"LOVE is in the air" - FraxCheck #26

This week.. I call this week the “LOVE is in the air” week. As the name suggests, this week things are simply LOVELY.

Feb 14, 2023

Welcome to Frax Check.  Your weekly frax vibe check.  I am your host Kapital_K and I’m joined by my cohost DeFi Dave and our producer extraordinaire Sam.  We will be going straight to the source of truth via checking the chain.  Before we jump in, please subscribe to the flywheel, it really does help!  Please also follow us @flywheeldefi on Twitter and tg.

This week..  I call this week the “LOVE is in the air” week.  As the name suggests, this week things are simply LOVELY.  It feels really good.  You’ll see what I mean as we dive in!  Frax Check will now break up into two main sections: Product Lines and Profitability.  As the name suggests, for the first section, we’re going to go through some of Frax’s products such as FRAX (the stablecoin), frxETH (the stablecoin), FraxBP, FraxLend, FraxSwap, you get the idea.  Then we’ll investigate the Profitability across these products.

We start with the flagship product: $FRAX stablecoin.  We see the Supply has been holding steady at $1B-ish for the past month or so.  Not much to update here.  Then obvs, we must check the peg, which got as low as $0.999 with a high of $1.002 for the week.  Peg Check = Strong.   We then looked at Curve via swapping 100M FRAX for USDC.  We received a 0.9984 exchange rate.  This is 2 bps lower than last week.  Nothing newsworthy this week so moving on we have our Collateralization %.

This is the % that conveys how much FXS (algorithmic) is used as collateral.  We remained unchanged for the week still at 92%, it’s been this way for 7 Frax Checks now.  Following we have the Decentralize %.  Pretty much unchanged at 23.5%.  Still V v v v much bear market vibes across the board when it comes to these two metrics.  The Frax team has a goal to get it to one hunnid!  But some members of the community wants to see the Collat % going back to the low 80s and the Decent % going back to 30s.  But I’m hopeful.

Okay.  Quick summary Health Check.  Peg Good.  Curve Swap unchanged  Collat % could be better been stagnant.  Decent % may be in a reversal to the upside.  Next, we have the FraxBP product, which imo is sort of like liquidity as a service.

The FraxBP broke above $500M for the first time since November 2022.  For this week we saw the TVL got to $530.2M, which is 7.4% increase from last week so BIG BIG MOVES.  On the right side we have a new metric I wanted to start looking at which is the volume traded.  For context, in January we had 12.1M, and in February we hit 29.0M already.  Though, this is still only 5.4% of the $530M TVL.

Following this slide, we have a yield and bribes section, where I look at the current yield being offered to LP into this pool and the bribes Frax Finance had to pay for the yield.  You see here that there’s an APR of 2.28% for a $530M pool so the estimated $570k of yield.  The quick math is take TVL of $530M, multiply by 2.28%, divide by 365, multiply by 14 days (because Votium epochs are 14 days).  Then we compare that to the bribes paid we see if there was any net gain on the bribes.  This epoch so far, we paid $291k so rough back of the envelope math says we’re doing pretty good so far this month.  However it’s important to note that Frax Finance’s POL isn’t the only liquidity in the pool so its reward shares are definitely diluted but that’s part of the plan as Frax wants to attract liquidity into the FraxBP.  To that end, $617 of liquidity were incentivized by $1 of bribes paid.

Now, we march forward to my favorite section of the Frax Check.  Ladies and gents, we are… drumroll…. at 99% of the 3pool.  Love is in the air and so is FraxBP as we rocketed up there now neck to neck with the 3Pool.  The FraxBasedPool is $530.2M versus 3pool's $551.9M.  What’s noteworthy is that the FraxBP gained all the TVL but 3pool didn’t move at all.  Note that we are now way above the Frax3CRV pool!!!  Let’s keep the momentum going.  We’re so close.  Let’s get it next week.  Moving on, let’s chat about our metapools.

Reminder the metapool are pools that are PAIRED with the BasedPool, examples like LUSD/FraxBP.  We’re at $77.1M, an increase of 1.7% from last week.  On the following slide, we’ll quickly cover some yields on these metapools as well as the bribes paid.  Because there are quite a few stablepair metapools, I’m only looking at the top ones by TVL.  The alUSD and FRAXBP pair is paying out 10% APR at nearly $18M in TVL.  Honestly, still not too shabby if you believe/trust in alchemix’s mechanism and collateral set.  On the bribes front, Frax paid $49k for the month of January so far.  And if we look at Liquidity per Bribe Dollar, Frax was able to pull in $1,563 per $1 of bribes spent.  So, c’mon people, we got some yield and liquidity for your community, so come and get some!  Any projects out there looking to work with the Metapool, please join the Flywheel TG chat and DM any of the hosts for assistance.

Also one quick note, we also have an additional $16M of TVL from non-stable pairs in the Metapools.  These are pairs like cvxfxs/FraxBP and cvxcrv/FraxBP.  That is a drop of 8.5% over last week.  Similarly, I wanted to look at some of the yield and the bribes for these non-stable metapool pairs.  For this category, I went the other route and sorted by APR.  We see here that OHM-FRAXBP is offering a whopping 38% APR!  Wooh!  Then we have the usual flywheel suspects of CVX, cvxCRV, and cvxFXS at a range between 20 - 30%.  Alcx/FraxBP is also paying a nice 36%.  On the bribes side, Frax paid $12.7k so far in January and the liquidity incented is $1,259 of liquidity per $1 of bribe spent.

So, adding all of the stables and non-stables TVL, we have a total of $93.1M of liquidity paired against FraxBP – down 0.2% this week.

