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In a move echoing Uniswap’s recent proposal, Sam Kazemian, the CEO of Frax Finance, has revealed plans to introduce a reward mechanism for stakers of the veFXS token.
Uniswap recently unveiled an “Activate Uniswap Protocol Governance” proposal that includes plan to share a portion of protocol fees with UNI token holders who stake and delegate their tokens. Frax Finance, a decentralized finance (DeFi) protocol, is now eyeing a similar strategy for its ecosystem.
Frax Finance revenue distribution plan to veFXS stakers
Frax Finance’s core team is contemplating a proposal that would see a share of protocol revenue directed towards veFXS token stakers.
The veFXS tokens are obtained by users who lock their FXS, granting them utility and governance rights within the Frax Finance ecosystem.
While the community had previously voted against revenue sharing in 2022, the surge in Frax Finance’s annual revenue, now reaching eight figures, has prompted a reevaluation of this decision.
The proposal is set to be put forward, and if approved by the community, it could mark a significant shift in the reward structure for participants in the Frax Finance ecosystem. Stakers would play a crucial role in the decision-making process, influencing the trajectory of the protocol in alignment with the community’s preferences.
Seeking community input on the proposal
Frax Finance has initiated discussions on social media platforms, seeking input from the community regarding the proposed revenue-sharing mechanism.
A tweet from the official Frax Finance account prompted responses from various crypto market participants, including pseudonymous analyst Ignas and decentralized exchange Curve, expressing optimism and support for the potential change.
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? 👀 https://t.co/3Yd9oDV98A
— Frax Finance ¤⛓️¤ (@fraxfinance) February 23, 2024
Frax Share (FXS) price reaction
The Frax Share (FXS) token, at $9.10 at the time of reporting, has experienced a 7.72% rise over 24 hours. The FXS price reaction closely mirrors that of UNI price after Uniswap announced its plan.
The proposed reward mechanism, if implemented, could introduce a new dynamic to the Frax Protocol ecosystem, potentially influencing the value and dynamics of the native FXS token, seeing that the announcement of the plan resulted to the token almost hitting $9.80.
As Frax Finance follows in the footsteps of Uniswap’s innovative approach, the DeFi landscape continues to evolve, with protocols exploring novel ways to incentivize and reward their user base, fostering greater community engagement and participation in decentralized governance.
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