Vote-to-Earn: Wrapping frfr.fun Bonding Curve Tokens into Liquid Governance Derivatives

Memecoins and serious DeFi tokenomics have lived at opposite ends of the crypto spectrum for years. Memecoins offer viral distribution and instant bonding-curve liquidity but almost no utility beyond speculation. Vote-escrowed ("ve") DeFi protocols offer real fee-sharing and governance depth, but historically demand multi-year lockups that only whales and institutions can stomach.

This piece lays out a proposed architecture — call it veTokenomics 3.0 — for closing that gap on Base: a liquid, instantly-tradable governance wrapper that sits on top of frfr.fun bonding-curve tokens. To be clear about what follows: this is a developer blueprint and design proposal, not a description of a live, audited product. Where the piece references real precedent — Curve, Convex, Aerodrome, historical governance exploits — those are documented, sourced facts. Where it describes the proposed wrapper contract and its incentive loop, that's original design work you'd still need to build, audit, and stress-test.

1. Why veTokenomics 1.0 and 2.0 Hit a Ceiling

Curve Finance pioneered the vote-escrowed model with veCRV in 2020. Users lock CRV for up to four years; voting power is calculated as veCRV = CRV locked × (lock time in years) / 4, decaying linearly as the unlock date approaches. veCRV is non-transferable, so once you lock, your capital is genuinely stuck until expiry.

That design solved a real problem — coin-voting systems where someone buys tokens, votes, then immediately sells are vulnerable to short-term manipulation — but it created a new one: capital lockup meant only large, patient holders could meaningfully participate in governance.

Convex's answer (2021) was cvxCRV, a liquid receipt token issued when users deposit CRV into Convex, which locks it on their behalf for the full four years. This is the real precedent for "liquid wrapping" of a ve-token, and it's worth understanding both its success and its failure mode, because the failure mode is directly relevant to any new liquid wrapper design:

cvxCRV holders get Curve trading-fee yield without locking their own CRV.
But cvxCRV holders do not get Curve governance power directly — Convex itself accumulates that. Convex now controls roughly half of all veCRV in existence, meaning actual gauge-vote influence over Curve concentrated into Convex's own governance token, vlCVX, rather than democratizing it. This dynamic — sometimes called the "Curve Wars" — spawned a secondary bribe market (Votium, later Hidden Hand) where protocols pay vlCVX holders directly to vote for their liquidity pools.
cvxCRV also carries peg risk: because it's redeemable for CRV only through market liquidity (not a 1:1 contract redemption), cvxCRV has historically traded below its CRV backing during periods of stress.

The lesson for any "liquid governance wrapper" project: liquidity and governance rights are in tension. Solve the liquidity problem by pooling deposits into a single lock, and you typically re-concentrate governance into whoever operates the wrapper — the opposite of the stated goal.

2. The Live Precedent on Base: Aerodrome's ve(3,3) System

Before proposing a new wrapper, it's worth pointing at what's already running in production on Base, because it's directly relevant and directly at odds with part of the original pitch for this design.

Aerodrome Finance, launched on Base in August 2023, is the chain's dominant decentralized exchange — capturing roughly 50–63% of Base DEX trading volume, depending on the week, and generating over $200 million in annualized swap revenue. It runs a ve(3,3) model (a design lineage from Solidly/Velodrome): users lock the native AERO token for up to four years to receive veAERO, a transferable NFT that carries voting power, a share of protocol fees, and the right to direct weekly AERO emissions toward specific liquidity pools. External protocols pay "bribes" — reward-pool deposits — to steer veAERO voters toward their pools, and Aerodrome routes 100% of trading fees from voted pools back to the voters who backed them.

This matters for the "liquid governance" pitch in two ways:

It confirms the demand side of the thesis: ve(3,3) tokenomics, bribe markets, and vote-to-earn fee-sharing are not speculative — they're the actual dominant liquidity model on Base today, and Aerodrome is in the process of merging with Velodrome in 2026 to extend the model cross-chain.
It also undercuts the "zero lockup" framing in the original draft: veAERO still requires locking AERO for up to four years to get full voting weight. Liquidity comes only from the fact that the position is a transferable NFT that can be sold on secondary markets — not from an unlocked, fungible ERC-20 wrapper as described below. No major ve(3,3) protocol on Base has yet shipped a fully liquid, non-custodial, instant-unlock governance derivative at scale. That's the actual gap the proposal below is trying to fill, and it's an open, unsolved design problem — not a solved one.

