Proposal: Launch Stable Fox ($oneFOX)

  1. Summary - As promised on the last two Fox community calls, this is a proposal to partner with the ICHI community to create Stable Fox ($oneFOX). You must deposit $FOX tokens to mint $oneFOX, a token valued at $1.

    Abstract - $oneFOX will be the 7th ICHI V2 stable asset, following stable assets created for Filecoin, 1INCH, Uniswap, etc. It never made sense for different communities to govern the different features of money. ICHI makes it possible for every community to have their own everyday currency backed by their scarce crypto.

    Motivation - More value will be retained within the Fox economy. Instead of selling $FOX tokens for assets issued by other communities, Fox can use its own asset to conduct business or create dollar-denominated exposure/loans in decentralized finance.

    Specification -

    ICHI (conditional on a successful ICHI DAO vote):

    Launches $oneFOX

  2. Provides 67k ICHI in rewards to $oneFOX deposits over 3 months ($320k value)
  3. Fox DAO (conditional on this vote and a successful deployment of $oneFOX):

    Funds 50% of the cost of initial ICHI rewards ($160k). ICHI will use this entire amount to mint $oneFOX and hold it for a minimum of 12 months, increasing safety and enabling initial DeFi insurance.

  4. Loans 1.5M $Fox tokens to the $oneFOX treasury to lower initial minting ratio from 98% to 80%. Users will deposit an estimated additional 1.5M $FOX tokens in the initial minting period as a result of this loan.

Docs and audits, including one from Quantstamp, are available on

  1. for those who want a deeper understanding.

    Benefits -

    Here are a few benefits of Stable Fox to the FOX economy:

    $FOX Use Case: You must deposit $FOX to mint $oneFOX.

  2. ICHI Rewards: Deposits of $oneFOX will earn ICHI rewards.
  3. Revenue: 80% of the yield generated by ICHI strategies stays in the $oneFOX treasury which belongs to the Fox community. 10% may be distributed to applications that leverage $oneFOX. 10% goes to staked ICHI (xICHI).
  4. Protocol Locked Liquidity: The $oneFOX treasury will provide liquidity to $oneFOX and $FOX on exchanges such as Uniswap V3.
  5. Discounts/Interest: $oneFOX holders can vote to allocate treasury towards providing discounts when spending or better interest when saving.

Drawbacks - The Stable Fox treasury would either need to be topped up with $FOX or rebalance $FOX into $USDC if a severe $FOX price decline causes the treasury reserve ratio to drop beneath 150% (ICHI’s recommended minimum). Mitigation: Yield on Stable Fox treasury assets, $oneFOX minting ratio adjustments, and $oneFOX redemption fees drive over-collateralization. These mitigations make it less likely that the reserve ratio drops beneath 150%.

For - Launch Stable Fox

Against - Do Nothing

Link to discussion … Proposal: $oneFOX Stablecoin, For $FOX Sake - #30 by ICHI

Thanks so much for posting this up

  1. - seeing this in proposal format makes the whole thing a lot clearer in my mind.

    A few questions on this.

    Where are the deposits of $oneFOX for that would gain ichi rewards? Is this an LP pool or just some sort of staking contract that keeps the $oneFOX locked for a period of time?

  2. Would it make sense to also have the fox community incentivize some LM rewards to create a $oneFOX/usdc or $oneFOX/eth pool or the like on an AMM like uniswapv2 (or v3)/sushiswap/ or even on curve? An incentivized curve pool would seem to be really cool for something like this to give people returns on their $oneFOX and create liquidity for people to swap to other stables without having to call on the treasury backing the $oneFOX. Have you seen this with other ichi stable coins yet or anyone talking about it?

I really like this proposal and will likely support it, but interested to hear other community feedback as well as want to make sure we are setting up the incentives right as a community to make this successful.

In ICHI V1, users minted oneTokens, created liquidity positions (ie, USDC/oneFOX), and then deposited the LP tokens to a farm contract. It was expensive and cumbersome. It often took $400+ for someone to set it all up.

In ICHI V2, users take two simple and inexpensive steps: 1) mint/swap for $oneFOX, and 2) deposit $oneFOX for rewards. The total cost is 10% of V1 costs (around $40 on Ethereum mainnet at similar gas prices).

So where does the Uniswap V3 liquidity come from if people don’t create it? The Stable Fox treasury itself creates a position on Uniswap V3 between $0.9955 and $1.0045. We are targeting $1.6M of this liquidity for $oneFOX’s initial minting period. This ensures people can easily buy and sell around $1. When the price goes over $1, arbitrage agents are quick to mint more and sell it. When the price goes beneath $1, the Stable Fox arbitrage contract typically buys $oneFOX with USDC and redeems it since it has a cost advantage: it pays the 0.45% redemption fee to itself.

