Introducing STAX v0.1
The Temple flywheel covered in the two-part Medium series (Part I and Part II) has been spinning at idle for some time. The time has come to rev it up with the launch of STAX. We’re excited to launch STAX v0.1 to make its baseline feature set available to the market. This article will give an overview of what STAX v0.1 does, how to use it, and what’s on the menu for future upgrades.
Currently, the only way to add liquidity to the FRAX/TEMPLE liquidity pool (LP) is to manually interact with the Temple contract on Etherscan. Once you mint the LP tokens, you would then have to go to Frax Finance to stake the tokens on the gauge and choose your time-lock duration. Once you are locked, you cannot unlock nor withdraw your LP tokens until the lock duration has expired.
With STAX you can 1) Add FRAX/TEMPLE LP through a simple interface without using Etherscan; 2) Gain boosted APR from time-locking while retaining your liquidity; and 3) Access more STAX rewards in the future. Let’s dive into how STAX works.
Top Level Overview of STAX v0.1 Features
In this initial version, STAX Finance handles the operation of adding liquidity for you, and locks the liquidity in the Frax gauge as well. The process looks like this:
- You deposit $TEMPLE and $FRAX to STAX.
- STAX adds liquidity to the Temple AMM, which returns FRAX/TEMPLE LP tokens.
- STAX locks the LP tokens in the Frax gauge.
- You receive xLP, a liquid 1:1 mirrored asset to the native LP token.
- You stake your xLP tokens on STAX and earn Frax rewards ($FXS and $TEMPLE).
Now let’s have a look at the three-step process on the user side in practice and some key information you should know before you make your deposit.
1) Deposit $TEMPLE and $FRAX to Add Liquidity
You will first need to acquire $TEMPLE and $FRAX tokens. Once you have them in your wallet, head to the “VAULTS” section of the STAX dApp. You should see the “Add Liquidity” tab.
Here you may enter the amount of either $TEMPLE or $FRAX to deposit. The matching amount of the other asset will auto-populate. Click the “Add Liquidity” button at the bottom to go to the deposit confirmation screen.
Click the “Confirm Deposit” button to submit the transactions through your wallet. Once confirmed, your tokens will be added to the Temple AMM liquidity pool, and you will receive LP pool tokens in return.
2) Convert LP tokens to xLP
After successfully adding liquidity and receiving LP tokens, the STAX dApp will prompt you to convert your LP tokens to xLP to earn rewards through STAX. You can execute the conversion by clicking the “Convert To xLP” button to submit the transactions. Important: Please read the section below on xLP Conversion Permanence before proceeding with the LP conversion.
Alternatively, you can complete this LP to xLP conversion step in the “VAULTS” section of the dApp under the “Convert LP” tab. If you already have existing FRAX/TEMPLE LP tokens in your wallet from manually providing liquidity through Etherscan, this is where you would convert them to xLP.
If you check the “Stake my xLP” checkbox on the conversion page, the dApp will execute both the LP to xLP conversion and xLP staking steps. Click the “Convert” button to submit both transactions.
2a) Note on xLP Conversion Permanence
It is important to note that converting LP to xLP is irreversible. The xLP token can be staked and unstaked at will, but xLP cannot be converted back to LP. However, xLP tokens can be swapped for LP tokens thanks to the secondary market provisioned by STAX on Curve Finance.
If you do not wish to convert your native LP tokens to xLP, you will need to manually stake the native LP tokens on the Frax Finance gauge to receive rewards. You would then need to select the lock duration and provide your own veFXS boost multiplier if applicable.
2b) xLP Conversion: Behind the Scenes
When you convert your LP tokens to xLP tokens, STAX dynamically locks up to 90% of your tokens into the Frax gauge, and the remaining amount of LP tokens are used to provide liquidity to the xLP/LP pool on Curve Finance. The xLP token is your liquid receipt of the capital locked into the Frax gauge and your claim to the underlying rewards.
3) Staking xLP on STAX to Earn Rewards
At this point, you have provided FRAX/TEMPLE liquidity to the Temple AMM and converted your LP tokens to xLP. The last step necessary to earn rewards is to stake your xLP tokens.
Please note that if you did not check the “Stake my xLP” checkbox during the conversion step, you can head to the “PROFILE” section of the STAX dApp to stake your xLP tokens at any time.
The main page of the PROFILE section displays basic information about your position, including the amount of xLP you own, your percentage of the total liquidity pool, APR, and claimable rewards. To stake your xLP, enter the amount to stake and click the “STAKE” button to submit the transaction. Congratulations, you’re now earning time-lock boosted yields from the Frax gauge!
As mentioned, staked xLP earns you time-lock boosted Frax gauge rewards. The bulk of your Frax gauge rewards will be paid in $FXS, with a small bonus of $TEMPLE tokens. The variable Frax gauge APR will fluctuate based on the price of the $FXS token and the veFXS votes that the FRAX/TEMPLE gauge received in the last week. At the time of this writing (taking into account the current price of $FXS), stakers can expect to earn between 18%-36% initially. TempleDAO will continue to incentivize the FRAX/TEMPLE gauge emissions through bribes on external platforms.
For the STAX v0.1 launch, STAX will not take a fee on rewards. All rewards from FRAX/TEMPLE gauge emissions will go to stakers.
$FXS and $TEMPLE rewards will accrue continuously and appear in the “Claimable Rewards” box on the main page of the “PROFILE” section. Click the “CLAIM” button to submit the wallet transactions to claim available rewards.
You may unstake your xLP at any time. Unstaking means you will no longer be earning gauge rewards through STAX. To unstake, head to the “PROFILE” section in the STAX dApp.
Enter the amount of xLP tokens to unstake and click the “UNSTAKE” button. Submit the transaction and your xLP will be unstaked and available rewards will be claimed. If your staked or unstaked xLP balance does not update, try refreshing the page.
Curve xLP/LP Pool
To provide exit liquidity for xLP stakers, STAX will provision a xLP/LP pool on Curve Finance. TempleDAO will seed the initial pool with $5mm of liquidity, and more liquidity will be added through the xLP conversion process outlined above as users add more liquidity. Users can expect Curve Factory pool settings similar to the CRV/cvxCRV pool. During periods of high exit liquidity demand, TempleDAO will continue to monitor and support the xLP/LP peg by minting or withdrawing unlocked native LP tokens and buying xLP tokens from Curve to rebalance the pool.
The Future for STAX
The STAX v0.1 pre-release marks the introduction of STAX to the DeFi world, growth of TVL for the TEMPLE protocol, and the accelerated adoption of FRAX. Users who wish to provide TEMPLE liquidity to receive Frax gauge rewards can do so in one place through the simple and intuitive STAX interface. The LP provider will enjoy liquidity for their locked position through the xLP/LP pool on Curve Finance. As TempleDAO continues to incentivize veFXS voting through external bribe platforms, STAX hopes to add FXS staking through a Frax governance proposal to whitelist veFXS staking and collect bribes on the user’s behalf. The veFXS staking will also provide an additional boost to user positions on STAX.
Gradually, STAX will expand investment options to let users access the rest of the FRAX ecosystem and other stablecoin farming opportunities. Once the Temple Core Vault product is launched, STAX will also enable users to invest in the Temple vaults through the same intuitive interface. We look forward to revealing more details about how STAX Finance will provide the best value for DeFi users in the near future as we approach the official launch date of the next STAX iteration (v1.0) later this year.