@Samkazemian I would like to ask some questions regarding FRAX

Question

@Samkazemian I would like to ask some questions regarding FRAX

AMO:

1. In FRAX3CRV pool, apart from FRAX & USDC, there are also some USDT and DAI from the AMO. Why is that? For USDC as a main collateral backing FRAX, I understand it. But how are USDT & DAI also from AMO? Can you explain more?

2. Is the amount of FRAX minted by AMO to AMMs counted as circulating supply? If not, how is that counted?

3. I find that AMO represents a huge portion of liquidity in Curve pools involving FRAX (~70%). What’s your comment on this? And do you think one of the targets would be to reduce the portion by expanding the base?

It will be very helpful if you can give a thorough answer to these as I have been confused for quite a while. Thank you so much!! 🙏🏻🙏🏻

#cryptocurrency #english #frax

0

09.06.2023

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AnT Автор вопроса

Sam Kazemian ¤⛓️¤
1.) FRAX does have some exposure to DAI and USDT c...

Thank you @samkazemian !! Would like to follow up a bit: 1. Originally what FRAX can control should be FRAX & USDC. How did 3CRV come into picture (i.e. from AMOs)? The same question is also for other non-USDC PCL from AMO that is paired with FRAX. Is this due to arbitrage profits: LP tokens are withdrawn when FRAX < $0.99, resulting in some other assets in the pool withdrawn in the process? If not, how did those assets come into place? 2. I understand this won’t affect CR. If FRAX minted by AMOs isn’t counted as circulating supply, and only user-owned FRAX is counted. How is that amount counted in practice? As there is no more minting by users, and circulating supply could not be counted by simply taking TVL of FRAX AMM pools (as some are from AMOs). 3. Maybe it is something wrong with the definition: is FRAX minted by the AMO called POL? And is POL equal to PCL (as shown in Dashboard)? Thank you again for your time!

0

09.06.2023

AnT Автор вопроса

AnT
Thank you @samkazemian !! Would like to follow up ...

@samkazemian are you free to answer these? Wanna make sure I don’t understand the stuffs wrongly 🙈

0

10.06.2023

Sam Kazemian ¤⛓️¤ · Accepted Answer

1.) FRAX does have some exposure to DAI and USDT currently because technically the exact collateral that backs part of FRAX is 3CRV LP tokens. That is slowly being phased out for FRAXUSDC LP tokens as you can see. 2.) It's counted as protocol owned supply which doesn't lower or increase the CR. This is a common mistake people make when they think FRAX CR is lower than it actually is. But it's not true. For example, if all FRAX that is in a Curve pool is owned by the AMO, there is no way for that FRAX to lower the CR because for a user to buy that FRAX requires giving 1 USDC/USDT/DAI to the AMO by swapping on Curve. So protocol owned FRAX is not counted as collateral nor is it counted as a liability. Only user owned FRAX is counted as a liability. 3.) Not sure if you're saying there's something wrong with some Curve pools being mostly POL. That is by design and a good thing. That makes the liquidity in those pools reliable and not unpredictable.

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