[Draft Proposal] Add FRAX as a fee

Adding FRAX as a fee benefits the entire EPNS ecosystem; new marketing opportunities, building community, attracting new potential investors.

As of now, EPNS accepts only DAI as a staking fee when it comes to creating the channels. Currently, one of the strongest narratives in Crypto is stablecoin issuance. More and more protocols decide to create their token pegged to the US dollar. In accordance with the general crypto spirit of decentralization, I believe that we, as EPNS DAO, should make sure we keep one of the most important aspects of the protocol’s functionality (which are fees) diversified.

Proposal description
I propose to add FRAX as the second staking fee asset.

The fundamental characteristics of FRAX:

  • It’s a fractional-algorithmic stablecoin pegged to the USD.
  • It’s the 5th biggest stablecoin by market capitalization.
  • As a partially algorithmic stablecoin, it managed to keep its peg during the LUNA/UST fiasco.
  • Similarly to DAI, it aims to become a solely decentralized stablecoin.

Reasons why I think it is worth having more than one stablecoin as a fee:

  1. Services that could be interested in EPNS’s service might operate in one particular stablecoin (for example in FRAX, in this case). In order to create the channel for its users, the services have to exchange one stablecoin for another— it’s an unnecessary hassle we could remove. It’s a hassle especially when it’s a DAO that wants to use Ethereum Push Notification Service solutions and its Treasury management is based on multi-sig.
  2. Accepting a new stablecoin creates new marketing & development opportunities such as;
    The inflow of new users/ subscribes/ token holders/ contributors.
  3. Raising awareness of Ethereum Push Notification Service among other communities.
  4. More channels that we, users, might be interested in.
  5. Promoting decentralization as a pillar of cryptography-technology-based projects.

If the feedback from the community is positive, this proposal would be promoted to Discussions Phase and then to formal voting on Snapshot.
Also, if the Marketing Team would be keen to, I’m willing to help in formulating some strategies for raising awareness of EPNS among the FRAX community.

very Interesting @ELI5ofTLDR !
I have to ask about the other side of this proposal

Fee split will come in the future and will allow token holders to participate for “fee split”.
If there are multiple pools, what could be the possible repercussions to make fee split calculations

Also, is FRAX available in all chains we are going to be deployed on?

I believe this proposal is great in essence as I agree opening the floor for more funding opportunities is necessary , but we have to ensure now is the right time to pass such proposal and really be sure if we are in position to support all the implications it brings.

Hi @Jaf.

I’m not sure what exactly you mean by “repercussions to make fee split calculations”— could you please elaborate on that concern?

FRAX is a multi-chain stablecoin; it’s on 14 chains (L1s and L2s: Arbitrum, Aurora, Avalanche, Boba, BSC, Ethereum, Evmos, Harmony, Fantom, Moonbeam, Moonriver, Optimism, Polygon, Solana) with sufficient liquidity (thanks to a close relationship with Curve Finance and its ecosystem). More details about available chains along with the contract addresses are here: Frax (FRAX) - Frax Finance ¤.

Given current circumstances surrounding crypto, and especially concerns regarding the most trusted stablecoin (USDC) which is a collateral base for most stablecoins, that went public just after posting that proposal, I believe there should be a broader conversation about EPNS and its accepted assets as a fee.

The risk that comes with operating in USDC is enormously big. DAI is ~60% backed by centralized assets, FRAX is 80%. At this point, this 20% difference doesn’t really matter— being blacklisted can freeze the entire Treasury anyway. We already witnessed some people sending TC ETH to doxxed/pseudo-doxxed wallets that are already OFAC’d— these people will struggle to interact with the front end of major protocols that compile with the sanctions.

As precautionary steps, the Co-founder of Maker proposed exchanging some part of USDC collateral for ETH.
But such action could put the DAI peg at risk. Maker is the oldest (and the most important) DAO when it comes to trying to issue a fully decentralized stablecoin but at the same time trying to interact with TradFi (recently Maker accepted real-world assets as collateral from Huntington Valley Bank). Also, things move pretty fast in crypto so time for calculations, estimating risks, for forecasting macro aspects is extraordinarily limited.

The idea of exchanging collateral for ETH, at first sight, might appear right, but there might be consequences of such action; ETH is a volatile asset; if the macro circumstances will get worse (the sanctions going beyond Tornado Cash) and start to impact the entire crypto sector, we might experience high volatility regarding not-pegged assets. It might be hard to maintain a peg to the US dollar when collateral suddenly drops significantly.

So the question right now is; do we, as EPNS DAO, accept the risks that come with operating in one stablecoin that can face not known good consequences?