Summary:
This proposal aims to add sfrxETH as new collateral for PAR on Parallel on Ethereum.
Rationale:
Frax Protocol is a decentralized synthetic asset platform that allows users to mint and trade synthetic assets that track the value of real-world assets. sfrxETH is a synthetic token that represents a staked version of Ethereum, allowing users to earn rewards by staking their ETH, while maintaining liquidity through the use of sfrxETH on other DeFi protocols
Onboarding sfrxETH is a source of additional revenue for Parallel and benefits the ecosystem as a whole because these onboarding has an effect on assets liquidity & peg resilience.
Parallel has the opportunity to help ecosystem diversity and decrease the concentration of liquidity to a unique entity while supporting more staking overall and increasing Ethereum decentralization.
You can learn more about these mechanisms in their documentation / frax-ether overview.
Once the vote is accepted on Snapshot, we will determine the associated liquidation ratio, minimal collateral ratio, debt ceiling, liquidation bonus on a second MIR discussion.
Project Presentation:
Protocol name : Frax Finance
Token requested : sfrxETH
Token contract address : https://etherscan.io/address/0xac3e018457b222d93114458476f3e3416abbe38f
Audit(s) links : Audits - Frax Finance ¤
Bug bounty : Miscellaneous & Bug Bounty - Frax Finance ¤
Chain requested : Ethereum
Relation with the project : None.
Website: Frax Finance
Github: Frax Facts
Twitter : https://twitter.com/fraxfinance
Discord : Discord
Telegram: Telegram: Contact @fraxfinance
Token metrics & Risk assessment:
- Smart Contract risk: D
The code has audit code4arena audit for frxETH & sfrxETH and they also have their own bug bounty program for the whole Frax ecosystem. Cumulative sfrxETH & frxETH has generated more than 34k transactions
- Counterparty risk: D+
sfrxETH is minted when stakers deposit frxETH into the Frax Protocol deposit pool, and sfrxETH is burnt when stakers withdraw their frxETH. The Frax protocol contracts do have permissions that grant administrators mint/burn capabilities. This was pointed out in code4Arena audit 2.
sfrxETH has multiple counterparty risk to the frax team, including: Managing all validators for frxETH, Minting rights for frxETH (as mentioned above), Withdrawal keys for staked ETH underlying the asset, Control of frxETH Curve LPs generated by withholding 10% of user ETH deposits and pairing with newly minted frxETH. Cumulative sfrxETH & frxETH currently has 2.7k holders on Ethereum.
- Market Risk: C-
sfrxETH is an ERC-4626 vault designed to accrue the staking yield of the Frax ETH validators. At any time, frxETH can be exchanged for sfrxETH by depositing it into the sfrxETH vault, which allows users to earn staking yield on their frxETH. Over time, as validators accrue staking yield, an equivalent amount of frxETH is minted and added to the vault, allowing users to redeem their sfrxETH for a greater amount of frxETH than they deposited. The exhange rate of frxETH per sfrxETH increases over time as staking rewards are added to the vault. By holding sfrxETH you hold a % claim on an increasing amount of the vault’s frxETH, splitting staking rewards up among sfrxETH holders proportional to their share of the total sfrxETH. Cumulative frxETH and sfrxETH liquidity available is nearly $250M with approximately $1.5M of volume per day on Ethereum.
- Chain Risk : A
Ethereum had 0 outages over the last 6 months. (https://etherscan.com/chart/blocks)
- Liquidity Risk of PAR on Ethereum: A
The PAR-USDC UniV3 pool has 1,68M$ in concentrated liquidity, composed of 50% PAR and 50% USDC. The PAR-USDC Curve pool has 425k$ in liquidity, composed of 52,1% PAR and 47,9% USDC at the time of writing. The MIMO-PAR Balancer pool has 310k$ in liquidity, composed of 80% MIMO and 20% PAR.
This provides the following price impact on the following trade sizes:
1000 USDC → PAR: 0.00%
10000 USDC → PAR: 0.03%
25000 USDC → PAR: 0.07%
50000 USDC → PAR: 0.14%
- Overall Risk : C+
The Overall Risk is the average of the points mentioned above.
- Community size :
Twitter: 68,7k followers
Discord: 9k members
Telegram: 15k members
Means:
- Human resources: Multisig DAO signers will need to sign and execute transactions to add sfrxETH as collateral on Parallel on Ethereum.
- Treasury resources: There is no cost for the treasury to add sfrxETH on Parallel Ethereum.
Technical implementation:
- Add sfrxETH in the ConfigProvider Contract with all parameters decided by the Mimo governance.
- Set the oracle PriceFeed related to the sfrxETH Contract
(Chainlink + Curve EMA & UniV3 TWAP)
Voting options:
- Add sfrxETH as new collateral on Parallel on Ethereum
- Against adding sfrxETH as new collateral on Parallel on Ethereum
- Abstain
Authors: @starny & @JeanBrasse from Mimo Labs
Community poll:
- Add sfrxETH as new collateral on Parallel on Ethereum
- Against adding sfrxETH as new collateral on Parallel on Ethereum
- Abstain
0 voters