veFXS

Background
veFXS is a vesting and yield system based off of Curve’s veCRV mechanism. Users may lock up their FXS for up to 4 years for four times the amount of veFXS (e.g. 100 FXS locked for 4 years returns 400 veFXS). veFXS is not a transferable token nor does it trade on liquid markets. It is more akin to an account based point system that signifies the vesting duration of the wallet's locked FXS tokens within the protocol. 
The veFXS balance linearly decreases as tokens approach their lock expiry, approaching 1 veFXS per 1 FXS at zero lock time remaining. This encourages long-term staking and an active community. 
veFXS Governance Whitelisting
Smart contracts & DAOs require whitelisting by governance to stake for veFXS. Only externally owned accounts and normal user wallets can directly call the veFXS stake locking function. In order to build veFXS functionality into your protocol, begin the governance process with the FRAX community at gov.frax.finance by submitting a whitelisting proposal.
Voting Power
Each veFXS has 1 vote in governance proposals. Staking 1 FXS for the maximum time, 4 years, would generate 4 veFXS. This veFXS balance itself will slowly decay down to 1 veFXS after 4 years, at which time the user can redeem the veFXS back for FXS. In the meantime, the user can also increase their veFXS balance by locking up FXS, extending the lock end date, or both. It should be noted that veFXS is non-transferable and each account can only have a single lock duration meaning that a single address cannot lock certain FXS tokens for 2 years then another set of FXS tokens for 3 years etc. All FXS per account must have a uniform lock time.
Gauge Farming Boosts
Holding veFXS will give the user more weight when collecting certain farming rewards. All farming rewards that are distributed directly through the protocol are eligible for veFXS boosts. External farming that are promoted by other protocols (such as Sushi Onsen) are typically not available for veFXS boosts since they are independent of the Frax protocol itself. Other protocols can choose to distribute their rewards through Frax's gauge farming contracts to acquire the veFXS boost functionality. FXS gauge farming contracts support up to 4 different token rewards per gauge.

A user's veFXS boost does not increase the overall emission of rewards. The boost is an additive boost that will be added to each farmer's yield proportional to their veFXS balance. The veFXS boost can be different for each LP pair by the discretion of the community based on partnership agreements and governance votes. Each gauge will display the exact terms of the boosts available.

Farming boosts are given in ratios of veFXS per 1 FRAX in the LP deposit token. For example, a FRAX-IQ gauge with a 2x boost ratio of 10 veFXS per 1 FRAX means that a user that has 50,000 veFXS gets a 2x boost for an LP position that contains 5,000 FRAX (total value of $10,000).
Most gauges currently offer a 2x boost in yield with a requirements of 4 veFXS to 1 FRAX.
veFXS Yield
The primary cash flow distribution mechanism of the Frax Protocol is to veFXS holders. Cash flow earned from AMOs, Fraxlend loans, and Fraxswap fees are typically used to buy back FXS from the market then distributed to veFXS stakers as yield. The emission rate varies depending on protocol profitability, sources of cash flow, market price of FXS, and governance actions.

Historical view of veFXS yield can be viewed here: https://app.frax.finance/vefxs​
Future Functionality
The veFXS system is modular and all-purpose. In the future, it can be expanded to vote on AMO weights, earn additional yield in new places/features, and help create long term alignment for the Frax Finance economy.
This benefits Frax as a whole by:
Allocate voting power to long-term holders of FXS through veFXS
Incentivizing gauge farmers to stake FXS
Allowing DAOs and other projects to build a large and long term veFXS position and participate in Frax governance.
Creating a bond-like utility for FXS and create a benchmark APR rate for staked FXS
Staking guide
Guide: How to stake your FXS and earn veFXS yield.
Medium
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Background

veFXS Governance Whitelisting