Simple Summary

Deposit $33 million of idle Frax into USDC / Frax (FraxBP) and stake on Convex

Background

Olympus currently has ~$58 million of Frax, of which $25 million is deposited in the FraxBP and staked on Convex. The remainder is sitting idly in the treasury, earning no yield.

Motivation

As of this writing, the pool is projected to yield ~4.4% APR including FXS rewards. The incremental $33 million deposited and staked would earn the protocol an additional ~$1.6 million per year. 

Given the risk profiles of the two assets in the pool – USDC and Frax – the risk of LPing is no greater than holding Frax “naked” (i.e., if Frax were to depeg, the pool would end up all Frax – exactly where we stand today). Of course, there is smart contract risk, but both Curve and Convex have proved to be extremely robust.

Proposal

Deposit the remaining $33 million to the FraxBP and stake on Convex. This proposal would not preclude Olympus from pursuing other opportunities. The FraxBP should be viewed as the "base camp" for Frax holdings, with its yield serving as a hurdle rate for other deployments.

Deposit Idle Frax?

This poll has ended.

    This is it! Praise be to JaLa!

    FraxBP is essentially the DAI Savings Rate of Frax!!

    Put that money to work! All in on this one.

    sounds good to me…on a side note since you mentioned this not precluding other opportunities, how does anyone feel about supply some portion of the FRAX to the gOHM/FRAX pool on Fraxlend to support liquidity there? i suppose the risk profile is a bit different, but it is yielding ~7%.

    Regardless, solid proposal!

      Frax3CRV and FRAX/USDC are very good yield opportunities in general.

      I also agree with the rational of there being close to no difference in holding $FRAX in the treasury versus putting it to work, in the given liquidity pools on curve.

      But I think our general exposure to frax needs to be discussed, since with $58m its almost 25% of our entire treasury.

      And with FRAX only having a market of 1 billion is it much more prone to volatility and potential manipulation.

      And once a commonly known "algo" stable coin, even if its almost fully backed, starts some slight de-pegging it could spiral out of control.

      But I do like frax a lot and I am also farming it myself 🙂

      a month later
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