Sunset the FRAX LP and cvxFXS Markets

FiRM
1

Sunset the FRAX LP and cvxFXS Markets

Summary

This proposal aims to formally retire the FraxBP and FraxPyUSD LP FiRM markets (listed below) by pausing borrows and setting each market’s market ceiling parameter to 0. These markets have seen dwindling usage following the Treasury Working Group’s (TWG) strategic shift away from incentivizing the DOLA/Frax pools on Curve to newer pools paired with yield-bearing stablecoins.

In addition to retiring the Frax LP markets, the cvxFXS FiRM market will also be fully decommissioned by setting its supply ceiling to zero. On July 4, 2023, Proposal #199 reduced the collateral factor for cvxFXS to 50%, and the Risk Working Group paused new borrows. These measures were taken following Convex Finance’s announcement to migrate cvxFXS liquidity to Fraxtal.

Markets to Be Sunset:

  • yv-FraxPyUSD-DOLA
  • FraxBP-DOLA
  • FraxPyUSD-DOLA
  • yv-FraxBP-DOLA
  • cvxFXS Market

Background

  1. TWG Shift in Incentives
    On November 22nd, 2024, the TWG announced a plan to gradually wind down incentives for the DOLA/FraxPyUSD and DOLA/FRAXBP liquidity pools on Curve. The goal was to move liquidity incentives to pools that pair DOLA with yield-bearing stablecoins such as sUSDe, sUSDS, and scrvUSD. The new pools began receiving rewards on November 28th, with a 4–8 week phase-out of rewards to the old pools.

  2. Rationale for New Pools

  • Yield-Bearing Stablecoins: DOLA is paired with stablecoins that generate yield on their own, offering more robust potential returns on top of the CRV/CVX rewards.
  • Consolidation of Liquidity: Concentrating liquidity in fewer, higher-value pools aids in maintaining stable peg and improving capital efficiency.
  1. Emptied Frax Markets on FiRM
    As incentives for the older pools have been reduced to zero over the past months, usage of the FraxBP and FraxPyUSD FiRM markets has dwindled to negligible levels. With the markets now effectively empty, this proposal recommends sunsetting them as part of a larger ongoing overall effort to reduce managerial overhead.

On-Chain Actions

  1. Set market ceilings to Zero
  • yv-FraxPyUSD-DOLA: Set market ceiling to 0.
  • FraxBP-DOLA: Set market ceiling to 0.
  • FraxPyUSD-DOLA: Set market ceiling to 0.
  • yv-FraxBP-DOLA: Set market ceiling to 0.
  • cvxFXS: Set market ceiling to 0.
  1. Pause all four markets

These actions ensure no new supply (or loans) can be created in these markets, effectively retiring them.

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