@Samkazemian you mentioned that protocols can decide how fraxbp incentives

are delivered back to them meaning they may not want it to go through votium.. will this not undercut/circumvent veCrv and vlcvx holders? I know that's not frax's intentions but i was wondering what your thoughts were on this?

Once everything is set up soon with Fraxbp, our veCRV permalocker, and Fraxbp factory pools, we can have a governance proposal to exactly structure the incentives. The original idea was to simply distribute the CVX+CRV back to the metapool through Votium. That is option 1. The 2nd option is that FRAX keeps everything permalocked but will vote for those metapools proportionally with its vlCVX+veCRV. Each option has slightly different pros/cons.

Wouldn't a vote generated from the locked crv be considerably less than passing the value through cotium by a fairly large amount? Voting with say 1000.00 of CRV is not the same as passing 1000.00 in bribes back to the pool no?

Indeed. That's why I said there's pros and cons. Keeping the CRV+CVX on our balance sheet would obviously have powerful network effects for FRAX but it would also make the flywheels for the metapools slower to get going. The other method gets the flywheels going faster but contributes to CRV+CVX sell pressure possibly. The community should decide and model out the benefits. I like a lot of @seba_tldr's modeling. He might have an opinion on this.

Here’s a hybrid option/option 3… you could take the CRV+CVX, lock it for Frax, and the distribute the value equivalent in FRAX (maybe a slight premium because you’re taking a desired asset). Frax gets the governance assets it wants, people still get their yield, but you’re shifting expectations for yields to be denominated in FRAX instead of CRV/CVX.

This too is a great idea. It is harder to model properly but could be done. This would be like using FRAX as the dividend currency the same way Curve uses 3CRV to distribute fees.

Another effect (and this might just be an accounting effect, and Frax needs to decide the value of that) is that you’re simulating a transaction on the CRV and CVX. So receive the assets and can book them as cash flows (settled at whatever FRAX amount you pass along). Now you’ve reset the cost basis and have an easier time separating cash flows from your balance sheet.

isn't this equivalent to saying that we value crv/cvx over fxs though?

I had this same question the other day. I think it is essentially a trade of FXS for (CRV, CVX, and FRAX growth)

Definitely saying we value CRV/CVX over FRAX… that might have the implication that you favor them over FXS but I need to think that true.

This is insightful

I hadn't considered your point on the accounting, or paying in FRAX instead of FXS, and I especially like the latter and think it would be well received by others

This is a really good point!! You take in CR-V and CVX as cashflow and you spend frax on bribes as a cost in equal amounts

Option 4 is to sell hyperinflationary farmed tokens that go down everyday - like all the smart money

Here’s is what I think. It does not make much sense to criticize Curve (and Convex(?)) for spending more than it generates, everything is early stage and evolving. When you invest in a startup often the founders have more weight than the idea, and Curve’s founders are clearly geniuses and Curve the product is also incredibly smart, so in that sense I have absolute faith that (if they continue building) it will become profitable and very valuable, same goes for Convex. Frax has clearly been very supportive of Curve through Convex bribes, even though people say that Frax dumps its CRV, the amount of CRV perma-locked in Convex because of Frax’s fund injection probably offsets what Frax has sold. I do not think the $70m in FXS spent on bribes was a terrible mistake, but what I would do now is acknowledge we are in a bear market and should reduce our spending, so I’d cut our current bribes to $250k per round. I’m probably gonna get a lot of criticism for this, but let’s not forget that Frax already ‘invested’ $70m in Curve-Convex and $250k every two weeks its a fucking ton of money, DeFi has completely destroyed our notions of how much is a lot of money and I think it is a completely sane and wise decision to come back to earth for a while. My estimations is that this cut in bribes would reduce the TVL in the Frax pool to 400-500m, and I’d do the following; Frax owns ~66% of the liquidity in the pool, I’d withdraw USDC from it to the 30-40% range (somwhere in the $100m ballpark I think) and deposit that in uncollateralized lending platforms (Maple, TrueFi, Goldfinch, Centrifuge, …) which provide higher yields and farm and accumulate their tokens, as we did with CVX which was a nice play. About how to distribute the bribes+vlCVX voting power, I’d spend 50% on the FraxBP, and would divide the remaining half to match 1+1 what the protocols that use the FraxBP provide in liquidity incentives (through whatever program they use). I’d continue farming and perma-locking all the CVX and CRV Frax farms, although with CRV I would look for a way to mantain low-time frame liquidity and governance power (like sdCRV, but I think something akin with Convex is in the works), ape stronk together. Finally I’d continue taking the bribes from the community pool but use a base FXS price, something like $7-7.5, so we keep emissions bounded.

Very informative analysis and agree on a lot of main points. Not sure if I agree on specific numbers at this time. Have to think about it a lot more, but conceptually I think this is a good way to analyze the situation.

Doing this would likely hammer the price of FXS, and put Frax protocol at more likelhood of a depeg as there would be considerably less of the liqudiity controlled by Frax itself, no?

Where I dont agree with on this is the massive withdrawal of FRAX/3CRV LP into USDC. As per the math in my tweet you can see what would happen thereafter is a deficit of non-protocol-owned FRAX vs liquidity on chain - ie adding to depeg stress. Not saying that there should always be a surplus of on-chain liquidity to non-protocol owned FRAX but a sudden deficit would definitely take confidence away from the system.

Agreed

Yep, said the same. You can’t just remove all of that liquidity and contract or you introduce terminal risk.

agree, frax locking both crv & cvx takes too much risks from crv & cvx, what about some other new protocol defeat crv/cvx? frax dies with crv/cvx?