TL;DR
This proposal introduces fxMINT V2, an opt-in upgrade that allows wstETH collateral to be actively deployed into proven yield strategies for increased returns. This is expected to increase protocol revenue from ~$416K to ~1.1M annually, while allowing users to opt into receiving a return from their ETH collateral deposits, or remain in the existing V1 fxMINT system.
Summary
This proposal introduces fxMINT V2, an opt-in upgrade to the f(x) Protocol that enables active yield deployment of wstETH collateral.
Under the current system (fxMINT V1), collateral remains passively exposed to base staking yield. fxMINT V2 introduces a controlled strategy layer that deploys collateral into low-risk, yield-optimized strategies, increasing capital efficiency and protocol revenue.
Users may choose between:
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fxMINT V1 — passive exposure (current system)
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fxMINT V2 — active yield strategies with shared yield accrual (suggested 30% to users / 70% to FX Treasury, subject to DAO governance)
This structure preserves backward compatibility while enabling users to opt into enhanced yield in exchange for controlled additional risk.
Background
The f(x) Protocol is structurally designed around stETH-based collateral, where yield generated from staking flows into protocol incentives and treasury growth.
At present:
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wstETH produces approximately 2.4% Base APR
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Historical peaks remain near ~3%, with limited upside
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Yield generation is entirely passive
Meanwhile, DeFi markets now support:
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Layered yield on LST collateral
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Low-cost borrowing environments
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High-yield internal ecosystem opportunities
Motivation
The objective of this proposal is to improve capital efficiency while maintaining user choice and system stability.
Specifically:
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Increase protocol revenue
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Increase the intrinsic value of FXN
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Enhance FXN staking returns
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Accelerate growth of the FX ecosystem
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Deepen FX Ecosystem Liquidity
By introducing fxMINT V2 as an opt-in system, the protocol can:
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Enable yield on collateral deposits for users that want additional revenue
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Preserve the simplicity and safety of fxMINT V1
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Allow market-driven adoption of the upgraded system
Opportunity & Impact
According to DefiLlama, the f(x) Protocol currently generates approximately:
- ~$416,000 annualized protocol revenue
Using existing collateral, the proposed V2 fxMINT strategy is estimated to generate:
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~314 ETH annually
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~$697,000 annually (at ~$2,220 ETH)
Comparative Impact
| Metric | Value |
|---|---|
| Current protocol revenue | ~$416K |
| Proposed additional revenue | ~$697K |
| Total potential revenue | ~$1.11M |
~1.7× increase in protocol revenue using existing collateral only
Proposed Solution
Introduce fxMINT V2, a parallel system that integrates a Yield Deployment Layer for wstETH collateral.
Key Characteristics
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Opt-in architecture
- Users choose between V1 (passive) and V2 (active)
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Yield-sharing model
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Suggested 30% of generated yield distributed to V2 users
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Suggested 70% accrued to protocol treasury
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Final allocation subject to DAO governance and community consensus
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Strategy-based deployment
- Capital allocated across DAO approved yield strategies
Design Constraints
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Maintain collateral accounting integrity
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Preserve liquidity availability
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Use conservative leverage parameters
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Restrict to battle-tested integrations
fxMINT V1 vs V2
| Feature | fxMINT V1 | fxMINT V2 |
|---|---|---|
| Yield Source | Base wstETH APR | Active strategy deployment |
| Annual Yield | ~2.4% | ~5%–7% (estimated) |
| Risk Profile | Minimal | Moderately increased (controlled) |
| User Choice | Default | Opt-in |
| Capital Efficiency | Low | High |
| Yield Distribution | Protocol-level | Suggested: 30% User / 70% Protocol |
fxMINT V2 enables a market-driven upgrade path without disrupting existing users.
Strategy Overview
1. Lido Earn (EarnETH)
https://lido.fi/earn
TVL Reference: https://defillama.com/protocol/lido
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TVL: ~$240M+
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Conservative Estimated Yield based on Historical Performance: ~4% APR
Lido Earn represents the most conservative strategy in the allocation. It aggregates yield across established DeFi integrations while maintaining strong alignment with the stETH ecosystem. As the dominant liquid staking provider, Lido benefits from deep liquidity, broad integrations, and a long operational history.
Importantly, this strategy is implicitly backstopped by the Lido Treasury, providing an additional layer of confidence relative to typical DeFi vaults.
2. IPOR stETH Vault
https://app.ipor.io
TVL Reference: https://defillama.com/protocol/ipor
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TVL: ~$50M+
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Conservative Estimated Yield based on Historical Performance: ~6% APR
IPOR introduces a differentiated yield source through on-chain interest rate markets. Rather than relying solely on staking or liquidity provision, IPOR generates yield via structured exposure to fixed and floating interest rates.
This provides diversification away from staking-based returns and enables more consistent yield generation across varying market conditions.
3. Collateral Deposit & Lending Strategy (FX Ecosystem)
https://compound.finance/markets
TVL Reference: https://defillama.com/protocol/compound
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Underlying Market: Compound ETH (~$300M+ TVL)
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Conservative Estimated Yield based on Historical Performance: ~7.65% APR (IF max boosted via staked FXN)
This strategy introduces a controlled debt position designed to bolster the TVL of the FX ecosystem.
Mechanics:
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wstETH is supplied as collateral on Compound
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USDC is borrowed at ~3% estimated cost
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Position is maintained at 46% LTV, providing a ~40% buffer against liquidation
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Borrowed capital is deployed into delta-neutral liquidity pools within the FX ecosystem
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Debt position is protected by real time Chainlink guardians that respond in real time to balance the LTV ratio of the debt position
This approach captures the spread between borrowing costs and ecosystem yields while reinforcing internal FX liquidity.
Risk Considerations
Smart Contract Risk
All strategies rely on external protocols. While battle-tested, exploits remain a non-zero risk.
Liquidity Risk
Partial deployment of collateral may introduce withdrawal delays under extreme conditions.
Market Risk (Lending Strategy)
The borrowing strategy introduces a debt position that can be liquidated if not managed correctly. While the suggested conservative LTV provides a strong 40% buffer, extreme volatility could still create risk if not actively managed by 24/7/365 real time automation.
Yield Variability
All yields are based on historical performance and will fluctuate over time.
Oracle / Automation Risk
Automation introduces dependency on oracle systems and execution reliability.
Conclusion
This proposal introduces a capital-efficient upgrade to the FX protocol via an opt-in fxMINT V2 system.
Estimated first-year revenue: ~$697,000
This is achieved:
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Without new emissions
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Without new liquidity
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Without impacting existing users
Call to Action
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Request feedback on:
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Strategy selection
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Risk parameters
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Yield-sharing model
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Upon consensus:
- Proceed to governance vote
*This proposal was created by the founders of CurveYield, a DAO community & Protocol dedicated to safely generating increased yields on blue chip token assets.
If you appreciate this proposal and want to see more proposals like it, Tips are very much appreciated. ENS: curveyield.eth (Any FXN sent will be permalocked and compounded).*