3. frfr.fun as the Settlement and Fee Layer

frfr.fun is a USDC-settled, fair-launch token platform on Base, with bonding-curve graduation routing into Aerodrome and Uniswap v4 liquidity — established characteristics of the platform. (Note the correction from the original draft: frfr.fun tokens graduate into Aerodrome and Uniswap v4 pools, not Uniswap v3; v4's hooks architecture, live on Base since 2025, is what enables the dynamic-fee and custom-pool logic referenced later in this piece.)

Settling volume in USDC rather than a volatile native token is meaningful for a governance-treasury design specifically: a market downturn shouldn't wipe out a treasury balance denominated in dollars the way it would a treasury holding the project's own token.

One thing that has to be flagged clearly, consistent with prior coverage on this blog: frfr.fun's stated fee structure — commonly described as a 6% creator fee and up to a 14% referrer fee on trading volume — is a platform self-description, not something independently verifiable from outside data. Treat those figures as frfr.fun's own claims about its mechanics, not confirmed, audited facts. The architecture below is written generically around "the creator fee stream," whatever its actual current percentage is, so the design isn't dependent on that specific number being accurate.

4. How a "Vote-to-Earn" Loop Would Work

The proposed loop redirects a token's creator-fee stream — instead of paying out to a single deployer wallet — into a community-governed treasury, with weekly voting epochs that decide how that treasury gets deployed and which voters get paid for participating.

[frfr.fun Trading Volume]
           │
           ▼
 [Creator Fee Stream, USDC] ──> [Secondary Protocol Treasury]
                                     │
                                     ▼
                      [Governance Epoch (Weekly Vote)]
                                     │
           ┌─────────────────────────┴─────────────────────────┐
           ▼                                                   ▼
[Option A: Execute Token Buyback & Burn]     [Option B: Direct Treasury to Yield Vault]
           │                                                   │
           └─────────────────────────┬─────────────────────────┘
                                     ▼
                [Active Voters Receive USDC Rewards]

The weekly mechanics:

Fee accumulation — trading volume streams USDC into the secondary treasury continuously.
Proposal phase — a Snapshot space (or an on-chain Governor) opens allocation proposals for the epoch.
Voting and reward distribution — holders of the wrapped governance derivative vote; a portion of the accumulated treasury is distributed to addresses that voted that epoch.
Execution — the winning proposal executes, deploying the remaining treasury.

This is the same structural pattern Aerodrome already runs in production (gauge votes → emissions → bribes → fee share), just substituting a project-level USDC treasury for protocol-level AERO emissions. If you're deploying on frfr.fun, you could realistically route votes through Aerodrome's or Uniswap v4's own incentive layers rather than building a fully custom voting stack from scratch — worth scoping before committing engineering time to a bespoke system.

5. Architecting the Wrapper: Corrected for a Known Attack Surface

The three-module architecture — Vault Wrapper, Governance Registry, Yield Distributor — is the right shape. But the naive implementation is worth walking through explicitly, because it illustrates exactly the vulnerability class covered in Section 7.

// SPDX-License-Identifier: MIT
pragma solidity ^0.8.20;

import "@openzeppelin/contracts/token/ERC20/ERC20.sol";
import "@openzeppelin/contracts/token/ERC20/utils/SafeERC20.sol";
import "@openzeppelin/contracts/access/Ownable.sol";

contract LiquidVeWrapper is ERC20, Ownable {
    using SafeERC20 for IERC20;

    IERC20 public immutable baseToken;
    address public treasuryVault;

    event Wrapped(address indexed user, uint256 amount);
    event Unwrapped(address indexed user, uint256 amount);

    constructor(address _baseToken, address _treasuryVault)
        ERC20("Liquid veToken Derivative", "veBASE")
        Ownable(msg.sender)
    {
        baseToken = IERC20(_baseToken);
        treasuryVault = _treasuryVault;
    }

    function wrap(uint256 amount) external {
        require(amount > 0, "Cannot wrap zero tokens");
        baseToken.safeTransferFrom(msg.sender, address(this), amount);
        _mint(msg.sender, amount);
        emit Wrapped(msg.sender, amount);
    }

    function unwrap(uint256 amount) external {
        require(amount > 0, "Cannot unwrap zero tokens");
        _burn(msg.sender, amount);
        baseToken.safeTransfer(msg.sender, amount);
        emit Unwrapped(msg.sender, amount);
    }
}

