Authors

Frax Finance Team

Summary

Approve vote boosts and yield for FXS single-asset staking as veFXS

Background

veFXS is a fork of Curve’s veCRV code. Users may lock up their FXS for up to 4 years for four times the amount of veFXS (e.g. 100 FXS locked for 4 years returns 400 veFXS). The veFXS balance linearly decreases as tokens approach their lock expiry, approaching 1 veFXS per 1 FXS at zero lock time remaining. This encourages long-term staking and an active community. Sushiswap has proposed a similar implementation with their recently announced oSushi token A sample graph (Curve’s veCRV) illustrating the decrease can be found at this address.

Purpose

The purpose of veFXS is to reward long-term FXS hodlers and incentivize farmers to stake FXS.

The functionality of veFXS is described as follows:

Voting Power

Each veFXS will have 1 vote in governance proposals. Staking 1 FXS for the maximum time, 4 years, would generate 4 veFXS. This veFXS balance itself will slowly decay down to 1 veFXS after 4 years, at which time the user can redeem the veFXS back for FXS. In the meantime, the user can also increase their veFXS balance by locking up FXS, extending the lock end date, or both. It should be noted that veFXS is non-transferable.

Farming Boosts

Holding veFXS will give the user more weight when collecting farming rewards. The overall emission will remain the same. Curve has their max at 2.5x and we propose the same.[1][2]

Yield

After the implementation of veFXS, holders may be able to collect rewards periodically. The emission rate would vary, depending on the implementation of how the yield is obtained and market price of FXS.

Future Functionality

The veFXS system is modular and all-purpose. In the future, it can be expanded to vote on AMO weights, earn additional yield in new places/features, and be treated as a governance token-like bond of sorts.

If adopted, this proposal seeks to:

1. Give veFXS voting rights
2. Have future farms (e.g. Uniswap v3) include a reward weight boost to veFXS holders

This benefits Frax as a whole by:

• Allocate voting power to long-term holders of FXS through veFXS
• Incentivizing farmers to stake FXS