"Name is Bond, Frax Bond. License to Yield" - FraxCheck #61

Jan 23, 2024
"Name is Bond, Frax Bond.  License to Yield" - FraxCheck #61

This week... I call this week the “Name is Bond, Frax Bond. License to Yield” week. As the name suggests, this week was the announcement of Fraxbonds, the first zero coupon bond on-chain.


  1. FXB // $2.1M in TVL on Curve
  2. frxETH // Flipped by mETH (Ranked 5th)
  3. FraxLend // $250k in Revenue (Jan.)

Frax Supply & Peg

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We kick the year off pretty much exactly where we left off at $649M $FRAX supply. Nothing else to report here, moving on the peg.

We saw the peg got as high as 0.999 and as low as 0.997. In the market, we saw an exchange rate of $0.994 when swapping up to 40M of FRAX for USDC. We're having to reduce the total size of our swap from 100M FRAX to 35M FRAX since the FraxBP went from a high of 600M to 73M TVL. But also because we have a new FRAX/PYUSD pool. Yes that's right, a FRAX/PYUSD, not FRAXBP/PYUSD. Swapping another 20M FRAX for PYUSD also gave an exchange of 0.993.

We currently have $802M in Total Assets, $721M in Liabilities, and $81M in Balance Equity. Largely unchanged from last week.

Collateralization Ratios

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The Collateralization Percentage decreased by 60 basis points down to 94.1%. We got this number by taking the Total Assets ($801M) subtracting the Locked Liquidity ($123M) then dividing that by the Total Frax Supply (720M).


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As aforementioned, FraxBP's balance remains on the wrong side with an 80/20 imbalance between $FRAX and $USDC. There was another TVL reduction to balance down nearly 13%, from $104 to $73M. However the decrease in TVL here is offset by the massive increase in,TVL for the FRAX/PYUSD pool of $135M TVL.

When we add up all the FraxBP, Frax3CRV, FraxPP, and Frax/PYUSD we receive a total of $218M, which is 1.1x of the 3Pool. There was one point in time when Frax-related pools were 3.0x of the 3Pool.


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sFRAX been live for about 4.5 months and we finally experienced a bounce in the TVL from the lows of $20M to $28.5M slowly climbing back to our ATH of $45M.

But the real yield is still here so come get real-world yields via sFRAX now.

The APY at the time of writing is 5.4%. There are 195 sFRAX holders.


The name is Bond, Frax Bond. License to Yield. The long-awaited on-chain bonds have arrived.

There were three tranches auctioned off but two already sold out! There's about $200k left of the third tranche which is offering around 4.3% YTM with a Jan 1 2027 expiry.

FXB will be offered with always two expiry months June 30th and December 31st with multiple yearly terms.

Users could purchase these bonds and then LP them into Curve with FRAX stablecoin to earn up to 20% APY in rewards. Wild. There are two $800k TVL pools available plus one $500k pool for the longest duration bond.

FrxETH supply and distribution

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Now onto the crowd favorite, le frxETH. There is 312,818 frxETH.

Not much movement in the frxETH supply.

FrxETH peg

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Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. In the markets, we swapped 2.0k frxETH for ETH via Curve and received an exchange rate of 0.992. We had to reduce our normal swap rate of 3.5k frxETH.

Total frxETH liquidity on Curve is at $172M across 3 pools. The blended balance across these pools is 74% frxETH and 26% ETH, wETH, and stETH. There weren't any changes to the liquidity so unsure why we couldn't swap our usual 3.5k frxETH.

Competitive landscape

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

We held onto 2.5% of the market. For the last 30 days, we've grown 2.4% but our competitors such as rETH grew by 4.6%. And we have a new contender Mantle Staked ETH growing at 114% over the last 30 days and they're right now flipped us with 328k staked ETH.

In the yield department, frxETH is completely dominated by Mantle Staked ETH's 6.2% APY. Even though frxETH is ahead of all our other competitors with a 4.0% APR. The competitors are closely behind though so there is no resting!


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The final stablecoin: FPI. The Annual Inflation Index is now at 3.3%. Good thing that the FPI is still above Peg by 3 basis points. The treasury consists of $92.9M with an excess equity of $4.8M.

As inflation decreases and the treasury continues to earn high yields, the excess equity will continue to be built up in FPI's treasury, which would perhaps be converted to Frax's (FXS's) treasury.


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FraxLend's operating at peak performance. This is a new ATH at $301M TVL as well as an ATH in borrowed amount of nearly $85M. An 80% utilization rate is healthy. I like to see utilization in this range – it keeps the interest rate high enough for suppliers while still providing ample liquidity for borrowers. FraxLend AMO was also able to reduce $1M.


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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 $68.9M TVL across all the pools. For January, this DEX turned over 100% of its TVL.


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Revenue, Expenses, Profit

Show me the money! Well, here it is.

Let's look at the FraxLend AMO as that's one of the key revenue drivers with $248k so far in January.

Another revenue stream from FraxLend is liquidation fees. For January we generated $18.7k – glad we're staying safe out there.

FPI continues with a green profit month in January with $85k in earnings. Fortunately, this contributed to the treasury's equity balance of $4.8M. And this treasury may soon be combined with that of FXS'.

Lastly, if we do some rough math we could estimate the run rate of frxETH at $1.54M for the year. The math goes as such: 24 frxETH rewards per day* 365 days * 8.0% fee rate * Price of ETH. Then divide that by 12 to get the monthly figure of $128k per month or 58 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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