Frax Finance has recently announced a new proposal with the goal of reinstating its protocol fee switch. This proposal, presented on Thursday, introduces a plan to allocate 50% of the yield towards veFXS and the remaining 50% towards purchasing other Frax assets for pairing in the FXS Liquidity Engine (FLE).

The implementation of FLE aims to strengthen Frax’s balance sheet and increase liquidity for FXS and paired Frax assets. In addition to this, the proposal also includes a new tokenomics system to fully collateralize the decentralized stablecoin FRAX, as well as improvements to yield structures.

Regarding the non-liquid staking reward veFXS, the proposal states that upon passage, veFXS stakers will receive total protocol fees. These fees will be added to the veFXS yield distributor on the Ethereum mainnet and subsequently to the veFXS yield distributor contract on Fraxtal.

Previously, Frax Finance had proposed activating the protocol fee switch on February 26, after initially suspending rewards. Founder Sam Kazemian stated that this decision was made as the team felt it was the right time to activate the switch and generate significant revenue.

Frax Finance is the creator of the FRAX decentralized stablecoin, as well as the native token FXS and the veFXS token distributed to users who stake FXS. At the time of writing, FXS was trading at $7.48, with a 1.13% increase over the past 24 hours.

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