Frax Governance

Overview

Frax Governance is Frax Finance's implementation of onchain governance. veFXS holders can propose arbitrary governance actions through FraxGovernorAlpha. FraxGovernorAlpha has a high quorum, and is used in rare situations and for one off governance parameter changes.

The Frax team has a special Governor contract called FraxGovernorOmega. Omega allows the Frax team to submit proposals corresponding to Gnosis Safe transactions. These proposals must be approved or vetoed by veFXS holders. These special proposals are optimistic, meaning that they succeed by default unless quorum is met, and they are vetoed. This ensures that the community must approve of any onchain action that the Frax team makes.

Smart Contract Design

End to End Governance Process

FraxGovernorAlpha

High quorum. Alpha's TimelockController must be set as a Module on underlying Gnosis Safes. It has full control over the Gnosis Safes. Only veFXS holders can call propose(). Alpha controls all governance parameters, including governance parameters on Omega.

General Flow

Identical to OpenZeppelin Governor.

FraxGovernorOmega

Low quorum. Signer on underlying Gnosis Safe, so limited control. propose() is removed.

General Flow

DeFi transaction

1. An owner uses the Gnosis Safe to initiate a DeFi transaction. This produces a transaction hash that identifies the action to be approved or rejected by the other multisig owners.
2. ⅗ EOA sign the transaction through the UI.
3. After 3 signatures are collected, anyone can call fraxGovernorOmega.addTransaction(address teamSafe, TxHashArgs calldata args, bytes calldata signatures) to begin onchain governance. The team is incentivized to do so because they cannot execute any Gnosis Tx without FraxGovernorOmega’s approval.
4. veFXS voters have a 2-day window of time to vote on the proposal.
5. If no quorum is met during the voting window, or there are more for than against votes on the proposal, anyone can call execute(). This calls safe.approveHash() from Omega under the hood. It provides the needed approval from FraxGovernorOmega, which will allow the gnosis transaction to be executed through the Gnosis UI.
6. If quorum is met and there are more against than for votes. The proposal gets vetoed by anyone calling fraxGovernorOmega.rejectTransaction(address teamSafe, uint256 nonce). This will cause FraxGovernorOmega to sign a zero eth transfer gnosis transaction with the same nonce. Safe owners can then sign the same tx in the UI using the “replace transaction” functionality. Safe owners can then execute the zero eth transfer, incrementing the nonce. The original transaction can never be executed, because there is no approval from FraxGovernorOmega and the nonce has moved on, invalidating the original tx.

Abort Transaction Flow

This flow exists to stop a gnosis transaction that is deemed wrong or no longer needed.

1. 1 EOA owner starts a rejection transaction in the gnosis safe UI.
2. ⅗ EOA sign the rejection tx.
3. Anyone can call fraxGovernorOmega.abortTransaction(address teamSafe, bytes calldata signatures) which immediately causes Omega to approve the rejection tx (zero eth transfer) on the underlying gnosis safe with the provided nonce.
4. Safe Owners can now execute the approved transaction.
5. This increments the nonce, rendering the original tx and accompanying veto proposal useless.
6. If the original transaction was already put into FraxGovernorOmega with addNewTransaction(), the underlying proposal will be marked ProposalState.Canceled so no one else can vote on it.

Tests

npm install

To run tests you need to create a virtual env and install vyper 0.2.12. This is because we're using VyperDeployer, which will deploy the actual veFXS.vy contract.

Steps:

virtualenv -p python --no-site-packages ~/vyper-venv # or python3 -m venv ~/vyper-venv
source ~/vyper-venv/bin/activate
cd ~/vyper-venv
pip install vyper==0.2.12
cd $PROJECT_DIR
forge test

Coverage

forge coverage --report lcov && genhtml lcov.info -o report --branch-coverage && open report/index.html

Deploy:

Make sure to update Constants.sol.

Local Deploy:

forge script script/test/DeployTestFxs.s.sol:DeployTestFxs --fork-url http://localhost:8545 --broadcast
forge script script/test/DeployTestnet.s.sol:DeployTestnet --fork-url http://localhost:8545 --broadcast

Arbitrum Deploy (test):

forge script script/test/DeployTestFxs.s.sol:DeployTestFxs --rpc-url $ARBI_RPC_URL -vvvvv --verify --etherscan-api-key $ARBISCAN_KEY --verifier-url $ARBISCAN_API_URL
forge script script/test/DeployTestnet.s.sol:DeployTestnet --rpc-url $ARBI_RPC_URL -vvvvv --verify --etherscan-api-key $ARBISCAN_KEY --verifier-url $ARBISCAN_API_URL

Deploying MockVeFxs on Arbitrum:

1. Go to Remix
2. Install Vyper Remix plugin
3. Bump veFXS.py version to 0.2.16
4. Deploy through remix
5. Verify on arbiscan, Remix will give you the abi encoded parameters

Contract Verification

forge verify-contract $CONTRACT_ADDRESS src/VeFxsVotingDelegation.sol:VeFxsVotingDelegation --verifier-url $ARBISCAN_API_URL --etherscan-api-key $ARBISCAN_KEY --chain 42161 --constructor-args $CONSTRUCTOR_ARGS --show-standard-json-input