We’re excited to announce that Frax’s governance process has approved a partnership with Ondo!
This partnership will build on Ondo’s Liquidity-as-a-Service offering and enable the use of $FRAX (provided by the protocol itself) as liquidity for token issuers.
Based on the design of the proposal, a portion of the future algorithmic expansion of the FRAX stablecoin will be minted into Frax-as-a-Service vaults as needed. This means that Frax will have no upfront costs to participate.
In addition, the Frax community has generously agreed to incentivize DAOs and token issuers to use Frax-as-a-Service by providing $FXS incentives. If you know of or represent a DAO that might be a good fit for Frax-as-a-Service, please reach out to our team!
Frax-as-a-Service (“FaaS”) is an offering from Frax and Ondo to make it possible for projects issuing tokens to increase the liquidity in their native tokens on decentralized exchanges by providing liquidity themselves. With FaaS, a project can deposit its token into an Ondo liquidity vault with a flexible duration. Ondo and Frax will match those deposits with an equivalent amount of FRAX to form a liquidity pair. In exchange for providing FRAX, the Frax DAO will receive a fixed 5% APR return on its provided liquidity. We plan to leverage Frax’s success at building a multichain ecosystem and hope to deploy on several other chains starting with Polygon.
Ondo provides several advantages over existing liquidity solutions. With Ondo, token issuers earn trading fees and rewards which reduce (or even negate) impermanent loss (IL) risk and the cost of capital. With small adjustments, Ondo vaults are well-suited to facilitating direct listings, establishing the first liquidity for a token. Direct listings could eventually replace or complement IDOs. We are excited to work directly with Frax to build out these future offerings.
Ondo Finance is connecting and servicing investors and token issuers in DeFi with on-chain investment banking services. Ondo is being developed by a team of traditional banking veterans and DeFi experts. The team includes alumni from Goldman Sachs Digital Assets, Facebook, BadgerDAO, Snap, private equity funds, hedge funds, and various venture-backed start-ups.
If you’re interested in getting involved, join us on Twitter.
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