Here is a screen capture of the ICHI deposit screen:

Ideally, Fox would begin providing $oneFOX deposit rewards using the same farming contract currently in use for $FOX liquidity. You just might want a slightly different UI experience since technically they aren’t depositing LP tokens - just the $oneFOX. If Fox price does well, the Stable Fox treasury itself could help pay for those rewards!

Love it generally and will support this if the community is liking it generally. I’m willing to contribute a significant amount of FOX tokens to back this, once it’s live and I understand it a little better 1f609 I’m not selling any of my tokens, so opportunities to use them in productive ways to support the community is exciting to me.

This looks awesome and seems like a win-win for both communities. I think the importance of having a stablecoin that ShapeShift could govern would provide huge upside for the community and lock in more capital that could be used to support community incentives. Seems better than having to give up FOX and pay people in USDC/USDT/other centralized stables in order to get things done :man_shrugging:

I just created the ideation post.

The voting will start in one day.

Boardroom Management Portal

Thanks for your support!

(Cross-post: I made this comment on Ideation)

I have a number of reservations about this proposal.

Personally, my analysis is that oneFOX falls squarely under the legal definition of a security. One of the ShapeShift DAO’s most unique strengths is that unlike many other DAO’s native tokens, FOX is very defensibly not a security. The ShapeShift US has taken some significant pains to ensure that status, and I feel that the community would be doing itself a grave disservice not to recognize its uniquely defensible position in the face of encroaching regulation. Issuing oneFOX would deliberately place our community squarely back in the legal crosshairs – and probably justifiably so.

Fundamentally, oneFOX’s purpose is to enable the community to retain the upside risk of FOX and still be able to make payments in a stablecoin. While retaining the ability to make returns on FOX is undoubtedly a good thing for the oneFOX treasury, it’s much less of a good thing for the holders of oneFOX itself. The extent to which the oneFOX treasury can profit is the extent to which oneFOX holders are holding a token that’s not 100% USDC, and I don’t think that a “stablecoin” that can’t hold its value without ongoing subsidies from a central bank is worth the name.

Without some type of incentives (or, worse, hope of future incentives) oneFOX will be strictly worse to hold than USDC itself. That means that if incentives ever stop, its real value will drop (if ever so slightly) below $1.00. The moment that happens, a wave of redemptions will hit all at once by economically rational folks who realize they can exchange a $0.99 asset for $1.00.

Treasury reserve ratios provide some level of protection against this eventuality, but it’s very reasonable to expect that cessation of oneFOX incentives would be due to a drop in the available treasury funds – probably related to a drop in the price of FOX. Under such a scenario, oneFOX incentives would cease at the same time the reserve ratio goes out-of-kilter, which would lead to a significantly amplified chance of triggering a redemption freeze. Such a freeze would (again, justifiably) be a disaster for the community.

All concerns about the merits of the proposal aside, I also have serious issues with the current form of this proposal; as it is written right now it’s severely underspecified. If any proposal (not just this one) isn’t fully specified, I can’t properly do my job of analyzing the proposal for potential security issues and neither can any other voter.

While the text goes into some detail about the planned incentives, it does not actually specify how oneFOX will work . The code itself that the oneFOX token will run is available, but it has a number of tunable knobs: the reserve ratio for minting, the threshold for freezing redemptions, and the specifics around the oneFOX governance process (quorum, voting power assignment, etc) just to name a few. These parameters will end up on-chain at some point, and are essential to know ahead of time.

One way to fully specify the proposal would be to embed specific transaction data which launches oneFOX; barring that, there needs to be special attention paid to making sure that what the DAO is directing its multisig trustees to actually do is precisely specified by the text. It’s fine if technical limitations prevent the proposal from being specified in executable form, but all the implementation details must be unambiguous. It’s also fine if something does need to be done that involves delegating decision-making authority, but it should be explicitly delegated to a workstream which is equipped to handle that sort of thing. If it isn’t, the holders of the DAO treasury’s multisig fallback keys will be required to act as de facto executive officers.

Tacitly vesting the DAO treasury’s multisig trustees with the power to make implementation decisions about how to make proposals a reality is not in their best interests or the DAO’s. I feel that doing so would be fundamentally incompatible with the nature of a DAO, and I’m also concerned about what type of legal liability it might open them up to. My nightmare scenario is that the reserve ratio falls, a redemption freeze threshold is triggered, and somebody sues the multisig holders for a breach of some fiduciary duty.

discourse-post-upload20231125-65354-zsozg2.png MrNerdHair:

Personally, my analysis is that oneFOX falls squarely under the legal definition of a security.

