ā­• [RFC] Acquire FXS, CVX, and CRV for Long Term Health of mUSD

The frax/mUSD feederpool is the largest revenue generator for mStable on Polygon. The Frax team has bought MTA in the past to vote for the frax/mUSD feederpool. The mStable treasury should take appropriate actions to ensure the longevity of this pool. By staking cvxFXS/FXS, the mStable treasury can acquire FXS, CVX, and CRV with an approximate APR of 45%.


This strategy will enable the mStable protocol to accumulate FXS and CVX during the bear market. FXS enables voting for the FXS rewards to the mUSD/Frax Feederpool and CVX and CRV enable voting for the mUSD/3Curv pool. Although the vault metavault design is the main focus of the team., keeping and increasing the adoption of mUSD on both Polygon and Mainnet would be long term beneficial for the protocol.

The topic is not for aping into a large FXS purchase, but to keep this in mind going forward to DCA into FXS and allocate FXS here (especially when cvxFXS:FXS becomes imbalanced).

Risk assetment of FXS can be thought by 1.4 Billion FRAX (is currently 90% backed by USDC collateral: https://old.app.frax.finance/) leaving 140m unbacked which the 360m (FXS at $6) worth of FXS is meant to backstop. If all the FRAX were redeemed for USDC+FXS it would introduce 140m more worth of FXS. Unlike systems like Terra the Frax Team has ensured both protocol owned and locked investor FXS/FRAX LPs ensuring that it would not go to zero. Also Frax cannot be burned for FXS unless it is off peg by more than 0.3%. And, the vast majority of the Frax supply is locked in Frax/LPs. So there is no external source of Frax that could suddenly depeg the system.

1 Like

I mean, Iā€™m all for acquiring these tokens in general, much less for the specific purpose of voting for our pool. Seems like a strong infrastructure purchase and a bet on an ethereum defi primitive.

1 Like

Seems like a risky bet on something that might not have the same value for us with V2 as we had with V1.

1 Like