FIP 50 - Frax + Futureswap

Link to Discussion Thread: https://gov.frax.finance/t/fip-50-frax-futureswap/805

Summary

The Frax and Futureswap teams have been working together to enable a derivative layer on top of Frax products. This proposal will formalize the collaboration with a $3m token swap and the creation of a $8m long term AMM liquidity pool, which will include $4m of FRAX.

Background and Motivation

Frax is preparing for the next phase of expansion. FPI, Fraxswap and native lending markets are all on the horizon.

Futureswap (https://www.futureswap.com/ 5 ) is a decentralized non-custodial perpetual protocol where users can gain leveraged exposure on assets. Futureswap is live on Arbitrum and plans to expand to other chains in the coming weeks. More information about Futureswap can be found here 3.

Futureswap is working to provide a layer of derivative products on top of the Frax ecosystem. The Futureswap team is already assisting with Fraxswap and will be one of the first products to utilize Fraxswap once it is live. Some of the possible applications include leveraged exposure for pairs listed on Fraxswap, including leveraged exposure to inflation via FPI. Futureswap also plans on building products for Frax’s native lending markets.

There is tremendous potential for Futureswap and Frax to enable great markets together. The vision is for Futureswap to provide a derivative layer on top of Frax on all relevant chains. As we begin this effort, now is a great time to execute a token swap to align interests and benefit from mutual protocol growth going forward. The proposed swap amount is $3m of FXS for $3m of FST at a 30-day TWAP.

This proposal also authorizes the creation of an $8m long term FST/FRAX AMM pool, with Frax contributing $4m FRAX and Futureswap contributing $4m FST. This pool is designed to create a long term market for FST priced in FRAX with both protocols as equal owners of the LP positions.

This proposal is only for the approval of a $3m token swap and $4m FRAX for the AMM pool. The next phase of the collaboration will likely include Frax providing liquidity on Futureswap. This will be addressed in a future proposal.

Proposal

Authorize a $3m FXS swap for $3m FST at a 30-day TWAP and up to $4m FRAX for a long term FST/FRAX AMM pool to be jointly owned by both protocols.

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For: Authorize the swap and creation of the AMM pool

Against: Do nothing