If the v1 burning still works, why wouldn’t FXS supply

Question

Frax Finance

J L

If the v1 burning still works, why wouldn’t FXS supply

decrease during Dec. to mid Jan.?

#cryptocurrency #english #frax

0

21.02.2022

10 ответов

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Seba TLDR

https://mirror.xyz/0x5152e31dfF3C7C7fa1f7D90cef6C9EafD56bE7E7/aHfH_cSy6wToU7aWKXW07y_sL4-atFQcMNt_6Y1EQdM

0

21.02.2022

J L Автор вопроса

Sam Kazemian ¤⛓️¤
I'm not sure, I think the gas price for the swap w...

So that means arbers need to execute the mint function from the site which then triggers the burn, but it didn’t happen because the arbs were not executed due to the gas cost. This raises the first question: How does the protocol maintain peg if arbers can be easily discouraged by the gas cost? I thought arbers were critical for the peg stability. The second question: After reading the documentation, I have had an impression that FRAX expands only when demand is high thus a lowered CR and buybacks. How does FRAX supply increase with the increasing CR? I must have missed other variables in the system.

0

21.02.2022

Sam Kazemian ¤⛓️¤

J L
So that means arbers need to execute the mint func...

FRAX's main stability is now predominantly through protocol controlled liquidity (Curve+Uniswap v3), lending, and other AMOs that maintain large reserves of assets+LP tokens as collateral. The arbing mechanism is still always there as the backstop like always, but it is far from necessary to maintain peg these days due to how mature of a stablecoin FRAX is right now.

0

21.02.2022

J L Автор вопроса

Sam Kazemian ¤⛓️¤
FRAX's main stability is now predominantly through...

Thanks! @Oxseba article should be posted as a part of the offical doc. There’s been lots of changes since AMO I guess, and the real-time charts don’t seem to match well with the existing doc. So it basically means over the past like three months, the protocol has been using the curve pool AMO to mint/redeem FRAX to control the supply, so there was little to no FXS burn which has to be triggered by arbitragers minting which didn’t happen due to the gas cost (which will be addressed by FraxSwap). And according to @Oxseba the best explanation for the increasing CR could be the inaccurate pricing of FRAX/ETH which determines the CR. Does it mean CR should be decreasing instead (because FRAX was in expansion)? Also, I read from the doc that it is the FXS price affecting the growth rate which determines the CR (FRAX supply instead of price is the denominator), could that be a typo @Oxseba?

0

21.02.2022

Seba TLDR

J L
Thanks! @Oxseba article should be posted as a part...

not sure about that, best we can do is read how the contract works https://etherscan.io/address/0x853d955acef822db058eb8505911ed77f175b99e#code#F17#L178

0

21.02.2022

J L Автор вопроса

Seba TLDR
not sure about that, best we can do is read how th...

indeed. Code is the true doc. Respect!

0

21.02.2022

tan Any1 DM as admin will be reported to tg as scammer

J L
Thanks! @Oxseba article should be posted as a part...

Could you explain how AMO to redeem FRAX? I think I understand how AMO mint FRAX.

0

21.02.2022

J L Автор вопроса

tan Any1 DM as admin will be reported to tg as scammer

Could you explain how AMO to redeem FRAX? I think ...

ah my understanding is simply the protocol mint Frax into the LP when Frax > $1, and withdraw (or redeem) Frax from the LP when Frax < $1

0

21.02.2022

J L Автор вопроса

J L
Thanks! @Oxseba article should be posted as a part...

I am still very much confused by how the CR keeps increasing over the four months while Frax supply keeps increasing as well. I thought the expansion (esp. for an aggressive one like what happend over the past few months) only happens when CR decreases.

0

22.02.2022

Sam Kazemian ¤⛓️¤ · Accepted Answer

I'm not sure, I think the gas price for the swap was very high so there was not really enough arbs as much happening and also there were mostly recollateralizations rather than buybacks. Now that gas is overall lower than being 200-300 gwei there seems to be a lot more usage of the arb functions. These functions will be migrated to Fraxswap when it is launched so it should be extremely easy to use and arb (like a normal Uniswap swap) so we'll see it burning more most likely.

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