DeFi Protocols have made use of liquidity programs to jumpstart growth and distribute protocol tokens to community members. To that end, 60% of all FXS tokens are to be distributed through various yield farming and liquidity incentives across a number of years.
60% – Liquidity Programs / Farming / Community – 40 months, up to over half released in the first 12 months
A maximum of
60,000,000 FXS will be distributed to the community for liquidity programs and other DeFi initiatives as they appear in the space as voted by governance. New programs can be added by governance to the remaining allocation, but no more than
60,000,000 FXS can be allocated due to the hard cap of
100,000,000 FXS distributed.
36,000,000 FXS will be distributed in the first year through farming programs. The protocol applies a boost to FXS emission proportional to the collateral ratio. At a
100% collateral ratio, there is no global boost and a base rate of
18,000,000 FXS is emitted. As the collateral ratio decreases and FRAX becomes more algorithmic, the protocol applies a dynamic
2x boost across all LP yields. This means that at a fully algorithmic phase, there is a maximum amount of
36,000,000 FXS emitted in the first year. In practice, the real rate of FXS emitted in the first year will start at
18,000,000 and increase in rate toward
36,000,000 as the collateral ratio approaches
Community governance can decide which pools, programs, and initiatives to support with the emission schedule, but it cannot be increased past the
100,000,000 FXS supply max. This is to put a hard cap on the amount of FXS as well as to put a hard duration on the number of years required to distribute the FXS. This emission rate was chosen to balance the need for a large amount of rewards for early adopters while not distributing all FXS too early which is needed for long term community sustainability. The FXS emission should be thought of and modeled more after Bitcoin mining than anything else. It needs to be multi-year, extended, and sustainable until the protocol reaches ubiquity.
Below are the Uniswap LP staking pools for the first year:
5% – Project Treasury / Grants / Partnerships / Security-Bug-Bounties – via Team and Community discretion The Project Treasury is an entirely community and team governed pool of FXS. It should be used for making grants for development of the Frax technology, open source upkeep of the code, future audits of smart contracts, bug bounties through responsible disclosure, possible cross-chain implementations, creation of new protocol level features and updates, Gitcoin grants for the Ethereum community, Frax Improvement Proposals (FIPs), partnerships with exchanges and DeFi projects, providing liquidity on AMMs at launch. The usage of this fund is dependent on the discretion of the team and community.
20% – Team / Founders / Early Project Members – 12 months, 6 month cliff Team tokens are retained for founders and original early contributors to Frax. The Frax Protocol was conceived in late 2018 and work began in early 2019. The Frax concept has been over 2 years old since conception. Although, the mainnet is just now being launched, the contributions of founders and early members that have been working on Frax was crucial to releasing the protocol. The team will continue to work on Frax for its lifetime along with the greater community.
3% – Strategic Advisors / Outside Early Contributors – 36 months Advisory tokens which are allotted for strategic work done in legal, technical, and business efforts to advance the adoption of the Frax protocol. The tokens are vested evenly over 3 years.
12% – Accredited Private Investors – 2% unlocked at launch, 5% vested over the first 6 months, 5% vested over 1 year with a 6 month cliff The first round in Frax was done in August of 2020 with a small allocation that was sold out in under 2 hours. This allocation will have a small amount of their tokens, ~2% unlocked at launch. The remainder of the round was done individually through private placements.The remaining 10% is vested evenly over 1 year, half of which has a 6 month cliff.