"Finding Our Footing" - FraxCheck #32

This week... I call this week the “Finding Our Footing” week. As the name suggests, this week we're trying to find solid ground.

March 28, 2023


  1. FraxBP - 114% of 3Pool, down 4% from last week’s FraxCheck
  2. FraxLend - Added two new pairs MKR and APE as well as a new v3 sfrxETH pool
  3. AMO - Currently at a loss of $180k, but could potentially be flat this month.

Frax Supply & Peg

Let’s begin with the flagship product: FRAX stablecoin.  The supply remained flat this week.  However, the peg fluctuated violently between 1.002 and 0.991.  When checking the Curve markets, we swapped 100M of FRAX to receive an exchange rate of 0.9989 — not too bad.  We strive for a near 0.998+ exchange rate for similar-stable assets.

Collateralization & Decentralization Ratios

The Collateralization percent conveys how much FXS (algorithmic) is used as collateral.  We’re unchanged at 92%.  Following we have the Decentralize percent, which is also unchanged and are now sitting at 23.9%.


For this week we saw the FraxBP TVL dropped to $487.3M, which is -1.3% from last week.  Also, we look at the volume traded.  For context, in February we hit 49.3M, and in March we hit 210M – we gained 16M over the last week.  This represents a 43% utilization rate.  The stablecoin trading volume has been ridiculously profitable for Curve this month.

% of 3 pool

We are 114% of 3pool.  We decreased by 4% since last week.  We’re still above 100%!  The FraxBasedPool is $487M versus 3pool's $425M.  What’s concerning is that the FraxBP dropped $6M and the 3Pool gained $6M.   Now, it wasn’t easy to get to the top but now we must stay at the top.

FrxETH supply and distribution

Next, we have our FrxETH segment.  We start by checking the frxETH supply.  As always, it’s up only!  The count is at 125,803, +3.9% WoW -- not terrible but we prefer a 5% WoW.  Let’s look at where the frxETHs are hanging out!  As a reminder, frxETH could be staked into the sfrxETH vault to earn the native ETH staking yield – which is printing a nice 6.4%.  And in that vault we see that 62% of the frxETH is chilling and stacking ETH earning a nice native staking yield.  The other place frxETH can be put to work is in the curve pool of frxETH/ETH, where 30% of the frxETH supply is currently at.  The remainder 8% is floating in the ether somewhere. We think the yield parity between the sfrxETH and Curve pool is reflected in the current split.  Unless Frax cranks up the bribes a bit more, we think we’ll see this heavier flow into sfrxETH.  But enough talk of the supply and the yield, let’s get down to the peg.

FrxETH peg

Peg check is at a solid 0.9992.  Let’s check the market.  We tried to swap a 3500 frxETH which is roughly the amount of the largest frxETH holder and we get an exchange rate of 0.9976.  Not too bad considering we got as low as 0.9950 two weeks ago.  But we still don’t like to see a number 7 there, these are similar assets so the exchange rate should remain above 0.998.  Fortunately, the TVL is quite sticky at $121M, still 9 SOLID FIGURES.  So far so good, let’s see how we stack up with the other competitors.

Competitive & Yield Landscape

Here we layout the LSD market landscape.  We have Lido in the lead with 74.5% of the market.  Though, Frax REMAINED the highest 30-day delta in the group, at +22.2%.  FrxETH’s market share is at 1.6%, gained 0.05% over the last week!.  Let’s keep fighting the good fight!  On the yield landscape, frxETH pretty much dominates with 6.4% and the closest competitor is Stakewise with 4.8%.


Quick refresher, FPI is a Frax Price Index, which is a stablecoin that tracks inflation.  This is the first product of its kind on chain.  Let’s run through the numbers!  So far, we have 82.3M supply of FPI, the current inflation reading is 6.0% and the FPI peg is ABOVE by 0.37% of its mandated peg.  The FPI Treasury is used to generate yield to maintain the peg.  FPI’s treasury is at $88.3M, which is comprised of FPI, FRAX, and a small percentage holding of FXS.  95% of the treasury is in the FPI/FRAX convex.  All these assets are put to work just like in the AMO to earn that needed yield to keep FPI at the inflation peg.  These assets managed to produce $4.3M above the amount needed to maintain FPI at the peg, therefore we have what we like to call “equity” for the veFPIS of $4.3M.


Next we have our FraxLend section.  We remained pretty flat at $143M in TVL with $37M in borrowed FRAX.  The Utilization rate increased by 11% from a week ago, now its at 66%.  From the two charts, we see that the Supply Value of FRAX just took a nose dive alongside with the Collateral Value but both saw a nice bump, and now flattening.  We pretty much hit reset on both of these values and started near the beginning of FraxLend again.  Currently, there are many pairs being offered on FraxLend but more and more are being added.  Also look at the current highest Supply APY we have none other than the sfrxETH/FRAX pair but note this is the v2 and we’re migrating to v3.  Then right behind it is the gOHM/FRAX pair at 8.8%.  A little further down the list you see there’s the CRV/FRAX pool with a juicy 7.1% APY.  Some new pairs are the MKR and APE pair!


The last leg of the Stablecoin Maximalism, the DEX aka FraxSwap.  Per DeFi Llama, the TVL is $66M with a 149M monthly volume for March. We took the Monthly volume divided by the TVL to get a utilization rate of 225% — pretty well utilized for a DEX no one knows about.


Finally, let’s jump into our profitability section starting with an overview of the AMO holdings.  The grand total of all AMOs is at $916M, we experienced a 0.5% decrease over the last week.  The Curve AMO is $623M, Liquidity AMO is at $72M, Lending $85M, and Investor $131M.  It’s going to take us quite some time to regain all these assets into the treasury from the shakeout from USDC but Flywheel DeFi will be here every week reporting in on every step of the journey.

Revenue, Expenses, Profit

Onto the profitability of the Convex AMO.  For the month of March, we have $1.43M in revenue and $1.6M in bribe expense, which means we are at a loss of $180k for March.  The lionshare of the revenue came from CRV at $1.23M, that’s 86% of the Convex AMO revenue.  We believe we may end the month very close to being flat!  Will report back next week with the final count.


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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