FIP-13: Incentivize Saddle D4 Pool

Strategy for Incentivizng Saddle's D4 Stableswap pool

Authors

Jason Huan

Summary

Incentivize the saddle.finance D4 pool (FRAX, alUSD, LUSD, FEI) with 1200 FXS per day.

Motivation

Saddle is an automated market maker for stablecoins based off of Curve's StableSwap invariant, allowing for low slippage when trading between the stablecoins in a pool. To attract liquidity to the D4 pool, incentives will be proposed by each protocol in the form of their governance token as staking rewards for the pool LP token: FXS, ALCX, LQTY, and TRIBE. This will allow holders of the assets in the decentralized stablecoin pool to swap between each other with minimal slippage.

Currently, liquidity between these stablecoins is fragmented across decentralized exchanges Uniswap V2, Uniswap V3, and Curve.fi. By putting them together in a saddle pool, it will not only link the stablecoins to each other but also create cross-dex swap infrastructure through these assets.

If adopted, this proposal seeks to:

1. Incentivize the Saddle D4 pool with 1200 FXS/day
2. Coordinate with other decentralized stablecoin protocols to maintain liquidity rewards

This benefits Frax as a whole by:

• Creating a native pool to swap between FRAX, alUSD, LUSD, and FEI
• Promoting cross-dex swaps by dex aggregators through FRAX