DeFi project Frax Finance is developing a reward mechanism for veFXS stakers, akin to an initiative by the Uniswap Foundation. This news led to a 17.3% surge in Frax Share (FXS).
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
“Should veFXS holders vote to resume the distribution of Frax Protocol revenue among veFXS stakers? The project’s annual revenue is in the eight-figure range and growing, replenishing the treasury. Is it time to return to the previous mechanism?” the message reads.
CoinDesk recalled the project’s community decision to halt revenue distribution among token holders in 2022.
On February 23, 2024, a nonprofit organization associated with Uniswap published a proposal to distribute protocol fees among UNI holders.
If the proposal gains support, rewards will be distributed to token holders who have staked or delegated their voting rights. This move by the Uniswap Foundation could be a response to community criticism over the asset’s lack of “utility.”
Following the announcement, UNI surged by 54.5%.
The response of FXS to a similar proposal was more modest, with a price jump of 17.3%, followed by a correction. Daily growth rates fell to 5.7%, according to CoinGecko.
In a conversation with CoinDesk, Frax co-founder and CEO Sam Kazemian promised to bring this issue to the community for consideration. The essence is to share protocol revenue with veFXS stakers.
In Frax Finance, the governance and utility token is FXS. When the asset is staked, holders retain associated rights and receive veFXS as a reward. These can be staked in the main Ethereum network and the L2 solution Fraxtal.
Curve Finance reacted positively to Frax Finance’s proposal.
Do et!
— Curve Finance (@CurveFinance) February 23, 2024
Back in June 2023, Kazemian supported a more “aggressive” buyback of the project’s tokens.