[ARFC] Remove Frax from Isolation Mode and onboard sFRAX to Aave v3 Mainnet
Vote Result: ABSTAIN
Rationale
While FRAX and Aave have been more synergistic over the last few months and removing FRAX out of isolation mode while onboarding sFRAX onto Aave is another step in the collaboration, and Chaos Labs is in favour of the decision and so is LlamaRisk with the suggested parameters, we think the concerns highlighted by LlamaRisk need to be addressed before we can offer a YES vote:
- There are a lot of centralised dependencies in FRAX’s protocol operations, and the amount of control exerted by FinResPBC in terms of holding off-chain assets and not being bankruptcy remote is also a concern.
- There is concern in removing FRAX from isolation mode with the same parameters as DAI - FRAX’s collateralization ratio is lower than that of DAI, and most of the collateral is composed of FRAX itself, which is not ideal. Therefore, we think the parameters for FRAX should actually be lower than those for DAI.
- We would also point out the sFRAX yield sources which seem to be confusing - while the documentation suggests it comes from RWAs and AMOs, it seems as if the yield is coming from on-chain sources. This needs to be clarified.
- sFRAX not relying on the IORB oracle to match the Federal interest rate is another question we would like to see answered.
While we would usually vote against, the fact that the risk providers think these concerns are addressed by the parameters FRAX is listed with lean towards us voting ABSTAIN and we would like to hear a response from the FRAX team on these points.