3s in the next 365 days to kickstart the Fraxtal Nation community. Frax has always taken a positive sum approach and directly supports the community and builders that integrate with us. We believe 23 L3s is the perfect number of chains that we can actively support with direct developer access/incentives/investment and more. The first two L3s are already in the works and we expect to fill the remaining spots in the coming months! L3s wil not only earn FXTL points through Flox, but the 23 L3 slots are for official partners that will get additional support from the Fraxtal Core Devs and large allocations of FXTL total supply.

If you are deploying any form of L3 or appchain and want to explore joining the Fraxtal Network State early, reach out to the Frax Core Developers & our strategic rollup-as-a-service provider partners: Conduit.xyz, Gelato.network, & Caldera.xyz to express your early interest.

Overview of Frax Assets

Frax is the only protocol in all of crypto that has 4 separate tokens/assets in the top 200. This number will only increase as will the rank of Frax Assets. Thus, it’s important to have a current overview of all Frax Assets & their utility, pegs, and design specs.

Frax Asset	Utility & Specs
Frax Share (FXS)	Governance/Staking token of all of Frax Finance, base pair of all FXS Liquidity Engine
FRAX & Staked FRAX (s)FRAX	Dollar Peg, 4626 yielding vault
Frax Ether & Staked Frax Ether (s)frxETH	ETH Peg, initial gas token on Fraxtal, 4626 yielding vault, soon to be LRT with v2
Frax Bitcoin & Staked Frax Bitcoin (s)frxBTC	BTC peg, 4626 yielding vault, fully collateralized by BTC on Bitcoin PoW chain
Frax Price Index (FPI)	Flatcoin/CPI peg, no yielding token - peg is inflation resistant
Frax Bond (FXB)	Zero coupon bond tokens that convert to FRAX on maturity similar to US Treasuries
Fraxtal Points (FXTL)	Points that represent usage of the Fraxtal blockchain to be tokenized at a future date. More details forthcoming.

All Frax Assets should be usable as the gas token on Fraxtal as the chain matures. Potential new Frax Assets coming this year include: frxNEAR, frxTIA, frxMetis & more. FRAX, the flagship dollar-pegged stablecoin of Frax Finance, is now effectively fully collateralized allowing us to enter the new FXS tokenomics era described below.

FXS Singularity Tokenomics

All roads lead to FXS and it is the ultimate beneficiary of the Frax ecosystem. Now that 100% CR has been effectively reached, FXS can receive all utility and benefits of the entire Frax stack. We propose that the protocol fee switch be turned back on, with 50% of the yield flowing to veFXS and the other 50% used to buy FXS and other Frax assets to pair in the FXS Liquidity Engine (FLE). The FLE will allow Frax to continue building its balance sheet while dramatically increasing liquidity for FXS and paired Frax assets. According to Defillama, even without counting multiple sources of revenue like Fraxtal chain fees and the Fraxlend AMO, Frax makes over $40m of revenue annualized as of this writing.

veFXS Revenue Share+Fee Switch Turned ON

veFXS stakers will get total protocol fees at the passing of this proposal added to the veFXS yield distributor on Ethereum mainnet as well as veFXS yield distributor contract on Fraxtal soon after.

FXS Liquidity Engine will create increasing FXS POL against first Frax Assets but can and will be expanded to other voted pairs by the community.

FXS Liquidity Engine (FLE) The FXS Liquidity Engine is a protocol owned liquidity Schelling-point of pairs of every Frax Asset against FXS. Revenue allocated to the FLE is used to buy back half FXS & half Frax Assets to increase the liquidity depth of the pair. The amount allocated to the FLE is based on the trailing price of FXS. If FXS 30-day trailing price is lower than the prior month, then 25% of protocol revenue is allocated to the FXS Liquidity Engine instead of veFXS. If the 30-day trailing price is higher than the prior month, then 25% more of protocol revenue is distributed to veFXS instead. The long term goal is to increase the utility, liquidity, and lending credit to FXS to unprecedented levels as revenue comes in block-by-block.

Powered by Fraxswap+BAMM, these will be the initial FLE POL pairs: FXS-frxBTC pair (more on frxBTC timelines & info in Singularity Part 2) FXS-sfrxETH pair FXS-sFRAX pair FXS-FPI pair FLE gauges will be releasing soon to power different FLE pairs including bespoke FLE pairs. FLE gauges that go live with this vote: FXS-frxETH, FXS-FRAX. This liquidity engine is entirely on Fraxtal mainnet and nowhere else so Frax profits directly increase Fraxtal TVL, liquidity, & lending capacity in real time.

Frax Finance revenue to FXS and the FXS Liquidity Engine is not cyclical and generates consistent revenue through all market cycles to increase POL constantly in all macro conditions. When volatile assets go down in value, revenue from FXBs and (s)FRAX should increase revenues. Thus, the FLE should be a constant, direct value add to FXS holders and stakers alike. Note: there are certain strategic assets that will be kept on the balance sheet/treasury including CVX (staked as vlCVX), cvxCRV, cvxPRISMA, & cvxFXN, among other assets that will be added as “strategic assets” in future governance votes. These strategic assets will not be sold or distributed to veFXS holders nor sold to power the FLE.

Due to the length limitation of Snapshot proposal, the rest of this proposal can be found in the discussion link (v10):