Frax Finance and cvxFXS
Convex Finance originally started out with the goal of optimizing and expanding opportunities for users of Curve.fi. Curve’s CRV token model stood out amongst the crowded DeFi space, and the success of that model combined with Convex is clear. Other protocols have begun following suit, whether that’s launching new protocols with similar token-locking models, or revamping existing tokens to include similar characteristics.
Speculation over potential collaboration with Frax Finance over the past weeks can stop now: Convex Finance is expanding to include Frax Finance’s Frax Shares, FXS. Frax has adopted a similar token-locking model that is a natural fit for the Convex ecosystem. FXS can be locked as veFXS for fee sharing, governance rights, and gauge votes on Frax’s platform. We encourage users to familiarize themselves with Frax’s documentation.
Not long after our launch, Frax Finance has been invested in the success of Convex, and has shown considerable interest in being a good actor for the ecosystem. It is our belief that the team at Frax Finance will make for great partners in the first expansion into new protocols.
This week, we will begin a soft-launch of the new Frax portion of the Convex platform, starting with opening up deposits for FXS.
Phase 1 (this week):
- FXS deposit and convert to cvxFXS is now available at https://frax.convexfinance.com/.
- Since Convex will lock any deposited FXS for 4 years, cvxFXS holders will be eligible for Frax Finance’s upcoming FPI airdrop at the maximum possible multiplier.
- Staking cvxFXS will not be available immediately, nor will staking LP tokens from Frax Finance.
Phase 2 (post FPI airdrop):
- cvxFXS/FXS pool and incentives.
- Distribution of veFXS rewards
Phase 3 (still under development):
- Fully functional staking platform for Frax Finance LPs
- Platform fee distribution to cvxFXS and vlCVX
Things you should know before depositing/staking FXS on Convex Finance:
- Similar to the relationship between the CRV token and cvxCRV, FXS tokens converted to cvxFXS on Convex will be locked forever.
- FXS locked on Convex is locked in perpetuity for the maximum allowable time of 4 years.
- Conversion is one-way: cvxFXS tokens will not be convertible back to FXS on Convex Finance. There will be a liquidity pools available on Curve to swap between cvxFXS and FXS. Conversion rates can/will fluctuate based on demands for either token.
- Unlike veFXS, cvxFXS is transferrable.
- vlCVX holders, via Snapshot voting, will eventually dictate how Convex Finance allocates it’s veFXS during Frax governance votes and gauge votes. In the interim, Convex multi-sig will vote on any proposals in FRAX governance and gauge weights. Current and future functionality of veFXS are discussed in Frax Finance’s documentation here.
- Full functionality of cvxFXS staking, including platform fee distribution mechanisms, have yet to be finalized.
CVX / ETH Liquidity Provider Incentives
Since launch, Convex has provided CVX incentives to liquidity providers on the CVX/ETH Sushiswap pool. Now that Curve.fi v2 pools are active, it’s time to migrate those incentives to the new CVX/ETH Curve pool.
The migration of CVX incentives will begin over the next few days; we will announce once the process has begun. Remaining incentives will still be paid out to Sushiswap LP’s over the next ~2 weeks, reducing over time until eventually stopping altogether. Users are encouraged to move to the new Curve pool at their convenience.
Similar to the cvxCRV/CRV pool, CVX/ETH pool LP’s will be able to stake on Convex for additional rewards. This pool is available now, and like all Curve pools with a gauge, is eligible for CRV earnings + CVX rewards.
Update: Sushiswap pool incentives have concluded as of December 26; users are encouraged to move to the new Curve.fi pool http://curve.fi/cvxeth
Bug Bounties and Disclosure
Like many DeFi platforms, Convex Finance operates on the ethos of decentralization and trustlessness. In that vein, great strides have been made in order to limit the control of the team such that it should never have access to user funds. It is the opinion of the team that the best way for users to interact with DeFi is to allow self-custody wherever possible.
Recently, the team was made aware of a complicated series of actions that could, in theory, result in the Convex Finance multi-sig holders gaining access and control of staked Curve LP tokens on Convex. This series of events did not transpire, and user funds were not at risk at anytime from any outside actors. The team has already deployed an immutable fix which adds extra checks, removing the opportunity for the multi-sig to gain access to any LP tokens.
Convex Finance appreciates the team at OpenZeppelin for their disclosure. Our team has opted to provide a bug bounty as a reward, paid from the treasury.
Going forward, Convex will offer similar bug bounties for anyone who identifies potential risks/vulnerabilities in the platform’s smart contracts. Refer to the updated documentation page here for more information.
As always, please feel free to join the Discord, Telegram, and follow Convex Finance on Twitter!