Deposit $2M FRAX into the GOHM/FRAX pair on Fraxlend
Fraxlend is the largest mainnet destination for borrowing against gOHM and is an isolated lending pair market.
The gOHM/FRAX Fraxlend pair currently has:
a current approval of the Frax AMO to deploy $5M FRAX to be borrowed
a current deployment of ~$4.5M FRAX
a utilization of $3.3M
a borrow APR of ~8% over the last 30 days; and
a lend APR of ~6% over the past 30 days
More facts about the pool here.
OHM’s value as a reserve asset is greatly increased when it can be borrowed against - allowing holders to pursue other opportunities in the market while maintaining their exposure to the pristine collateral that is OHM. This will also earn an attractive interest rate on the deployment of the FRAX.
Fraxlend docs are available here.
Fraxlend is an isolated lending pair market built by Frax and audited by Trail of Bits - it has been running in production since September 2022 and has a current TVL of >$160M. The likelihood of an exploit is considered minimal.
If there is an exploit of the Fraxlend protocol it will likely affect the backing of the currently held FRAX in the Treasury & the portion of that FRAX which is proposed to be deployed in this proposal. To the extent we consider the effect of an exploit - the community should also consider that, to at least a degree, that exposure is already inherent to the very act of holding FRAX.
Given Fraxlend allows partial liquidations, the LTV of the pool at 75%, and that OHM is currently trading below backing the likelihood of bad debt is minimal.
The proposal directs the Treasury to deploy the FRAX in two transactions two weeks apart (or other schedule deemed appropriate & communicated to the community) as soon as practicable after the passing of the proposal. The tranching of deployments is done in consideration of exploit risk.
The proposal also includes authority for the Treasury to migrate liquidity to Fraxlend V2 which is currently under audit by Trail of Bits at a rate or schedule deemed appropriate.
For: Direct the DAO to deploy $2M in FRAX to Fraxlend GOHM/FRAX pair as described above
Against: Do nothing