[FIP - 240] FX Protocol <> Frax Finance

Allocate 60000 $vlCVX votes for fETH/FRAXBP for 6 months

Authors

f(x) Core Team

Summary

Allocate 60000 $vlCVX votes for fETH/FRAXBP for 6 months. In exchange, f(x) will offer Frax 4,000 FX tokens (0.2% of supply) vested linearly over 12 months from the first vote

Background

f(x) Protocol creates two ETH derivative assets, one with stablecoin-like low volatility and the second a leveraged long ETH perpetual token. These tokens are created by separating pure ETH collateral into a lower-volatility component (beta<1) called fractional ETH (fETH) and a higher-volatility (beta>1) one called leveraged ETH (xETH). By constraining beta=0.1 the fractional ETH token captures some growth of the cryptocurrency market while limiting volatility enough to retain the characteristics of a stablecoin. The leveraged ETH component is essentially a long perpetual future contract with zero funding costs and variable leverage. With only pure ETH collateral the system is not exposed to centralized risk. Maximum liquidity of fETH can scale quickly compared with CDP-issued stablecoins because it is based on the high demand for leveraged long ETH positions (xETH) rather than the relatively lower demand for CDPs, with their attendant maintenance and capital inefficiency.

More details can be found in f(x) white paper.

f(x) Tokenomics

FX is f(x)’s native token and it uses Curve’s ve- tokenomic system, with lockers sharing platform revenue and progressively increasing governance power. f(x) charges fees to minting and redeeming of fETH/xETH tokens and at least 50% of which will be distributed to veFX holders. This makes liquidity mining (or bribe payments) more sustainable than simple inflation because FX is a proxy for real, ongoing platform revenue. Locking FX is marketed as a set-and-forget way to earn ETH over time.

More details can be found in f(x) tokenomics article.

Motivation

Increasing liquidity and visibility for the fETH/FRAXBP pool will be extremely helpful to the operation of f(x). It would also be beneficial and additive to f(x) and Frax ecosystem in the following ways:

f(x) provides unique new farming opportunities for Aladdin and Frax communities;

fETH gets good liquidity support and it expands utility for FRAX as well. This creates a strong win-win situation for both the f(x) and Frax ecosystem.

Proposal

In order to create a deeper pool and to attract liquidity which will support fETH/FRAXBP, we propose that Frax vote with 60,000 vlCVX for the fETH/FRAXBP pool for 6 months on Votium. In exchange, f(x) will offer Frax 4,000 FX tokens (0.2% of supply) vested over 12 months from the first vote.

• For: Allocate 60000 $vlCVX votes for fETH/FRAXBP for 6 months.

• Against: Do nothing