Change CR Boost on FXS Farming Rewards

Authors

Frax Finance Team

Summary

Change Collateral Ratio (CR) Boost on Farming Rewards to 1x (no boost).

Abstract

If adopted, this proposal seeks to:

1. Change cr_boost_max_multiplier on the FRAX-USDC, FRAX-FXS, and FRAX-WETH staking rewards contracts to 1e6 (1000000 with 6 decimals of precision = 1x boost)

This benefits Frax as a whole by:

• Lowering emissions from a current rate of 56,000 FXS/day at a 86.50% CR, negatively correlated to the CR, to a constant 49,315 FXS/day. This also benefits farmers and locked stakers because the CR boost was a uniform boost across all emissions, so with it paused, it means that only locked stakers earn any kind of bonus boost. Their proportion of boosted emission increases since unlocked stakers do not earn any kind of boost (currently they earn CR boost).

Motivation

This proposal is motivated by the current high amount of FXS rewards emitted per day by the staking contracts. By turning off the CR boost, the protocol would slow down emissions, extending the duration of the yield farming program and easing selling pressure on the FXS price from farmers. The likely rise in demand+scarcity of FXS would most likely keep farming yields the comparable, if not better. It also tips the balance in favor of locked LPs since that is the only way to earn any form of boosted rewards.

Liquidity is still important, so we propose to keep locked stakes as-is. Additionally, this makes locked stakers earn the only kind of boost in the entire ecosystem. This proposal would not affect rewards already distributed.