Proposal to upgrade the Fraxbp Fed

This proposal intends to establish a new Fraxbp Fed with minor improvements to functionalities and permissions compared to version one launched recently in proposal #60 titled: “Launch a Fraxbp Fed”. The need for these upgrades are apparent after an initial period of operation of the Fraxbp Fed and are summarized in the write-up below.

  1. Amend the max slippage that can be taken by the FraxBP Fed when contracting/withdrawing DOLA.

Currently the maxLossWithdrawBps is set to 1, meaning a very small amount of slippage (0.01%) can be taken on withdrawals. This means that the contractAll() function, used to fully withdraw and burn the Feds DOLAs will fail in most situations. This function is important in the unlikely event of a USDC or Frax depegging, as the DAO would want to swiftly remove all DOLAs from the pool in this scenario.

To amend this, we suggest increasing maxLossWithdrawBps to a higher level. Approval of this proposal will set maxLossWithdrawBps to 10 (equivalent to 0.1%). This will be enough to secure DOLAs rapidly in an emergency situation. It will be up to the signers on the Fed Chair Multisig to operate the Fraxbp Fed adequately.

  1. Grant a new permission role (adjustable by gov) to the RWG Multisig to act as the guardian role on the new Frax Fed, meaning the maxLossWithdrawBps can be adjusted

Along with gov, the RWG Multisig will thus be able to make changes to the maxLoss parameter. This means in situations where action needs to be taken fast to contract the Frax Fed, if 10 bps is not enough for full withdrawal then RWG can step in to adjust, rather than being delayed by the 5 day delay of gov.

On-chain actions:

  • Set maxLossWithdrawBps of old Frax Fed to 10
  • Remove minting rights from old Frax Fed
  • Grant minting rights to new Frax Fed