Proposal: Add FXN gauge to frxUSD/fxUSD

f(x) Protocol Improvement Proposals
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FIP-XX: Add FXN gauge to frxUSD/fxUSD

Introduction

Frax is proposing to add a FXN gauge to frxUSD/fxUSD. Frax intends to direct its voting incentives for FXN to this pool, as well as the available yield from frxUSD. This proposal seeks to establish a synergistic relationship between Frax and f(x) protocol, which can lead to other cooperations down the line.

About frxUSD: Description

frxUSD is a fiat-redeemable stablecoin issued by the Frax Protocol, fully backed 1:1 by tokenized U.S. Treasury funds managed by institutional custodians like BlackRock and Superstate. Its bankruptcy-remote structure ensures unparalleled stability, and it is mintable/redeemable directly through licensed partners and soon directly on the frax[.]com interface itself to any user in the world (fiat wires will require KYC/AML). frxUSD is mintable/redeemable 1:1 for USDC, and cash directly from the issuer, Frax Protocol. Additionally, frxUSD offers a unique revenue-sharing mechanism, allowing up to 100% of its underlying T-Bill yield (currently 4.1%) on frxUSD assets in the frxUSD/fxUSD pool to be used for incentives.

Useful Links

Background & Motivation

The fxUSD stablecoin relies on efficient, deep on-chain liquidity to maintain a tight peg to USD. While existing fxUSD pools currently utilize USDC and other stable assets, integrating frxUSD offers unique advantages:

  1. Direct Fiat-Backed Parity: frxUSD is fully backed by short-duration U.S. dollar assets and redeemable 1:1 for USDC or fiat through authorized custodians. Pairing fxUSD with frxUSD provides a redemption path that more closely reflects real-world USD liquidity than volatile stable-to-stable pairs.

  2. Shared Incentives & Governance Alignment: Frax Finance intends to direct FXN voter incentives toward this pool, helping f(x) bootstrap deeper liquidity while Frax benefits from higher frxUSD velocity. Over time, Frax plans to allocate T-bill yield revenue from frxUSD reserves to sustain liquidity rewards, creating a more organic, yield-funded incentive model rather than short-term emissions.

  3. Mutual Ecosystem Growth: The frxUSD/fxUSD pool deepens integration between Frax and f(x), positioning it as a joint liquidity base for future shared stablecoin infrastructure and cross-ecosystem settlements.

Proposal Details

  • Pool: Curve Pool – frxUSD/fxUSD (Ethereum)

  • Action: Add this pool to the f(x) Finance gauge system.

  • Objective: Make the pool one of the official peg-keeping and liquidity venues for fxUSD.

  • Incentives:

    • Frax Finance to incentivize FXN voters to vote for the pool, boosting emissions via F(x) Protocol joint incentives.

    • Frax to allocate frxUSD’s T-bill yield revenue as sustainable, yield-backed LP incentives for this pool.

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IMO this is a great idea. Frax has done a lot of work to build a regulatory compliant stablecoin and an all-in-one crypto banking solution, and partnering with fxn could be mutually beneficial to increase visibility and utilization of both stablecoins.

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