This depends on the jurisdiction you’re referring to. Since the DAO is not an entity, each individual participating needs to consider their own legal risks based on the specific actions they are taking. Highly possible an activity is okay in one jurisdiction and not in another.

If I were concerned that oneFOX could be classified a security in my jurisdiction, then I’d personally just choose not to sell it.

discourse-post-upload20231125-65354-zsozg2.png MrNerdHair:

These parameters will end up on-chain at some point, and are essential to know ahead of time.

Agree with this comment. Proposal needs these criteria specified precisely.

I like your precautionary approach particularly regarding the specs. This is an important principle we should strive toward.

With the oneFOX proposal itself, because it falls under the category of “new and experimental” I think the way to manage that risk primarily is to start small. Try it, see how it’s going, expand if going well. I’ll propose in principle that we (ShapeShift DAO) should accept failure and expect mistakes to the degree that scale is minimal.

A person holding a oneFOX is only entitled to a single USDC. It is a ticket/receipt for a USDC.

Anyone minting or redeeming a oneFOX is using their own keys (stored on their device) to communicate with contracts running on Ethereum nodes.

Multisig signers have no decision-making authority.

Thank you for this relavent and thought invoking voice in championing a perspective for the DAO that can be easily be overlooked or even brushed aside at times. The pace that we find the DAO moving can be daunting for many different aspects but security and the well being of it participants should always have voice and in my mind high value. I aggree with and I am sure others that, a precautionary approach is an important principle and one we should most definitly be working within as a community.

I understand the need and motive to generate revenue for the DAO fund, and also the need to provide the “right” stability for the FOX token and its holders. Incoming/stable funds in the treasury has great value, but having a unbiased view of the overall and possiable “costs” of how they were gained may prove invaluable. This need for longer term vision and perspective can help insulate the community as well. What if the worst case scenero that MrNerdHair plays out or even a version, this can have longer and more damaging effects of not having the income that might or can be generated in the short term.

Security can be often prescribed to or seen as “what if” or just an “insurance policy” that is paid for, and that may never be used.

I personally see this as a short sided and “convenience” point of view of cutting corners and not taking real responsibility or true accountability for ones actions. Yes it’s everyones individual right and option to ignore any and all risk, but that individual choice shouldn’t be the only option presented and for everyone by default.

Thank you MrNerdHair for providing thought, options, voice, and working to offer help and protection to the community.

discourse-post-upload20231125-65354-zsozg2.png MrNerdHair:

These parameters will end up on-chain at some point, and are essential to know ahead of time.

In good faith, ICHI DAO will launch the oneFOX contract ahead of posting the final proposal. Then you can inspect the transaction itself.

We don’t normally do that because it costs several thousand dollars in Ethereum gas. This money is essentially burned if the oneFOX proposal doesn’t pass FOX DAO vote.

I think you nailed it when you said ~ “opportunities to use FOX tokens in productive ways to support the community is exciting”. Having productive uses of FOX tokens over time increases the stickiness of FOX holders and truly builds out the ecosystem beyond ‘store of value’ into a robust economy. I see this proposal as a way to begin to walk down that road of adding medium of exchange to our community without giving away ALL the value to large centralized crypto banks. Thanks for the clarity as well

Proposal is Live - please go vote!


I have concerns.

The proposal still doesn’t include the actual contract address. I haven’t been able to audit it ahead of the proposal going live, and parameters such as how many multisig signatures are required and when redemptions get locked out are absolutely critical. Part of my job is to do security review for proposals, and I haven’t been able to do a security review for this proposal yet

  1. .

Paying people to vote on your proposal, especially in a token that will have greater value if the proposal passes, is super

. I may have missed it, but I’ve not heard of this being discussed openly before. Personally, I think it’s unhealthy for our governance process to allow votes to be incentivized by outside parties

  1. .

I believe that this proposal should be considered unacceptable by the community in its current form, irrespective of anyone’s opinion on the idea of oneFOX itself, and I will be voting against it.

Update: We deleted the first posting of the proposal to give the Shapeshift community an opportunity to discuss it the potential voting participation reward.

The revised proposal (Boardroom, SnapShot) is available now, and the voting period starts tomorrow. I’ve exported the referenced Google Doc as a PDF and pinned it on IPFS to serve as a point-in-time reference for posterity: $oneFOX_Signing_SOP.pdf

(This is also the first proposal for which the Security Workstream has prepared a formal Risk Report!)

ICHI team,

Thank you so much for the hard work and working with MrNerdHair to make this the best proposal possible. I appreciate it and will be voting for it once I’ve reviewed the changes. 1f642