This contract, as written, is not safe to attach voting power to. A plain ERC-20 with no balance-history tracking means voting weight is read from the current block's balance — exactly the condition that made the Beanstalk exploit possible (detailed in Section 7). Before wiring this token into any governance function, it needs to inherit OpenZeppelin's ERC20Votes extension (or an equivalent checkpoint system), which records historical balances per address so that voting power for a given proposal is calculated from a balance snapshot taken before the proposal existed — not from whatever balance an address holds at the moment it casts a vote. Pair that with OpenZeppelin's Governor and TimelockController contracts, which are the actual industry-standard building blocks for on-chain DAO voting with execution delays, rather than hand-rolling the governance logic.

For gasless, off-chain voting, Snapshot is the de facto standard tool in production today; its snapshot-block mechanism is what enables balance-based voting without users paying gas per vote, and it's what's actually integrated with veAERO-style governance elsewhere on Base. Configure the voting strategy to also read balances of the wrapped token held in registered AMM liquidity positions, so LPs don't lose voting rights simply for providing liquidity.

6. Layering Secondary Yield: Corrected Figures

The original pitch for routing idle treasury USDC into Ethena's USDe for "10–15% APY" needs a correction — that range reflects USDe's early-2024 launch conditions, not current market reality.

Ethena's sUSDe generates yield from perpetual futures funding rates on a delta-neutral basis trade (long staked ETH/BTC collateral, short an equal-notional perp position), and that yield is inherently variable, not fixed. As of the most recent reporting available, sUSDe's 7-day trailing APY sits in roughly the high-single digits, with a 90-day trailing average somewhat higher — down substantially from the 20%+ rates seen when the protocol first launched and demand for the long side of the trade was much higher relative to available collateral. Historical realized yield has ranged from roughly 4% to over 30% depending on market conditions, meaning this is a genuinely floating-rate instrument, not a stable yield floor. USDe also carries structural risks worth naming explicitly: a 7-day cooldown on unstaking, dependence on centralized-exchange counterparties for the perp hedge, and peg risk if funding rates turn sharply and sustainably negative.

For a lower-variance comparison: Aave's USDC lending market — the closer analog to a "risk-free onchain rate" — currently pays in the mid-single-digit percentage range for USDC supplied, typically running somewhat higher on Base than on Ethereum mainnet due to thinner passive liquidity and stronger local borrow demand. If a treasury design wants a lower-volatility idle-yield leg alongside (or instead of) USDe exposure, Aave or Morpho USDC markets on Base are the more conservative comparison point, not a guaranteed higher-yield alternative to it.

A regulatory note worth flagging here, since it's directly relevant to any USDC yield-distribution design: the GENIUS Act, the first federal U.S. stablecoin law, prohibits payment stablecoin issuers — meaning entities like Circle, which issues USDC — from paying interest or yield to holders simply for holding the stablecoin. A DAO treasury distributing its own accumulated trading-fee revenue to voters is a structurally different arrangement (fee-sharing on protocol revenue, not issuer-paid yield on holding a stablecoin), and current guidance is that the yield-ban targets issuers and their affiliates specifically, not unrelated third parties distributing their own earned revenue. Still, this is an unsettled area — regulators have flagged that arrangements which functionally resemble stablecoin yield, even when routed through an intermediary, are drawing scrutiny. Separately, the March 2026 SEC/CFTC joint token-taxonomy release sorts crypto assets into five categories (digital commodities, digital collectibles, digital tools, stablecoins, and digital securities), with the Howey test still governing which non-named tokens fall into the "digital securities" bucket. A token that promises holders a pro-rata share of protocol trading-fee revenue is exactly the kind of profit-sharing characteristic that test scrutinizes — worth a securities-law review before launch, not an afterthought.

