[FIP - 214] Unlock the StakeDAO sdETH-FraxPut Gauge

Summary

Unlock the StakeDAO sdETH-FraxPut Gauge

Background & Motivation

In a recent statement, StakeDAO announced that they are deprecating their options products:

https://twitter.com/StakeDAOHQ/status/1635705988865982467

This closure is of relevance as one product, the ETH Put Selling Strategy, occupies a Frax gauge (sdETH-FraxPut) and has associated locked liquidity. StakeDAO users are currently being advised to withdraw from their options position. As such, this author believes the Frax community should vote to unlock the gauge.

The ETH Put Selling Strategy (the Strategy) is described on the StakeDAO website:

This strategy leverages Opyn’s oTokens to sell 7-day European ETH put options every Friday to market makers via Airswap. The premium received generates passive income for its users. The position is covered with USD stable coin collateral representing 100% of the face value of the put options sold. The USD stable coin collateral is staked into Stake DAO’s Passive FRAX Strategy to generate additional yield.

From the Frax perspective, having the position collateralized with FRAX3CRV pool tokens helps with the $FRAX peg. Some community members believe this is sufficient reason alone to reject unlocking (for example, see Dennett: https://gov.frax.finance/t/3crv-4pool-unlock-lps-in-the-sdeth-fraxput-and-sdfrax3crv-f-gauge-pools/1348/5), and I understand this perspective. Indeed, recent market conditions have illustrated the importance of maintaining a strong $FRAX peg. However, the fact remains that the strategy was designed, first and foremost, to sell ETH puts. Lockers had a reasonable expectation that ETH puts would continue to be sold while the gauge persists – this is no longer the case.

In terms of numbers:

• Current gauge weight: 0.28% (~123 FXS per week)
• Current value locked: 2.5 million USD

Finally, just a broad comment: The partnership between Frax and StakeDAO has been one of the more enjoyable to witness. It has been a pleasure to see how these two teams and communities have supported each other thus far, with supporting products on each platform and many dual community members. Perhaps optimistically, I hope that Frax members will extend this support once more to StakeDAO by unlocking the sdETH-FraxPut gauge, though I am sure the good vibes will continue regardless of the outcome.

Voting

• For : Unlock the StakeDAO sdETH-FraxPut Gauge
• Against : Do nothing