Protocol Expansion: f(x) Protocol

Convex Finance
2 min readSep 19, 2023


In August, we introduced our latest addition to the Convex veTKN ecosystem, cvxPRISMA. As the crypto market keeps on innovating, we keep carrying the torch at the forefront, adding new boosted staking protocols with veTKNs under our umbrella. In view of this, we are happy to announce Convex is expanding to new horizons and ready to welcome a new and innovative player in DeFi: f(x) Protocol!

What is the f(x) Protocol?

The f(x) Protocol is a solution designed to meet the demand for a stable asset while addressing concerns related to centralization risks and capital efficiency. Conceived by longstanding Curve/Convex friend Aladdin DAO, it emerged in response to the banking crisis in March and the depegging of USDC, which underscored the necessity for a fresh approach to stable assets.

In contrast to conventional stablecoins that maintain a fixed value, typically $1, the f(x) Protocol introduces a novel concept known as a “floating stablecoin,” or fETH. Unlike pegged assets, fETH’s value isn’t fixed; instead, it tracks a portion of the price movements of Ethereum (ETH). This design allows fETH to maintain its value robustly, even in volatile market conditions.

The f(x) Protocol employs a strategy for achieving stability by introducing an accompanying asset known as xETH. This asset functions as a cost-free leveraged long position on ETH, effectively absorbing the brunt of Ethereum’s price volatility. Consequently, this stabilization mechanism ensures that fETH experiences only minor fluctuations in its value, thanks to the protective layer provided by xETH.

The FXN token plays a pivotal role within the F(x) protocol by acting as its governance token. Token holders who choose to lock their tokens may engage in the decision-making processes of the protocol. Additionally, the protocol implements a revenue-sharing mechanism, aligning the interests of its users with those who hold veFXN.

Things to know before participating in cvxFXN rollout:

  • $FXN token distribution will continue as stated in the tokenomics blog post. We will deploy the FXN/cvxFXN pool after their Token Generation Event (TGE).
  • Similar to the CRV and cvxCRV relationship, the deposited veFXN tokens will be automatically transformed into cvxFXN, and the original FXN tokens will be permanently locked.
  • FXN tokens locked within Convex will remain inaccessible for the maximum lock duration in perpetuity.
  • The conversion process will be unidirectional; cvxFXN tokens cannot be reverted back to FXN tokens. Users will always have the option to exchange between the two tokens using liquidity pools on Curve Finance. (Exchange will be facilitated at the Curve Finance conversion rate.)
  • vlCVX users will determine how Convex Finance allocates veFXN vote weighting in FX Protocol’s governance.
  • Users can stake cvxFXN on Convex Finance to earn a share of fees obtained by staking their veFXN tokens.