[OGP-14] Integration of sfrxETH as Collateral on Ethos Reserve

Proposal Title: Integration of sfrxETH as Collateral on Ethos Reserve Proposal Chain: Optimism Proposal Author: Nader Ghazvini (Frax) Date: 01/11/2024

Executive Summary This proposal seeks to expand the Ethos Reserve v2’s collateral options by adding Frax Finance’s sfrxETH. This integration is aimed at leveraging the growing prominence of both Ethos Reserve and Frax Finance as linchpins of the Optimism DeFi ecosystem to push the boundaries of capital efficiency.

Proposal Motivation: The popularity of staking solutions for Ethereum has led to the emergence of assets like sfrxETH as premier staking assets. Its inclusion can attract a broader segment of DeFi users and give sfrxETH holders additional ways to utilize their assets.

Proposal Specifics: Market trends indicate a rise in the usage of liquid staking derivatives within DeFi, suggesting their increasing demand as valuable collateral assets. With Ethos Reserve v2’s integration, it is opportune to consider these additional collateral options to drive user adoption and increase capital efficiency. Initially, deposit caps will be used to ensure minimized risk to the protocol. Over time, as the market demonstrates the demand for sfrxETH and protocol performance can be monitored to ensure it acts as intended, deposit caps can be increased.

sfrxETH Collateral Details: Deposit Cap: 300 CCR: 135% MCR: 110%

Team Experience The development team, consisting of DeFi analysts and blockchain developers, has extensive experience in Ethereum-based protocols, staking mechanisms, DeFi primitives, and innovative assets like those offered by Frax Finance.

Key Objectives & Success Metrics Objective: Successfully integrate sfrxETH as collateral in Ethos Reserve.

Success Metric: Capture at least 10% market share of sfrxETH on Optimism within the first six months post initial collateral offering.

Length of Engagement & Budget Breakdown N/A

Partnerships Identify collaboration opportunities with Frax Finance on Optimism to drive usage of sfrxETH in Ethos Reserve.

Risk Assessment Price fluctuations of a sfrxETH oracle price feed during market volatility could add additional protocol risk.

Standard risks associated with integrating new assets & smart contracts into Ethos Reserve’s codebase.

Additional Details Post-integration, continuous monitoring, and evaluation of sfrxETH performance as collateral will be essential. Deposit cap adjustments based on community feedback, protocol performance, and market trends will be considered.

References/Useful links Website: https://frax.finance/ sfrxETH Dapp: https://app.frax.finance/frxeth/stake sfrxETH Litepaper: https://docs.frax.finance/frax-ether/overview sfrxETH Contract: https://docs.frax.finance/smart-contracts/frxeth-and-sfrxeth-contract-addresses Docs: Overview - https://docs.frax.finance/frax-ether/overview Github: GitHub - https://github.com/FraxFinance/staked-frax-erc4626 Audits: https://code4rena.com/reports/2022-09-frax Bug Bounty: https://docs.frax.finance/smart-contracts/miscellaneous Frax Facts: https://facts.frax.finance/frxeth CoinGecko: https://www.coingecko.com/en/coins/frax-ether Communities Twitter: https://twitter.com/fraxfinance Telegram: FraxFinance Discord: https://docs.frax.finance/frax-ether/overview Blog: https://fraxfinancecommunity.medium.com/