[Frax Finance] [FINAL] [STIP - Round 1]

are you able to share stats on the FRAX liquidity on Arbitrum?

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This proposal is focused on growing FRAX liquidty on Arbitrum.

Whilst that is an understandable goal, please can you highlight why this is so important for the ecosystem and its community?

Most importantly, just increasing liquidity or TVL is relatively insignificant. The main thing that adds real value is the use of the tokens within other protoocols, and how this furthers ecosystem use-case and gives users more options. This is what drives more users and projects to Arbitrum. Unfortunately, this proposal does not focus on the latter and therefore appears to be solely focused on increasing value for FRAX, rather than Arbiturm.

Please could you detail your current focus across different chains? This should include your incentives, resources deployed etc. If you are seeking millions of $ARB, it is only natural that we expect your focus to be on Arbitrum for the foreseeable future.

It is clear that using a large amount of incentives will generate more liquidity for FRAX, but I am not convinced this directly contributes to Arbitrum by bringing in new users, furthering development in the ecosystem, and providing new utility to users.

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The proposal is clear as to how the grant will be utilized to benefit Arbitrum’s ecosystem as a whole. This is a breath of fresh air compared to other proposals which seem to focus mainly on growing their own protocol and neglecting to expand on how the grant that they seek will benefit the entire ecosystem.

I believe that the request for 1.5m ARB, considering their excellent track record, is completely reasonable and justified.

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Hi @Frax.Finance , please observe the most recent application which articulates the change to fund streaming (instead of milestone based funding) via Hedgey as well as the grant period:

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Firstly, thank you for your proposal and your commitment to enhancing the Arbitrum ecosystem.

Introduction and Rationale

Frax aims to establish permanent capital flows into Arbitrum from Ethereum by incentivizing users of Frax stablecoins and staked ETH tokens. The request for a grant of 1.5M ARB (3% of the total available in the program) represents a thoughtful approach to enhancing Arbitrum’s competitive landscape. We see Frax as a comprehensive DeFi infrastructure, now moving beyond a decentralized stablecoin, with Arbitrum being a significant focus. Despite current low volumes on Arbitrum, Frax’s unmatched ability to develop its multi-layer suite of products gives hope for a broader initiative to incentivize liquidity on Arbitrum. We believe this proposal could lead to an increased presence of the Frax protocol on Arbitrum, benefiting the entire ecosystem.

Minor Concerns

  • Effectiveness of the grant in its current size is uncertain for the entire Frax ecosystem
  • Concerns exist about Frax’s ability to move Ethereum liquidity to Arbitrum effectively

Summary

Castle Capital appreciates the efforts put forth by Frax and the comprehensive DeFi solutions they offer to the Arbitrum ecosystem. We support the proposal in its intention to enhance the competitive landscape for Arbitrum stablecoin and staked Ether markets.

We hope that our feedback will contribute positively to the further refinement of this proposal for the greater benefit of the Arbitrum ecosystem. Your commitment to improvement and growth is clear and commendable, and we look forward to witnessing the continued success and evolution of the Frax protocol within the Arbitrum ecosystem.

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Hello @Frax.Finance thank you for submitting. Could you please add the following items to your proposal?

  1. Please link the addresses of the pools or contracts you plan to incentivize as per the application instructions.
  1. You mention this grant will allow for “Full Protocol Deployment” Please note that funds are only to be used for incentives and not for deployment costs.
  1. Please include a breakdown of how you will use the funds as per the eligibility requirements.
  1. As @tnorm pointed out the Funding Tranches piece of the incentives framework has been replaced by funds being streamed biweekly.
  1. You mention:

Please note the following regarding the expected timeline of the incentives program.

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Benjamin from QiDao

FRAX team understands the value of working together and collaborating. We work with them on many LM partnerships across multiple blockchains. No doubt that having more of a FRAX presence is good for Arbitrum

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Frax Finance has continuously shown its resilience throughout recent markets and has become a pillar of defi. Its many products focused on its stable coin and LSD have been a value add to defi and more recently Arbitrum. As their focus has primarily been on mainnet, their next home is Arbitrum.

