Context
The Frax Protocol has been a steadfast Curve+Convex ally for well over a year. FRAX’s Curve AMO has proven to be a very important innovation in DeFi & stablecoins. Curve is famous for autonomously market-making like-valued tokens, and its core technology, the 3 pool, is built around a pool of 3 stablecoins: USDT, USDC, and DAI. This 3pool forms the “base” of every other stable-asset on the exchange.
Frax recently launched (6 months ago) the novel Frax base-pool, which is composed simply of FRAX-USDC. Within 6 months, TVL on Curve of the FRAXUSDC LP pool is ~$450m (4th highest pool on Curve) and TVL in the two (2) Convex pools is ~$390m and ~$185m. The Frax-boosted Convex pool has the lowest TVL as users have been slow to migrate from their original Convex positions.
Motivation
Abracadabra is a fast-growing multichain protocol that would benefit from an additional stablecoin vault, in addition to the current vaults: LUSD, Stargate USDT, Stargate USDC, yvDAI, and cvx3pool. stkcvxcrvFRAX-frax is important to hedge against the risks of other stablecoin vaults (i.e. Tether, Dai) and has been one of the more important additions to the DeFi space in general over recent months. Currently, the stkcvxcrvFRAX-frax pool (Convex & Frax boosted) has ~$185m of TVL, which would be a nice addition to increase the supply of MIM and produce more value for SPELL holders.
Adding stkcvxcrvFRAX-frax would add another really strong collateral position to back MIM, which should be of utmost importance after the UST and FTT debacles.
Proposal
Allow stkcvxcrvFRAX-frax as collateral with similar pool specifications to other stablecoin cauldrons (Maximum collateral ratio 95%, liquidation fee 1.0%, borrow fee 0.5%, interest 1.0%)
Benefits
Diversified risks and adds an additional option for stablecoin LP providers who would like to access liquidity using Abracadabra, which in turn increases the supply of MIM.
Considerations/Risks
stkcvxcrvFRAX-frax LP position holders are exposed to smart contract risks on Curve and Convex, primarily. In addition, there could be potential risk (albeit very small) for a depeg of FRAX or USDC.
Links and resources
stkcvxcrvFRAX-frax contract addresses
LP token address: 0x8a53ee42FB458D4897e15cc7dEa3F75D0F1c3475
Curve LP token address: 0x3175Df0976dFA876431C2E9eE6Bc45b65d3473CC
Staking address: 0x963f487796d54d2f27bA6F3Fbe91154cA103b199
