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Rewards are now live for IQ/FRAX pair on Fraxswap

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Sat Sep 24 2022

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Anyone can now earn FXS and IQ tokens on Fraxswap on Frax Finance by providing liquidity to the FRAX/IQ pair on Fraxswap. Last week, the proposal to launch FXS rewards for IQ-FRAX on Fraxswap passed with overwhelming support.

Here is a guide on how to supply liquidity to the IQ/FRAX pool on Fraxswap. To start earning IQ and FXS rewards, supply liquidity to the IQ-FRAX pair on Fraxswap and then stake the LP tokens here to earn both FXS and IQ tokens as rewards.

Note: You must stake the LP tokens otherwise you will not receive any rewards.

An allocation of 500,000 IQ/day will be issued to incentivize liquidity providers. Additionally, BrainDAO will allocate $200,000 of IQ per biweekly voting period at core team’s discretion to pay FXS holders to vote in favor of FXS rewards for IQ-FRAX liquidity providers through the Frax gauge system.

To ensure the program is sustainable, the core team will not put up more rewards than the DAO makes from its LP after the first 2 cycles. Voting in favor of FXS rewards for IQ-FRAX liquidity providers will ensure that IQ-FRAX liquidity providers receive a large share of FXS rewards from the FXS gauges. Since BrainDAO will provide liquidity to the IQ-FRAX pair this will allow BrainDAO to earn FXS rewards which can then be reinvested into sustainably increase the number of votes in favor of the gauge. Thus, allowing BrainDAO along with all IQ-FRAX liquidity providers to earn an increasing amount of rewards.

Fraxswap is the first constant product automated market maker with an embedded time-weighted average market maker (TWAMM) for conducting large trades over long periods of time trustlessly powered by Frax Finance.

The pool is now also live on the FXS gauge system which will allow IQ/FRAX liquidity providers to earn more FXS emission rewards through the Frax gauge reward system.

The FRAX gauge system allows FXS holders to stake for up to 4 years to generate veFXS and vote where future FXS emissions are directed. Users can vote for FRAX gauge weights with their veFXS balance. They can distribute their voting power across multiple gauges or a single gauge. This allows veFXS holders who are the most long-term users of the protocol to have complete control over the future FXS emission rate. This system strongly favors LP providers who continually stake their rewards for veFXS to increase their pool's gauge weight.

Ultimately, FXS rewards for IQ-FRAX liquidity providers on Fraxswap should increase the liquidity for the IQ token. It will provide rewards for BrainDAO and all IQ-FRAX liquidity providers which incentivize people to acquire IQ tokens creating additional utility and demand for IQ. As the value of FXS rises, the value of the rewards will increase, which should increase the demand for IQ from yield farmers.

About Fraxswap

Fraxswap is the first constant product automated market maker with an embedded time-weighted average market maker (TWAMM) for conducting large trades over long periods of time trustlessly powered by FraxFinance.

Frax is the first and only stablecoin with parts of its supply backed by collateral and parts of the supply algorithmic. The stablecoin (FRAX) is named after the “fractional-algorithmic” stability mechanism. The ratio of collateralized and algorithmic depends on the market’s pricing of the FRAX stablecoin. If FRAX is trading at above $1, the protocol decreases the collateral ratio. If FRAX is trading at under $1, the protocol increases the collateral ratio.

FRAX: is the stablecoin targeting a tight band around $1/coin.

Frax Shares (FXS): is the governance token that accrues fees, seigniorage revenue, and excess collateral value.

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