Unite FEI and FRAX adoption efforts via a FEI-FRAX-DAI pool on Balancer and FEI replacing UST in the Curve 4pool. Incentive align with a TRIBE-FXS treasury swap
Proposal
FEI and FRAX are the two leading reserve backed decentralized stables. By aligning growth efforts, this can position both teams to attain higher levels of adoption similar to DAI and USDC.
In particular, making a base pair with DAI (on Balancer) and USDC/USDT (on Curve), FEI and FRAX can amplify their presence and liquidity against the other major stablecoins. The Tribe DAO would focus BAL incentives onto the Balancer 3pool, and the Frax DAO would focus Curve/Convex incentives on this 4pool to further adoption in roughly equal value.
In addition, thanks to the 30m FEI-FRAX swap from FIP-104, FEI and FRAX will begin partially backing each other, further decentralizing and strengthening each other’s reserves.
Lastly, to align incentives, the proposal includes a 5M TRIBE for FXS. We also propose to whitelist Tribe DAO as a veFXS staker, and direct emissions towards the above Balancer and Curve pools.
Balancer Pool: FEI-FRAX-DAI
The top two pools on Balancer ( I believe ) are stable pools. The addition of Fei-frax-dai pool opens up arbitrage opportunities. Many degens arb with Frax so pairing with Fei will increase overall usage and volume for fei trading as well. How much Fei are we looking to pool for the 3pool?
Curve/Convex
This is an obvious yes. 4pool will increase adoption, fees, and revenue for Tribe Dao. Replacing Fei with UST will increase the popularity of FEI as well and help drive attention well to the Fuse product once security measures are in place. How much FEI are we looking to deposit in this pool? The same amount UST was looking to deploy beforehand? I am assuming not.
We should think about directing TRIBE rewards to the CURVE pool as well if we can to increase fei trading.
The d3 pool will remain active on Curve. The proposed pools in this proposal will probably get more volume and increase FEI and FRAX utility by pairing with widely used stables
Curtis and Alan here from the Balancer Partnerships Team. We are excited to have a new pool from the Tribe and Frax familia. We want to share our thoughts regarding a stable pool vs. a boosted pool deployment.
Background and motivation
Balancer launched [AAVE boosted pools] to increase capital efficiency in DeFI. Liquidity providers benefit from an additional source of yield while traders get access to deep stablecoin liquidity. Nesting pool tokens create a powerful avenue to make swaps between stablecoin and aTokens in the Boosted Pool. On top of that, any token in a pool with a Boosted Pool Token can tap directly into the underlying tokens.
Proposal summary
Launching an AAVE Boosted Pool for FRAX-FEI over a Stable Pool.
Proposal Description
Currently, the only available Boosted Pool on Mainnet is the BB-A-USD pool with the composition of aUSDC/USDC + aUSDT/USDT + aDAI/DAI by having a TVL of ~180M. We want to propose a pool composition as follows bb-a-FEI / bb-a-FRAX / bb-a-DAI.
By supplying FEI and FRAX on AAVE, LPs gets 2.39% and 1.54% APY, respectively. Deploying an AAVE boosted pool, these extra yields will go directly to Balancer’s liquidity providers.
TribeDAO is one of the biggest veBAL holders (~112,041 veBAL tokens). It is currently using its voting power for the FEI/wETH pool (70m TVL) and getting 14%-32% APR for the liquidity providers. The following table shows two different scenarios where one will show what could happen with a new purchase of veBAL (from TribeDAO or FRAX DAO) vs. doing a bribing technique.
Recently, a big veBAL holder voted for the Badger pool (Balancer), allowing LPs to get an APR within a range of 100% to 250%. This pool is currently receiving an outsized portion of the weekly emissions (~40%). By Tribe (and potentially FRAX) deciding to move in early on a FEI/FRAX/DAI pool, outsized rewards and market inefficiencies can also be taken advantage of by knowledgeable players allowing for an early and profitable entry into the veBAL game.
Boosted pools are now integrated by DEX aggregators like 1inch and 0x, increasing the trading volume on those pools significantly, opening the doors to new boosted pools like 3pool (FEI/FRAX/DAI).
