Very pleased to share the continued great news from our efforts to expand liquidity for DOLA on new exchanges, starting with our new DOLA-Frax pool on Curve!
First a bit of background on this pool. Frax conceptualized the notion of its own basepool (FBP) on Curve in May 2022 pairing FRAX with USDC. The Frax DAO (“Automated Market Operations” or “AMO”) mints and burns Frax to the pool to keep it balanced and farm CRV and CVX incentives on Convex, recycling the rewards accruing to the DAO back into bribes that continually expands the rewards available to LP’s in the pool. For example, if $1.50 of incentives is distributed for every $1.00 in bribes, and the Frax AMO has around 40% dominance of the pool, then Frax will receive $0.60 from this $1 bribe and then bribe again with it. They will then receive $0.36 from the extra $0.60 bribe. This means that a $1 bribe from Inverse, actually is like doing a $1.96+ bribe that directs $2.94+ in incentives to the DOLA-FraxBP. Pairing DOLA with FraxBP will allow for extremely efficient bribes that results in high APY’s for LP’s and growing demand for the DOLA stablecoin.
Following an initial inquiry from our TWG, Frax invited DOLA and other stablecoins to pair with the FRAX-USDC basepool which, after a period of feedback and revision, resulted in a string of governance proposals. The DOLA-Frax basepool was successfully approved through Convex, Curve (required to get a gauge assigned), and Frax governance all with overwhelming majority.
Following this, Proposal #60 was drafted on Inverse’s GovernorMills on-chain voting system petitioning the DAO to allow the creation of a FraxBP Fed, via governance vote. The Fed contracts, several weeks in the making, have gone through our rigorous review process and have been audited by our new security partners, DefiMoon and the proposal passed with a strong show of hands. Inverse is now able to attach a Fed to the pool, meaning the protocol can mint and burn DOLA directly into the pool to help with peg management. This is very useful for flexing the supply of DOLA for instant peg management, as managing the peg directly via lending Feds can take much longer. This Fed will also be harvesting CRV and CVX rewards from the Convex pool itself, which will be locked by the protocol and used for directing more incentives towards DOLA.
The FraxBP Fed is the first DOLA Fed launched since the Yearn Fed in April. For more on how the Yearn Fed operates, please refer to the blog post titled: “A New Salvo in the Curve Wars”. We are proud of the work done, a collaborative effort between several working groups. More to come so stay tuned!