TAP 20: Deposit Idle Frax into FraxBP

Simple Summary

Deposit $33 million of idle Frax into USDC / Frax (FraxBP) and stake on Convex

Background

Olympus currently has ~$58 million of Frax, of which $25 million is deposited in the FraxBP and staked on Convex. The remainder is sitting idly in the treasury, earning no yield.

Motivation

As of this writing, the pool is projected to yield ~4.95% APR including FXS rewards. The incremental $33 million deposited and staked would earn the protocol an additional ~$1.6 million per year.

Given the risk profiles of the two assets in the pool – USDC and Frax – the risk of LPing is no greater than holding Frax “naked” (i.e., if Frax were to depeg, the pool would end up all Frax – exactly where we stand today). Of course, there is smart contract risk, but both Curve and Convex have proved to be extremely robust.

Proposal

Deposit the remaining $33 million to the FraxBP and stake on Convex. This proposal would not preclude Olympus from pursuing other opportunities. The FraxBP should be viewed as the "base camp" for Frax holdings, with its yield serving as a hurdle rate for other deployments.