The decentralized stablecoin project Frax Finance moved forward with reinstating a protocol fee switch in a new proposal.
"We propose that the protocol fee switch be turned back on, with 50% of the yield flowing to veFXS and the other 50% used to buy FXS and other Frax assets to pair in the FXS Liquidity Engine ," Frax Finance wrote in the proposal Thursday. "The FLE will allow Frax to continue building its balance sheet while dramatically increasing liquidity for FXS and paired Frax assets."
The proposal also details how a new tokenomics system will fully collateralize the decentralized stablecoin FRAX, in addition to suggesting augmented yield structures. Regarding its non-liquid staking reward veFXS,"veFXS stakers will get total protocol fees at the passing of this proposal added to the veFXS yield distributor on Ethereum mainnet as well as veFXS yield distributor contract on Fraxtal soon after.
Frax Finance initially suggested plans to turn on the protocol fee switch on Feb. 26, reversing a prior decision to cease the rewards, The Block previously reported. The protocol's founder, Sam Kazemian, said at the time that Frax felt "it is the right time to turn on the huge switch. It will be a ton of revenue."
Frax Finance develops and manages the FRAX USD-pegged decentralized stablecoin, the protocol's native token FXS and the veFXS token that users receive when staking FXS. FXS traded at $7.48 at 5:32 p.m. on March 21 after seeing a 1.13% 24-hour increase, The Block's price page for FXS shows. Disclaimer: The Block is an independent media outlet that delivers news, research, and data. As of November 2023, Foresight Ventures is a majority investor of The Block.