coindesk.com
Frax Finance's core team is considering a proposal to share protocol revenue with stakers of its veFXS token. It will be up to the community to approve the proposal, Frax's CEO said.
If submitted, the proposal would follow a similar one last week by the leading decentralized exchange, Uniswap.
The core team behind decentralized finance (DeFi) protocol Frax Finance could soon follow the leading decentralized exchange (DEX) Uniswap's proposal to distribute a portion of protocol fees to stakers of its native token, Frax's CEO and founder Sam Kazemian told CoinDesk.
The ecosystem's governance and utility token is FXS. Users who lock their FXS receive veFXS tokens, allowing them to keep their utility and governance rights. The veFXS tokens can be staked on the Ethereum mainnet and natively on Frax Finance's layer 2, Fraxtal. The proposal will recommend sharing protocol revenue with veFXS stakers, Kazemian said in an interview. The community voted to stop revenue sharing in 2022.
Last week, Uniswap proposed rewarding UNI token holders who stake and delegate their staked tokens with a portion of the DEX's fee earnings. UNI is the native governance token of Uniswap. The crypto community cheered the proposal, sending UNI higher by 60%. Several other DeFi tokens, including COMP, AAVE and SUHI, also witnessed an increase in value.
"We are going to follow Uniswap's lead in proposing it. It will be up to the community to pass it," Kazemian said,
Staking refers to locking cryptocurrencies for a set period to help support a blockchain's operation in return for a fixed percentage of rewards, analogous to interest earned on fixed-income securities. Delegation involves passing voting rights given by governance tokens to recognized decentralized autonomous organization entities called delegates.
"Should veFXS holders vote to distribute Frax Protocol revenue back to veFXS stakers again? Frax Finance makes 8 figures of annual revenue & growing, mostly being conserved in the treasury now. Time to turn it back on?," Frax Finance said on social media X, testing waters for an impending fee-switch proposal.
Several crypto market participants, including pseudonymous analyst Ignas and stablecoin-focused decentralized exchange Curve, responded positively to the social media post.
FXS was changing hands at $8.44 at press time, a 0.2% loss over 24 hours, according to CoinDesk data. The CoinDesk 20 Index reported a 0.68% gain across the broader market.