What is this about?

Frax.Finance, a well-known DeFi infrastructure protocol provider, has applied for a grant of 1,500,000 ARB to incentivize users of Frax stablecoins and staked ETH tokens¹. The goal is to attract the Frax ecosystem's extensive mainnet user base to Arbitrum's growing DeFi ecosystem and encourage migration of existing Frax users and their assets from other chains to Arbitrum¹. The Frax team has set key performance indicators (KPIs) to measure the success of their proposal, including increasing FRAX usage and creating capital flows to Arbitrum¹.

How is the community reacting?

The community's reaction to the proposal has been mixed. Some users, such as GFXlabs, ChronoFury, and CastleCapital, have expressed support for the proposal, highlighting FRAX's potential to become a major stablecoin on Arbitrum and the clear outline of how the grant would benefit the Arbitrum ecosystem^8,11,15. However, others, like 0xGDucky and Meyaf320219, have expressed skepticism about Frax Finance's contribution to the Arbitrum ecosystem and questioned the focus of the proposal^7,10. Matt_StableLab and MotusCM have requested additional information, including the addresses of the pools or contracts they plan to incentivize and a breakdown of how they will use the funds^16,18.

Why this is positive?

The proposal by Frax.Finance is seen as positive due to its potential to increase the presence of FRAX and ETH staked through Frax in the Arbitrum economy, which is at risk of becoming subject to a stablecoin duopoly and staked ETH monopoly¹. The grant they are requesting will be used to encourage migration of users and assets to Arbitrum, create a more healthy, sustainable competitive landscape for both stablecoins and liquid staked ETH, and increase the overall usage of staked ETH¹.

Why this is negative?

Some community members have expressed concerns about the proposal. 0xGDucky did not support the proposal, expressing skepticism about Frax Finance's contribution to the Arbitrum ecosystem⁷. Meyaf320219 questioned the focus of the proposal, suggesting it seemed more beneficial to FRAX than to Arbitrum¹⁰. There were also concerns about the effectiveness of the grant size and Frax's ability to move Ethereum liquidity to Arbitrum effectively¹⁵.