FIP-119 by Frax DAO, thanks to Samuel's help and the chad Frax contributors (https://gov.frax.finance/t/fip-119-create-gearbox-amo/1887) - established a Frax -> Gearbox AMO with a starting limit of 2M. To help bootstrap this as strategy from the Gearbox side, LM rewards were added to this passive lending pool, with GIP-30: https://gov.gearbox.fi/t/gip-30-lm-adjustment-1/1875. The rewards for FRAX are 0.168% GEAR of total supply yearly, or ~80K USD yearly currently. Not huge at current levels, but just pointing out.
Due to high borrow min limits for Credit Accounts, minimum sizes of CAs started at about $400K. Meaning that a pool needs to be at least $1M to serve just 2 users. That was the case with a $5M+ pool servicing a few CAs, but recently the pool was dropping and is now at a level where it's not particularly beneficial for the protocol. Even if it grows back to $3M, it presents fragmentation which isn't particularly relevant in this environment of liquidity constrains.
This is normal to see in these conditions, and this is one of the reasons why P2P lending or small multiple pools are hardly usable in isolation: it's hard to match both sides especially due to high collateral requirements. As such, the pool currently has no benefit to Gearbox Protocol. Nothing wrong with either protocol, just it's the time when users & protocols rethink their priorities and rates.
Suggestion: remove LM for now, revisit in V3 in a better way.
In V3, we can all rethink the pros & cons of adding back LM to Frax depending on what use cases of leverage Gearbox users find most interesting. Currently, these emissions bring no benefit to Gearbox whether in marketing or usage ways now.
PS: this will not remove the pool, there is no need for that. It's just logical that the liquidity wouldn't grow further anymore, for now, similar to wstETH pool. Which exists, but is not used.