Proposal 30 – Joint Liquidity Incentivization: frxUSD/USP Curve Pool

General
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Summary

This proposal introduces a strategic partnership between Frax Finance and PikuDAO to co-incentivize a new frxUSD/USP liquidity pool on Curve Finance.

To bootstrap institutional-grade liquidity and enable “Yield-Stacked” opportunities for LPs, Frax Finance proposes to contribute $100 in frxUSD per day to the pool’s incentive layer. In return, we propose that the Piku community allocates 10% of the current USP Holding rewards (amounting to 6,844.63 PIKU per day) to match this effort.

Rationale

The pairing of frxUSD and USP creates a premier stablecoin primitive on Ethereum, bridging two distinct and highly productive yield sources:

  • Yield Stacking: LPs benefit from the baseline TradFi T-bill revenue of frxUSD (~3.4%) stacked with the high-performance delta-neutral FX yield of USP (8%+).
  • Deep Institutional Liquidity: By establishing a $1M target TVL, we provide a reliable venue for users to trade and mint USP against one of DeFi’s most trusted RWA-backed stables.
  • Secondary Utility: Establishing this pool on Curve allows for the pursuit of onboarding LP tokens as collateral in vaults like the Stake DAO Vault on Morpho, enabling users to earn rewards on top of their LP yield: Stake DAO frxUSD v2 Vault

Incentive Distribution

The campaign will run for an initial period of 8 weeks (2 months). PIKU rewards will be redirected from the existing USP Holding campaign, calculated daily, and distributed via Merkl.xyz to ensure transparency and optimized capital efficiency.

Campaign Type Asset Daily Rewards
Piku Incentive (10% of USP Holding) PIKU 6,844.63 PIKU

(Note: Frax Finance’s matching frxUSD contributions will also be routed directly through the Merkl campaign over this 8-week period).

Pre Proposal

Rate Campaign Type Distributed Everyday
70% USP Holding 47,912.39 PIKU
10% Uniswap USP/USDC Pool LPs 6,844.63 PIKU
7.5% Borrow USDC on USP/USDC Alpha USDC Forex V2 Morpho Market 5,133.48 PIKU
5% Pendle LP USP 3,422.32 PIKU
5% Pendle YT USP 3,422.32 PIKU
2.5% Supply USDC to Alpha USDC Forex V2 Vault on Morpho 1,711.16 PIKU

Post Proposal

Rate Campaign Type Distributed Everyday
60% USP Holding 41,067.76 PIKU
10% Curve frxUSD/USP Pool LPs 6,844.63 PIKU
10% Uniswap USP/USDC Pool LPs 6,844.63 PIKU
7.5% Borrow USDC on USP/USDC Alpha USDC Forex V2 Morpho Market 5,133.48 PIKU
5% Pendle LP USP 3,422.32 PIKU
5% Pendle YT USP 3,422.32 PIKU
2.5% Supply USDC to Alpha USDC Forex V2 Vault on Morpho 1,711.16 PIKU

Suggested Action

  1. Allocate 10% of the USP Holding incentive (6,844.63 PIKU daily) to the frxUSD/USP Curve pool LPs for the 8-week duration of the campaign.
  2. Enable the Frax Finance team to deposit the $100/day frxUSD co-incentive curve pool’s CRV gauges.
  3. Integrate the resulting Curve LP position as a collateral asset in the StakeDAO frxUSD v2 vault on Morpho.