7. Governance Attack Surface: Real Precedent, Not Hypothetical

The original draft's warning about flash-loan governance attacks understates how real and costly this attack class already is. It isn't theoretical:

Beanstalk Farms (April 2022) — the canonical case. An attacker took out roughly $1 billion in flash loans from Aave, Uniswap, and SushiSwap in a single transaction, used the borrowed capital to acquire more than two-thirds of Beanstalk's governance voting power, and triggered an emergencyCommit() function that let a proposal execute after just a 24-hour delay instead of the normal 7 days. Two proposals — disguised in part as a Ukraine-relief donation — actually drained the protocol's entire treasury. Total loss: roughly $182 million, with the attacker netting about $80 million after repaying the loan.
Mango Markets (October 2022) — a related but distinct pattern: the attacker manipulated MNGO's price with a comparatively small ($5M) position, used the inflated collateral value to borrow and drain $114 million from Mango's lending pools, then used the same MNGO governance tokens to vote for a "no-prosecution" proposal offering to return part of the funds in exchange for keeping the rest.
Build Finance DAO (February 2022) — no exploit code at all. Low voter turnout let an attacker simply buy enough governance tokens on the open market to pass a hostile proposal, mint unlimited new tokens, and drain the treasury. A reminder that quorum and participation problems are a distinct, non-technical attack surface from flash loans.

The industry-standard defenses, in practice, are exactly the ones referenced in Section 5, not a bespoke invention:

Snapshot-block (checkpoint) voting — voting power for a proposal is calculated from token balances recorded at or before the block the proposal was created, mathematically excluding tokens acquired via flash loan within the same transaction. This is what OpenZeppelin's ERC20Votes and Compound's Governor Bravo implement, and it's the baseline, not an advanced feature.
Execution timelocks — a mandatory delay (commonly 24–48 hours) between a proposal passing and its execution, giving the community a window to detect and respond to a malicious proposal before funds move. OpenZeppelin's TimelockController is the standard implementation.
Quorum requirements — a minimum share of circulating voting-token supply (commonly cited in the 4–10% range) that must participate for a treasury-moving vote to be valid, specifically to prevent the Build Finance-style low-turnout takeover.

None of this is exotic; it's table stakes for any project actually planning to attach a treasury to a votable token, and skipping it is how the eight-figure losses above happened.

8. Bribe Markets: Already Real, Not a Future Possibility

The original piece frames third-party "bribe markets" for treasury votes as a future possibility. They're already running in production on Base today. Aerodrome allows any protocol to deposit tokens into a pool's reward contract to incentivize veAERO holders to direct emissions there — Lido Finance, for example, runs its own relay vault that votes specifically for the wstETH/ETH pool on Base. On Curve/Convex, the equivalent "Curve Wars" bribe layer (Votium, later Hidden Hand) has moved tens of millions of dollars in bribes over the protocol's history, with projects like Abracadabra's MIM notably outspending rivals to direct emissions toward their own pools.

Any liquid governance wrapper built on top of frfr.fun tokens should assume from day one that third-party bribe markets will attach themselves to its voting mechanism if the treasury gets large enough to be worth influencing — that's a design input, not a distant hypothetical.

9. Conclusion

The underlying thesis — that memecoin-style bonding-curve virality and DeFi-style governance depth don't have to be mutually exclusive — has real supporting evidence: Aerodrome's ve(3,3) system is proof the model works at scale on Base today. What doesn't yet exist, as far as public information shows, is a fully liquid (non-locked, non-NFT, instantly-transferable) version of that governance derivative running in production. That's a genuine, unsolved engineering and mechanism-design problem, not a solved one dressed up as new.

Anyone building toward it should treat the following as non-negotiable starting points, not later add-ons: checkpoint-based voting power (ERC20Votes or equivalent), an execution timelock, an explicit quorum, and a clear-eyed legal read on whether a fee-sharing governance token risks classification as a digital security under the current SEC/CFTC framework. And every yield figure quoted to prospective participants should be presented as a current, floating rate — not a fixed promise — given how far Ethena's own APY has moved just within the past two years.

