"Back 2 Basics" - FraxCheck #54

Oct 17, 2023
"Back 2 Basics" - FraxCheck #54

This week... I call this week the “Back 2 Basics” week. As the name suggests, we going back to the basics of what Frax can offer.


  1. sFRAX // $39M TVL
  2. FraxBP // Rebalanced to 50/50
  3. frxETH // 11% Monetary Premium

Frax Supply & Peg

We're finally NOT DOWN on the FRAX supply. We're currently at 671.7M. Though this is still -35% YTD since we started the year at 1B in supply. Nothing else to report here, moving on the peg.

We saw the peg got as high as 1.000 and as low as 0.998. In the market, we saw an exchange rate of $0.998 when swapping 100M FRAX for USDC. We are so back! Last Frax Check we got really close to $0.99.

No change on the assets side of the balance sheet for this Frax Check. However, our Liabilities did increase by $1.2M, so our balance equity had to decrease by $1.2M. We currently have $809M in Total Assets, $742.8M in Liabilities, and $66.7M in Balance Equity.

Collateralization Ratios

The Collateralization Percentage remained at 92.1%. We got this number by taking the Total Assets ($809M) subtracting the Locked Liquidity ($125M) then dividing that by the Total Frax Supply (742M).


Down 62%! FraxBP's TVL experienced a massive drop – or rather a massive rebalancing. There were about $62M USDC so Frax had to balance the pool, which meant pulling over $200M+ of FRAX from the liquidity pool.

When we add up all the FraxBP, Frax3CRV, and FraxPP, we receive a total of $197M, which is 0.9x of the 3Pool. This is one of the lowest ratios we've seen.


Hey babe wake up. sFRAX is live! No more waiting. Come get real-world yields via sFRAX now. Within 24 hours, sFRAX grew to $30M+ in TVL. The APY at the time of writing is 6.8%. There are 221 sFRAX holders and what's good to see is that folks are actually buying FRAX to stake it into sFRAX. Though 20% came from lending protocols so be careful with leverage y'all!

FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 274,383 frxETH supply, a 2.3% increase from two weeks ago. The frxETH/ETH Curve pool dropped by nearly 50%! The liquidity fled to frxETH/WETH and the monetary premium. There's been notable growth in the frxETH/WETH pool which jumped from 7% to 8% of all frxETH supply and the frxETH/stETH pool remained at 2%.

Most significant is that frxETH's monetary premium is at 11%! This is an all-time high! This means that 11% of the supply of frxETH holders are happily holding or utilizing frxETH outside of the Frax native ecosystem.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9918. We do not like seeing this exchange rate. We shouldn't have to eat nearly 1% to swap similar assets. We're also seeing similar signals of imbalance in the Curve Pool with a 79/21 split between frxETH and its counter pairs.

But we do have a few new pools to monitor as well. The frxETH/WETH pool has nearly 28.3k ETH worth and the frxETH/stETH has 8.8k ETH worth.

Competitive landscape

Speaking of landscape, let’s look at the LSD market.

We are up 9%!

We were at 2.2% for six weeks. We finally bumped up to 2.4%. For the last 30 days, we've grown 5.6% but our competitors such as rETH and stETH, grew by 4% and 2%, respectively.

Even though frxETH is paying out the highest yield at 3.9%, our growth rate pales in comparison to others. What's more frustrating is that YTD, frxETH has grown faster than rETH by 50% and stETH by 32%.


The final stablecoin: FPI. The Annual Inflation Index also is at 3.7%. Good thing that the FPI is still above Peg by 40 basis points. The treasury consists of $92.9M with an excess equity of $3.7M.


FraxLend's recovery run has stalled a bit since the crazy price action at the end of August and early September. The borrowed value seems to have turned over and heading lower. The collateral value has been steadily rising since the August cleanse. Currently, we have $218M in TVL with a 74% utilization rate.


Lastly, we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or knows about. There are only $61.5M TVL across all the pools. We saw decent volume in the FXS/FRAX pair these past 2 weeks with an avg 7D volume of $12M, previously we were in the $3-5M range. For October, this DEX turned over 57% of its TVL.


Revenue, Expenses, Profit

Show me the money! Well, here it is.

The AMO Dashboard is also undergoing some upgrades so we will report those figures next Frax Check.

Instead, let's look at the FraxLend AMO as that's one of the key revenue drivers with $27k revenue per week and $54 for October. There hasn't been any new FRAX minted or lent out of this AMO.

Another revenue stream from FraxLend is liquidation fees. Fortunately, we only saw $1.3k in liquidations in October. Recall that in August we had $225k+ in liquidations. RIP to the homies.

FPI is a little testy in October as we're down $18.7k. But if we zoom out, we saw that over the months we've been slowly bleeding. Fortunately, we have a $3.6M buffer to draw down upon.

Lastly, if we do some rough math we could estimate the run rate of frxETH at $1.0M for the year. The math goes as such: 21.3 frxETH rewards per day* 365 days * 8.0% fee rate * Price of ETH. Then divide that by 12 to get the monthly figure of $83k per month or 52 ETH.


Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

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