Summary time.  Liquidity Check.  FraxBP is 530.2M which is 99% of 3Pool.  The MetaPool is at $77.1M for stable pairs and $16.0M for non-stable pairs.  And TVL of All pairs (stables + non-stables) are at $93.2M.

Next, we have our FrxETH segment.  We start by checking the frxETH supply.  As always, it’s up only!  The count is at 94,996.  And look at that chart, I know you can’t read it but just appreciate the verticalness off that graph.  +8.8%.  Hot.  Let’s look at where the frxETHs are hanging out! As a reminder, You can stake your frxETH into the sfrxETH vault to earn the native ETH staking yield.  And in that vault we see that 50.6% of the frxETH is chilling and stacking ETH earning a nice 7% APR.  The other place you can take your frxETH is to the curve pool of frxETH/ETH, where you can join 45% of the frxETH supply earning 8% APR in CVX, CRV, FXS.  The remainder 4.1% is floating in the ether somewhere.  But enough talk of the supply and the yield, let’s get down to the peg.

Peg check here isn’t as strong as it was last week, you see the price delta at 0.0014 between frxETH and ETH.  But, we obvs have to go into the market and check this ourselves and you see here that I tried to swap a 3500 frxETH which is roughly the amount of the largest frxETH holder and I get an exchange rate of 0.9978.  I normally don’t like it when I see a number 7 in there so lets get the pool balanced y’all.  And also let’s just note the TVL here, we’re at $120M.  Still 9 SOLID FIGURES baby.  So far so good, let’s see how we stack up with the others.

Here we layout the LSD market landscape.  Obvs, we have Lido in the lead with 29% of the market but you can see here that Frax REMAINED the highest 30-day delta in the group, at +64% so far.  FrxETH’s market share is at 0.47%.  We’ve official flipped Stakewise.  LOVE is in the air!  And so is frxETH.  I did some dirty math and if we keep up this monthly growth and Rocketpool keeps up their growth, we’ll flip Rocketpool in 4 months.  Let’s keep fighting the good fight!  On the yield landscape, frxETH pretty much dominates with a 6.97% and the closest competitor is Stakewise at 5.2 %.  We are the best game in town so come get some of this gud gud!

Peg check strong.  Curve swap strong.  Count up-only.  Staked % healthy.

Next we have a new section I added.  Another one of Frax’s product that might not get as much as love as the other products is FPI.  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.  So lets run through the numbahs!  So far, we have 82.1M supply of FPI, current inflation reading (since Dec 2022) is 6.4% and the FPI peg is only short 0.08% of its peg.  And you’re wondering how does it maintain its peg to inflation, well that’s what the treasury is for.  For the record, FPI’s treasury is at $85.4M.  Like how the AMOs work for Frax stablecoin’s treasury, the FPI’s treasury is made up of FPI, FRAX, and a small percentage holding of FXS.  As you can see 85% of the treasury is in the FPI/FRAX convex, with another 10% just consisting of FPI & FRAX chilling in the Controller/Comptroller smart contracts.  All these assets are put to work just like in the AMO to earn that needed yield to keep FPI at the inflation peg.

Next we have our FraxLend section.  We’ve snatched a TVL of $228M with $52M in borrowed FRAX.  The charts I like to look at are the Collateral Value and the Supply Value.  These are great proxies for trust in the product.  A good confidence check and you see the graphs are trending up and to the right.  Following that I like to check the utilization %, which for me is how much of the total supply has been borrowed, and we’re at 82.1% utilization rate across all the lending pairs.  This is a slightly different way of looking at utilization rates, but I prefer it.  Currently, there are many pairs being offered on FraxLend but more and more are being added.  Also take a look at the current Supply APY for FPI/FRAX pair.  A whopping 12.42 %.  Be sure to listen to our Governance Roundup to get any alpha on any future pairs.  A little further down the list you see there’s the sfrxETH/FRAX pool with a double whopping 27% APY.  Though this won’t last as folks in the v2 pool would migrate over.  But I guess you can come get it while the going is good!

The last leg of the DeFi Trinity: the DEX aka FraxSwap.  Per DeFi Llama, the TVL is $68.3M with a 138M monthly volume so far for February.  I just took the Monthly volume divided by the TVL to get a utilization rate of 202%.  Granted the volume this past month has been picking up so if you look at December, which looks to be about a third so utilization rate could be in the 70%s, but that’s still pretty good.  In February so far, we’re already at 2/3 of January’s volume and its only the half way through February.  Now there is a slight discrepancy between DeFi Llama’s reported TVL and the one on Frax Facts but that’s because of the massive $85M FraxFPI pool that DeFi Llama isn’t including in the TVL.

Finally, let’s jump into our profitability section starting an overview of the AMO holdings.  We have a grand total of $1039.5M across all the AMOs.  This was a $10M change over last week with $4M leaving the Investor AMO and $6M leaving into the Liquidity AMO.  The Curve AMO is at 712M, Liquidity $87M, Lending $71M, and Investor 180M.  Things are quite topsy-turvy on the AMO front.

Onto the profitability of the Convex AMO.  For the month of February so far, we have $790k in revenue and $1M in bribe expense.  As you can see, most of our revenue comes from CRV rewards, magnitudes larger than the CVX and FXS rewards.  With a net loss of $210k to start our month.  We have a long way to climb to get over this profitability hurdle but it’s growth time so we gotta pay to play.  Another thing to note here is that with FXS price bumping the past 2 weeks, bribes are getting expensive since they’re paid in FXS.

Quick summary money check.  AMO holdings was $1039.5M, -1.0% WoW.  Profitability, for February so far is not too bad!  If we end the month only down $400k, I’d be okay with that.



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

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