1. Introduction https://www.notion.so/Opportunities-on-Frax-Analysis-39ccb11712684e54bdf939b172d00885

Like Convex being an aggregator that boost yields on Curve, this report is to analyze the chance of Congruent being a similar role with the purpose to boost the yields on Frax so as to reinforce the utility of the governance token of Congruent. ($GAAS)

Also, this report will address Convex’s economic flywheel with Curve, the mechanism of Frax gauge system, Frax’s FPI system, Frax’s partnership and the opportunities on Frax’s ecosystem.

2. Relationship between Convex and Curve

Before diving into Frax, we should understand the fundamental aspects of Convex. Convex mechanism can be considered as an improvement on veCRV and it is designed to help Curve liquidity providers to generate highest return as possible. It targets at 2 kinds of user group: Individual CRV users and the liquidity providers of each asset on Curve.

Convex created an economic flywheel based on Curve’s mechanisms and 2 key elements which are veCRV and cvxCRV. Users of CRV now have two choices to generate rewards by either locking their CRV into veCRV on Curve platform or converting their CRV into cvxCRV on Convex platform. The second choice is more favorable at the moment in terms of the return which will be explained in the following sections.

2.1 Rewards of veCRV and cvxCRV

The rewards for the veCRV users are:

1. 3CRV: which is 50% of transaction profit generated by Curve and can be used to redeem DAI, USDT,USDC;
2. Potential reward (CRV): Maximum of 2.5x initial locked CRV for liquidity providers, which means holders have to locked their CRV for a time period and deposit liquidity into Curve LP pools to boost their CRV APR reward; *Note that this requires further action apart from just holding veCRV.
3. Airdrops of tokens from other protocols.

The rewards can be summed up by the equation below:

*Rewards for veCRV = 3CRV + maximum 2.5X boost APR in CRV + Airdrops

For cvxCRV, the users would get usual rewards from veCRV (3crv governance fee distribution from Curve + any airdrop), plus a share of 10% of the Convex LPs’ boosted CRV earnings, and CVX tokens on top of that. The ‘Share of 10% of the Convex LPs’ boosted CRV earnings’ is similar to the second reward of veCRV list above but it is boosted by the Convex LP assets deposit in Curve, this can be considered as when users converted their CRV into cvxCRV, the Convex would use the CRV they receive to boost reward APR with Convex’s LP assets provided on Curve to maximize the profit as possible and distribute the portion of the rewards to cvxCRV users.

*Rewards for cvxCRV= 3CRV + Airdrops + a share of 10% of the Convex LPs’ boosted CRV earnings + CVX

CvxCRV economic cycle

2.2 The difference between veCRV and cvxCRV