Summary:
This proposal aims to add sfrxETH as new collateral for paUSD 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 frxETH, 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 : 0xac3e018457b222d93114458476f3e3416abbe38f
Audit(s) links : Audits | English 🇰🇾 | Frax ¤ Finance
Bug bounty : Miscellaneous & Bug Bounty | English 🇰🇾 | Frax ¤ Finance
Chain requested : Ethereum
Relation with the project : None.
Website: Frax Finance
Github: Frax Facts
Twitter : x.com
Discord : Discord
Telegram: Telegram: Contact @fraxfinance
Token metrics & Risk assessment:
- Smart Contract risk: B-
sfrxETH is the staked version of frxETH, a synthetic token that represents exposure to Ethereum Staking.
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 159k transactions
- Counterparty risk: B-
With Frax Ether v2, sfrxETH and frxETH are fully non-custodial with no blacklist or any mechanism that allows anyone to take away assets. The protocol does not grant administrators mint/burn capabilities or control of withdrawal keys. The monetary policy, including the management of Curve LPs/AMOs, is handled by the Frax Core Devs based on governance vote parameters.
Frax Ether validators were managed solely by the Frax Core Devs, similar to Lido, but with fewer entities (Lido has about 30), but with Frax Ether V2, the protocol completely permissionless in terms of node operations.
Each validator’s public address and real time stats can be monitored here and Third party & community tracking of all of frxETH’s validators can be found here. For real time information and monitoring of validators, see Frax Facts.
Cumulatively, frxETH and sfrxETH have nearly 5k holders.
- Market Risk: C-
sfrxETH is an ERC-4626 vault (staked version of frxETH) designed to accrue the staking yield of the Frax ETH validators. At any time, frxETH can be exchanged for sfrxETH, given that sfrxETH may be unstaked into frxETH via smart contract, users looking to liquidate an sfrxETH backed loan can make use of frxETH liquidity. Frax Ether has the best-performing validator set among major LSDs according to Rated.Network.
Cumulative frxETH and sfrxETH liquidity available is nearly $45M with approximately $2M of volume per day on Ethereum.
- Chain Risk : A
Ethereum had 0 outages over the last 6 months. (Ethereum Block Count and Rewards Chart | Etherscan)
- Liquidity Risk of paUSD on Ethereum: C
This provides the following price impact on the following trade sizes:
1000 USDC → paUSD: 0.353%
10000 USDC → paUSD: 0.739%
25000 USDC → paUSD: 1.377%
50000 USDC → paUSD: 100%
- Overall Risk : B
The Overall Risk is the average of the points mentioned above.
- Oracle:
To get the price of sfrxETH (or sfrxETH/USD price feed) we propose to use the one created by the Gravita Protocol, which is compatible with the Parallel Protocol: 0x807502C8EAdAc82C3227249f8aCf54d9d98F76d1
Means:
- Human resources:
- Treasury resources:
Technical implementation:
Set the sfrxETH/USD oracle into the paUSD PriceFeed contract by calling ‘SetAssetOracle’ function with these parameters:
- ‘_asset’ : 0xac3e018457b222d93114458476f3e3416abbe38f (sfrxETH)
- ‘_oracle’ : 0x807502C8EAdAc82C3227249f8aCf54d9d98F76d1 (sfrxETH/USD)
Voting options:
- Add sfrxETH as paUSD collateral on Ethereum
- Against / Rework the Proposal
- Abstain
Authors: @starny & @JeanBrasse from Mimo Labs
Community poll:
- Add sfrxETH as paUSD collateral on Ethereum
- Against / Rework the Proposal
- Abstain