Authors

Frax Core Team

Summary

This proposal serves as an official update to the Frax North Star Proposal V2.1 (FIP - 428) and establishes a formal governance resolution to postpone FXTL point conversions until key ecosystem health milestones are achieved.

The purpose of this resolution is to set clear expectations for the community, and ensure that FXTL conversion occurs only when it meaningfully benefits holders, the Frax ecosystem, and the long-term North Star roadmap.

This resolution does not cancel FXTL; it defers the conversion to a more advantageous future point.

Background and Motivation

FXTL point conversions were outlined in FIP-428, where ~1.918% of each user’s FXTL balance would convert weekly into FRAX, up to 57,534 FRAX/week, with rates determined by floxCAP and veFRAX weighting.

While the mechanism is sound, activating it now (e.g. FRAX at an all time low market cap) would not achieve its intended purpose. At current market conditions and ecosystem scale:

• FXTL conversions would yield very low dollar value,
• FRAX sell pressure could increase,
• Emissions would not contribute meaningfully to Fraxtal growth or frxUSD expansion.

Frax is currently in a transition phase, focused on scaling frxUSD, deepening Fraxtal liquidity, and strengthening FRAX value accrual. Launching FXTL conversions prematurely would undermine these priorities and create disappointment for participants.

A postponement ensures FXTL activates later, when it can deliver real value and align with broader ecosystem maturity.

Proposal Details

Formal Postponement of FXTL Conversions & Public Clarification

FXTL point conversions will not begin at this time. Activation will be reconsidered once any one of the following ecosystem milestones is achieved:

• FRAX price reaches $10,
• Fraxtal chain TVL reaches $500 million,
• frxUSD total supply reaches $1 billion.

Until one of these thresholds is met:

• No weekly FXTL burns or FRAX conversion emissions will take place.
• FXTL continues as the primary incentive mechanism for Fraxtal activity, builders, and ecosystem growth.

Upcoming Comprehensive Tokenomics Update (North Star V3)

Within the next month, the Frax Core Team will publish the North Star V3 tokenomics update, which will:

• Prioritize FRAX value accrual and utility,
• Outline the next phase of Frax Finance growth,
• Provide a comprehensive update on each section of North Star V2.1

Voting

• For: Postpone FXTL point conversions until key ecosystem health milestones are achieved.
• Against: Do nothing.