"One To The Gut, One To The Face" - FraxCheck #43

This week... I call this week the “One To The Gut, One To The Face” week. As the name suggests, this week we got worked, blows to the gut then one straight to the face.

Flywheel DeFi
June 13, 2023


  1. frxETH // ∆ -4.5% drop in supply
  2. FraxBP // ∆ +26.8% in TVL
  3. FraxLend // $186k in Liquidations

Frax Supply & Peg

We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9980. Good to see that we’re back at 0.9980. Things had been on a slow bleed but glad to see this little bounce. Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

The Collateralization Percentage has been flat across the board for the past 8 Frax Checks.  We are still on our March to 100%.  Next, we have our Decentralization Percentage, in which we saw a nice little bump of 1.8% up to 21.9% from weeks of being flat.


Big moves this week!  FraxBP’s TVL jumped by 27% up to $634M.  FraxBP has been hovering around $500M for the past few weeks then we popped by 134M over the past 7 days.  Frax liquidity pools are now nearly 2.5x that of 3POOL.  We are in a new regime in the Frax-Curve flywheel relationship.

IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 115%. There are 1758 holders of IQ on Ethereum but only 182 are staked. There’s definite value in staking as the treasury is $15.4M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.

FrxETH supply and distribution

Now onto the crowd favorite, le frxETH.  Here’s the first gut punch.  We experienced our very first down reporting on frxETH.  We dropped by 4.5%, down to 225,268 frxETH.  This was due to the frxETH/ETH pool being imbalanced and we needed to rebalance the pool so a lot of frxETH was withdrawn.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9989, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9985, we’ve been steadily declining so the reduction in frxETH from the Curve pool should help increase the exchange rate.

Competitive landscape

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

We are DOWN!  Again…

We’ve ceded market share two weeks in a row.  We were at 2.47% 2 weeks ago but now we’re at 2.33%. We saw strong growth over May but this is definitely a slow month. The bad news continues as frxETH is in the middle of the pack this week in the yield arena.  Here we witnessed one of the lower APYs at 4.6% — but still, it’s that sweet native ETH yield.  The yield is also particularly lowered since the validator queue is still quite long.  Steady lads, deploying validators.


The FPI has remained quiet for some time now since the release of veFPIS. We saw a flat week this week so nothing to report.


The good times came to an end.  The Collateral Value and the Borrowed Value took a nose dive over the last week.  We dropped over $40M in TVL.  The collateral value and the borrowed amount just got back up to levels before the USDC crisis then completely dropped off like a cliff.  The Utilization rate dropped back to 69%.  We’ll get to the liquidations later.


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 but it’s pushing out major volume relative to its size. The TVL dropped by 10% down to $57.4M TVL across all the pools.  Though this has been one of the slower weeks since our usual FXS/FRAX pair normally facilitates $15M in volume, this week we only processed $9M.


Revenue, Expenses, Profit

Show me the money! Well, here it is.

Two weeks into the month and we’re at $330k in revenue and $460k in expenses so we’re at a net loss of $130k for the Convex AMO.  On the FraxLend front, we increased the AMO by 10M FRAX to 85M FRAX, we generated $44k in revenue.  We were at 90% utilization rate for the 85M FRAX but with the recent liquidations, we dropped to the protocol’s avg rate of 69%.  Unfortunately, there were a lot of liquidations over the past week.  We generated over $186k in liquidation fees — that is a whole lot of fees.  This one felt like a blow straight to the face.  Pour one for all the homies.

Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiplying again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $202k — awesome. Lastly, we have the FPI which generated $2.2k in profit, that is after the requirement for the peg.

That is it for this week’s Frax Check #43! We hope you guys enjoyed this one and see you next week to welcome in the month of June!


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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