Corrections and Transparency Log

Metadata removed. Stripped all source-document formatting artifacts (embedded XML-style <Sequence>/<Step> tags, stray whitespace) and converted the piece to clean Markdown.
AMM reference corrected. The original draft referenced "Uniswap v3 on Base" as frfr.fun's secondary liquidity venue. Current sourcing indicates frfr.fun bonding-curve graduation routes to Aerodrome and Uniswap v4, and Aerodrome — not Uniswap v3 — is the dominant DEX on Base by volume (roughly 50–63% of Base DEX volume). Corrected throughout and added a dedicated section on Aerodrome's live ve(3,3) system as the real-world precedent this design is building on.
frfr.fun fee figures flagged as unverified. Consistent with prior coverage on this blog, the commonly-cited 6% creator fee / 14% referrer fee figures are treated as frfr.fun's own platform self-description, not independently confirmed data.
Ethena USDe/sUSDe yield figures corrected. The original draft's "10–15% Base APY" reflected early-2024 launch conditions. Current sourcing puts sUSDe's trailing APY in the high-single-digit range (with a wider historical range of roughly 4%–30%+ depending on funding-rate conditions), a meaningful compression from the 20%+ rates seen at protocol launch. Added explicit disclosure of USDe's structural risks (7-day unstake cooldown, CEX counterparty dependence, funding-rate/peg risk).
Aave/Base lending rate corrected. Replaced an unsourced implied 10–15% figure with current sourcing indicating Aave USDC supply APY runs in the mid-single-digit range, typically somewhat higher on Base than Ethereum mainnet.
Convex/cvxCRV mechanics corrected and expanded. The original draft implied liquid ve-wrappers straightforwardly "restore" governance participation. Added the more accurate nuance: cvxCRV holders receive fee yield but not direct Curve governance power — that concentrates into Convex's own vlCVX token, which now controls roughly half of all veCRV, a centralization outcome directly relevant to anyone designing a new liquid wrapper.
Flash-loan governance attack section substantially expanded with real, sourced precedent. Added specifics on the Beanstalk Farms exploit (~$182M loss, April 2022, mechanism, and dollar/time details), plus two additional real cases (Mango Markets, October 2022; Build Finance DAO, February 2022) that the original draft did not mention, to illustrate that this is a documented attack class with multiple distinct patterns, not a single hypothetical.
Smart contract example annotated with a security correction. Flagged that the wrapper contract as originally presented has no balance-checkpointing and would be vulnerable to the exact attack class described in the risk section if voting power were read directly from it. Added the specific, named fix (OpenZeppelin ERC20Votes, Governor, TimelockController) rather than leaving the "block snapshot lock" concept unspecified as in the original draft.
Bribe market section corrected from future-hypothetical to documented-current. The original framed third-party bribe markets as something that "will" emerge. These already operate in production today on both Aerodrome (Base) and Curve/Convex (Ethereum); added a named real example (Lido's wstETH/ETH relay vault on Aerodrome).
Regulatory context added (not present in original draft): GENIUS Act stablecoin-yield-ban context and its likely inapplicability to protocol fee-sharing (as distinct from issuer-paid yield), plus the March 2026 SEC/CFTC five-category token taxonomy and the Howey-test exposure of a fee-sharing governance token to digital-securities classification.
Framing correction throughout. The original draft presented "veTokenomics 3.0" as an established category. Reframed as a proposed design built on top of documented, real precedent (Curve, Convex, Aerodrome, Beanstalk, Snapshot), making clear which claims are sourced fact and which are original architectural proposal.

Sources referenced: Curve DAO documentation (docs.curve.finance, resources.curve.finance); Outlier Ventures and Balancer Labs analyses of Convex/cvxCRV; Aerodrome/Velodrome analysis via CoinGecko, Blockworks, DWF Labs, Gate Learn, and VaaSBlock; DeFiLlama-sourced lending rate roundups via Eco.com (Aave/Morpho/Sky USDC rates); Ethena yield data via Eco.com, Stablecoin Insider, and Aavescan; Beanstalk exploit analysis via Immunefi, CoinDesk, and Cyfrin's governance-attack glossary; Mango Markets and Build Finance DAO cases via DEXTools and Guardrail; DAO flash-loan defense mechanisms via an arXiv research paper on time-weighted snapshot voting frameworks (May 2025); GENIUS Act analysis via Eco.com, Morgan Lewis, and Forbes; SEC/CFTC token taxonomy via Astraea Counsel and Forvis Mazars.