Frax Finance Considers Reversing Decision to Stop Staking Rewards
Frax Finance, the developer of the decentralized USD-pegged stablecoin FRAX, is contemplating turning back on its rewards for token stakers. This decision comes in response to Uniswap’s proposal to reward UNI holders with incentives. While Uniswap plans to implement rewards for the first time, Frax Finance had previously halted its rewards but is now considering reactivating them due to favorable market conditions.
Background: Connection to Uniswap
In a tweet on February 24, Frax Finance asked its community if veFXS holders should vote to distribute revenue back to stakers. The company highlighted its significant annual revenue and growth, which is mainly stored in its treasury. This proposal closely followed Uniswap’s announcement of offering rewards for staking UNI tokens. Frax Finance expressed its intention to follow suit, but emphasized that the final decision would be determined by the community.
The Decision: Reactivating Staking Rewards
Frax founder Sam Kazemian confirmed that although there had been a previous vote to stop revenue sharing, the company now believes it is the right time to reintroduce staking rewards. Kazemian mentioned that this move would generate substantial revenue and expects the implementation process to be completed within 10 days.
The Frax Protocol and Staking Rewards
The Frax Protocol operates through its native token FXS and offers a decentralized stablecoin called FRAX. Users can stake their FXS tokens to earn veFXS, a non-liquid token. However, in 2022, Frax Finance ceased offering staking rewards for veFXS holders.
About Author
MK Manoylov has been a reporter for The Block since 2020, covering various crypto news stories. MK holds a graduate degree from New York University’s Science, Health and Environmental Reporting Program (SHERP) and has extensive experience in the field.
Hot Take: Frax Finance Reconsiders Staking Rewards
Frax Finance’s decision to potentially reactivate staking rewards is a significant development for the crypto community. By aligning with Uniswap’s proposal, Frax Finance aims to incentivize token holders and enhance user participation. If implemented successfully, this move could result in increased revenue for the company and greater engagement from its community.
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