As originally suggested in the Governance discussion forum (https://gov.frax.finance/t/using-amo-to-fill-tokemak-frax-pair-reactor/515), Frax can drive additional $FRAX liquidity by allocating to the newly created $FRAX reactor on Tokemak.
The outline is below highlighting the logic behind the reasons for doing so:
Fraximalists should be familiar with Tokemak as $FXS was one of the first reactors. The team at Tokemak has built something that may solve a major problem for any protocol trying to deepen liquidity; not only can they alleviate the burden of protocols trying to manage their own liquidity, they can help cut farming emissions by a significant amount; see Alchemix example here: https://medium.com/tokemak/the-evolution-of-daos-1692509bbb41
Tokemak recently launched base pair reactors, which are stable coin reactors where those assets can be paired with the other token reactors to create LP pairs (i.e. FRAX + OHM). FRAX, FEI, DAI, UST, and LUSD were added to ETH and USDC base pair reactors.
From the announcement: "Tokemak is a kingmaker for stablecoins: the Pair asset with the most TOKE staked to it will naturally attract the most TVL for that stablecoin, thereby appointing that asset the one with the most pairings and liquidity across DeFi."
By being the first stablecoin to load a reactor, Frax could drive the TOKE side of the reactor’s APR up significantly, which would drive the APR higher in order to seek balance, and when TOKE is voted, those folks become Liquidity Directors and have a say in how $FRAX is deployed.
Frax has $TOKE that could be voted into both the $FXS and $FRAX reactors to help direct liquidity, while earning healthy yields of $TOKE all the while.
As I believe we’ve seen with MIM, width and depth of distribution matter. Tokemak seems to have a unique solution to a widespread problem. It could help both Tokemak and Frax if we added a material amount to the $FRAX reactor which will attract TOKE.