It is understood that this proposal looks to incentivize FRAX token liquidity. The tokens listed are sfrxETH, frxETH, FRAX, and FPI. All products are great and serve a good purpose, and Arbitrum needs more LSDs liquidity in particular.

The grant proposal however lacks clarity on the specifics of how the ARB will be used. The incentives will be used “no later than six months from the approval”. A rewards program is spoken of in a way that tailors rewards to be just enough, not attracting mercenary. That is certainly appreciated. The tranching of payments that ensures effectiveness is something we believe should be followed by other projects asking for grants. However, we believe Frax should list more clarity as to how they plan on distributing such incentives. Whether set allocated amounts to certain pairs or to certain partner protocols, we are confident it will serve well. It should, however, be listed clearly in the proposal. Looking forward to Frax’s feedback on our comments.

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Sorry about that! Discourse limited our links so we had to make lots of replies. This one got lost in the mix. This is a list of currently incentivized pools on Arbitrum. Pools targeted with this grant would be the ones we already incentivize. Also, as we mentioned, our AMM/paired-token agnostic program actively seeks additional partnerships in the arbitrum economy.

That is correct! As you can see, no funds will be used for anything other than incentives, and excess ARB will be returned to the DAO treasury. That should also address some of your other questions.

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Thank you for this clarification! We will edit the proposal to reflect this.

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Thank you for the kind words! Collaboration is one of the things we do best.

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I think the grant size is completely appropiate for FRAX’s impact on Arbitrum ecosystem. It’s one of the few projects I see that tries to interact constantly with most other protocols participating in the chain despite being a very big treasury.

That said, I agree that more clarity is needed to know exactly how the ARB incentives are going to be matched. Depending on how it’s done it could be good or not for the ecosystem.

Good luck!

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Please check this Dune dashboard: https://dune.com/amirnader/frax-finance-arbitrum

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Love the Frax team, would be ecstatic to see them have a larger impression here on Arbitrum with their new releases coming. Grant size seems appropriate and there is a lot of compatibility with their product suite and the native protocols here on Arbitrum.

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I support FRAX finance proposal and think grant size is appropriate.
Maybe need to see some matching from FRAX though

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Good scope and Frax is good to everyone and we should be good to Frax.

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I fully support the Frax Finance grant proposal for the Arbitrum ecosystem. This proposal outlines a strategic plan to leverage Frax Finance’s brand and community to attract users and assets to Arbitrum, contributing to a healthier and more competitive DeFi landscape.

Frax Finance’s commitment to incentivizing pools in a responsible manner, avoiding excessive yield shocks, aligns with the goal of fostering long-term engagement rather than just attracting short-term speculative capital. The focus on completing the trio of decentralized stablecoins alongside USDC and USDT is a smart move that benefits the ecosystem’s diversification.

The proposed KPIs offer clear and measurable benchmarks for success, providing transparency and accountability. Additionally, the responsible fiscal management demonstrated by planning to return excess grant funds to the Arbitrum DAO Treasury shows a commitment to the sustainability of the ecosystem.

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Thank you for making these changes and providing clarification! Your submission now meets all requirements to be considered for a snapshot vote.

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Imagine not supporting FRAX.

Frax is by far the most defi intergrated project there is.

They have an excellent understanding of systems. A huge community of supporters , both in TVL terms, and technical understanding.

They’ve proven themselves to be efficient, supportive, and insightful.

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Hello @Frax.Finance,

Now that your application has been marked eligible, please be advised of the remaining steps in the application process to be completed prior to the Review Period Deadline:

Please complete the following steps required for your application to proceed to Snapshot:

Once you change your proposal title to final, please tag an Arbitrum Foundation Forum Moderator (@ stonecoldpat @ cliffton.eth @ eli_defi) by the Review Period deadline to notify them of your proposal’s readiness.

Once marked as [Final], your application post will be locked by moderators and you will no longer be able to edit your proposal.

1 Like