Summary
FXN liquidity mining emissions have kicked off with the genesis of fxUSD. Overall emissions will be guided by veFXN voting, however the team proposes to set a (temporary) fixed 15% carve-out of FXN emissions to the fETH rebalance pool to support it during the fxUSD launch and bootstrapping period.
Background
FXN liquidity mining emissions have kicked off with the genesis of fxUSD, the new USD-pegged stablecoin from f(x).
The first veFXN vote is currently scheduled to take place on March 14, and its results will determine gauge allocations flowing out to gauges beginning on Mar 21. For the period of time between fxUSD genesis and the start of the flow of the first veFXN vote allocations, emissions allocation will be determined by the f(x) team.
The team proposes that the existing fETH Rebalance Pool should receive a fixed proportion of FXN carved out automatically from each epoch’s liquidity mining allocation, starting from the very first epoch and continuing even after veFXN voting kicks in. This would be intended as a temporary measure, though not bound by a specific timeline.
Motivation
There are three key reasons the team proposes this approach.
- Protect fETH stability during the potentially fluid launch of fxUSD
f(x) was initially launched around the fETH asset for good reasons that are described in the whitepaper. fETH is a major component of the f(x) strategy, and with the excitement of the launch of fxUSD and its unique liquidity strategy, the team thinks it’s important to insulate the fETH/xETH pair from inadvertent damage while existing capital allocations stabillize.
- Simplify initial gauge votes
The first gauge votes to allocate FXN emissions will split those tokens between various rebalance pool backing fxUSD. Since stETH forms part or all of the backing for both fETH and fxUSD, there exist two stETH-backed rebalance pools. Allowing users to simplify their voting to one single stETH rebalance pool gauge, and that gauge be equivalent to the frxETH one (i.e. beta=0) will hopefully help make the process of the first gauge votes run more smoothly.
- Reduce the complicating effect of fETH and its alternative stETH rebalance pool from the initial operation of fxUSD’s new gauge emissions-based economic system
fxUSD is launching along with a new economic mechanism that will allow more than one LSD provider to compete to build their own individual liquidity on f(x), and in doing so, increase the available liquidity that their stable-leverage pair can provide to fxUSD. This entirely unique mechanism has the potential to power fxUSD to incredible heights, but as it is such a new concept the team needs to monitor it closely and gather as much data as possible to optimize it, adapt to changes, and help it grow. Removing the complication of the platform needing votes on gauges related to non fxUSD assets in the beginning will help make this easier.
Implementation
If approved by governance, a fixed 15% of the liquidity mining FXN emissions for each epoch starting with the first would be automatically diverted to the fETH rebalance pool, supporting and stabilizing its yields. All remaining FXN emissions would be allocated by the veFXN gauge voting process (once it has kicked off). This fixed carve-out would continue until a governance decision to change it is passed. It is expected that the fETH rebalance pool FXN emissions will eventually be determined exclusively by veFXN gauge votes, equivalently to all other pools.
Poll:
- For: I suppose a temporary ongoing automatic 15% carve-out of FXN LM emissions for the fETH Rebalance Pool
- Against: fETH Rebalance Pool should only earn FXN emissions from veFXN voting, or I propose a different carve-out (see my post)
Posted on behalf of the f(x) team.