Bienvenidos mis ositos, tu siempre eres mis queridos! (Welcome back little bears you are always my dears!)
As the bear market unfolds and makes its nasty presence felt in our portfolios, it’s not a bad idea to look for ways to stack some BTC, ETH or stablecoins. When people think of stablecoins they probably think of DAI, USDC, or (ugh) USDT.
Newer stablecoins like MIM and UST have started to share the spotlight. However one project that keeps getting overlooked is FRAX finance.
Despite being a hardworking multichain protocol with a dynamic founder (Sam Kazemian), FRAX hasn’t gotten the love from the DeFi community.
Perhaps they need a ticker rebrand like FUSD (snicker, snicker). Seriously though I’m not sure what more they can do to get more respect.
They have done a great job at maintaining the FRAX peg to the US dollar.
Frax finance also remains a significant owner of Convex and Liquid Driver tokens.
I wrote about Convex Finance here:
https://www.publish0x.com/how-to-transition-from-tradfi-to-defi/why-convex-finance-is-the-defi-kingpin-xvyqgwq
You can track the ownership of Convex tokens here:
https://daocvx.com/leaderboard/
Liquid driver looks to be the Convex Finance of the Fantom ecosystem. You can read more about Liquid Driver and Spiritswap on Fantom in this great tweet thread:
https://twitter.com/crypto_klay/status/1480673467301195776
The whole thread by @CryptoKlay is worth going over in general.
Now you maybe asking yourself “That’s nice panda but how does this help us make more of those sweet sweet GAINZ!?!”
Well, you have to keep in mind NOTHING is guaranteed in DeFi. The best you can do is look at a project’s track record.
So FXS is the governance token and FRAX is the stablecoin. FRAX is currently a partially collateralized (with USDC) ALGORITHMIC stablecoin. As mentioned earlier they have done a pretty good job with maintaining FRAX to the US dollar.
Here are some additional reading material regarding FRAX finance:
https://cryptorisks.substack.com/p/asset-risk-assessment-frax-finance?s=r
https://decentralparkcapital.substack.com/p/on-frax-finance?s=r
https://unsworth.substack.com/p/frax-finance-an-algo-stable-above?s=r
What intrigues me about the FRAX team is the upcoming FPI token.
The FPI token is supposedly coming “soon”
Inflation is on everyone’s mind and we’ve been feeling the pain in our wallet. Every time I look at my supermarket receipts my eyes bulge out and wince.
You could use Bitcoin as an inflation hedge but I would be reluctant to spend my Bitcoin for small transactions.
FPI could be one solution.
FPI aims to be an inflation adjusted stablecoin. No one knows how well this will play out but FPI will be linked to the consumer price index (CPI).
Convex Finance has started to lock up FXS tokens similar to what they are doing with Curve and their CRV tokens.
Could history repeat itself with Convex and Frax?
Supposedly there will be an initial airdrop for folks that lock up their FXS tokens with Convex (they will be converted to cvxFXS tokens). Now what happens after that is unknown. Will people that lock cvxFXS tokens get FRAX or FPI rewards or a mix going forward?
No one knows for certain. I’m willing to give Convex and FRAX the benefit of the doubt and start with a small position.
Similar to Curve Finance, Convex is proactive with the security of user funds. There was a potential exploit that Convex discovered and mitigated before a financial disaster could happen. You can read more about that here.
https://convexfinance.medium.com/vote-locked-cvx-contract-migration-8546b3d9a38c
Although Convex remains anonymous, their actions to date have been trustworthy.
So far this is only the second protocol that Convex Finance has chosen to work with closely. Going forward Convex Finance and FRAX Finance should lead to a mutually beneficial symbiotic relationship.
Obviously none of this is formal financial or tax advice. You need to find qualified professionals in your jurisdiction.
Be sharp, stay hungry let’s get that money!
