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. Sushiswap has proposed a similar implementation with their recently announced oSushi token A sample graph (Curve’s veCRV) illustrating the decrease can be found at this address.
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 will have 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. 
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. 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 and team based on partnership agreements and governance votes. 

Farming boosts are given in ratios of veFXS per 1 FRAX in LP. For example, a FRAX-IQ pair 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 of $10,000
The current veFXS per FRAX requirements are 4 veFXS to 1 FRAX
Yield
After the implementation of veFXS, holders may be able to collect rewards periodically. The emission rate would vary, depending on the implementation of how the yield is obtained and market price of FXS.
Currently, the FXS rewards for holding veFXS come from the AMO profits of the protocol that is above the collateral ratio. 50% of the profits are being used to buy back FXS and burn it, and the other 50% is sent to the yield distributor contract for distribution to veFXS holders.
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 be treated as a governance token bond rate of sorts.
This benefits Frax as a whole by:
Allocate voting power to long-term holders of FXS through veFXS
Incentivizing farmers to stake FXS
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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Contents

Background

veFXS Governance Whitelisting