Summary

We have recently announced the launch of f(x)’s new stable/leveraged pair, btcUSD-xwBTC

FXN liquidity mining emissions have kicked off with the genesis of fxUSD. Overall emissions are controlled by veFXN voting. Currently there’s a 15% fixed gauge weight for fETH Stability Pools.The team proposes to reduce the weight to 10% and add another fixed gauge weight of 10% to the upcoming btcUSD Stability Pools (temporary), during bootstrapping period.

Background

FXN liquidity mining emissions have kicked off with the genesis of fxUSD, the first USD-pegged stablecoin from f(x).

There have been so far 2 gauge weight veFXN votes for FXN liquidity and the third one is ongoing.

The team proposes that the existing fETH Stability Pools to have a reduced gauge weight from 15% to 10%, and add a 10% fixed gauge weight for the upcoming btcUSD Stability Pools, starting with the next epoch (25th April 2024). This would be intended as a temporary measure, though not bound by a specific timeline.

Motivation

There are two key reasons the team proposes this approach.

1. fETH collateral is constant

The fETH collateral appears to be in good shape. Initially, we assigned a 15% weight to fETH Stability Pools to safeguard them during the fxUSD launch. We believe this measure has served its purpose well, as capital remained stable within fETH. Therefore, we propose reducing the fixed weight by 5%.

2. wBTC does not generate yield.

Bitcoin operates on Proof of Work, meaning it doesn't inherently produce any real yield. Being decentralized, Bitcoin isn't governed by an entity that can incentivize veFXN voters. While we have implemented a mechanism to offer yield for btcUSD Stability Pools, during the initial phase, attracting deposits will require an appealing yield.

Implementation

If approved by governance, the fixed weight for fETH Stability Pools will be reduced at 10% and a btcUSD Stability Pools will be allocated a fixed 10% weight emissions for each epoch starting with the next one (25th April 2024), supporting and stabilising its yields. All remaining FXN emissions would be allocated by the veFXN gauge voting process. These fixed gauge weights would continue until a governance decision to change them is passed.