"Same Same but Different" - FraxCheck #29

This week.. I call this week the “Same Same but Different” week. As the name suggests, this week things are pretty much unchanged.

March 7, 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 “Same Same but Different” week.  As the name suggests, this week things are about unchanged, maybe some small changes.  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, unchanged from last week.  Not much to update here.  Then obvs, we must check the peg, which got as low as $0.995 with a high of $1.001 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’re unchanged at 92%.  Following we have the Decentralize %, which saw a decrease of 80 bps and are now sitting at 23.9%.

For this week we saw the FraxBP TVL dropped to $521M, which is -1.6% decrease from last week – tvl has declined two weeks in a row down approximately 3% in 2 weeks.  On the right side we have a new metric I wanted to start looking at which is the volume traded.  For context, in February we hit 49.3M, and in first week of March we hit 21.9M already.  Though, this is still only 4.2% utilization rate of the 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 1.7% for a $530M pool so the estimated $345k of yield for the 14-day epoch because Votium epochs are 14 days.  Then we compare that to the bribes paid we see if there was any gain.  This epoch so far, we paid $241k 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, $733 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…. STILL at 104% of the 3pool.  The FraxBasedPool is $521M versus 3pool's $501M.  Now, it wasn’t easy to get to the top but now we gotta stay at the top.  It seems that we’re maintaining a ratio here.  Also I looked back at when the FraxBP/3Pool % was the lowest and that was in early November last year, which also marked the bottom.  Do with that information with whatever you want.  Note that last week I mentioned Frax3CRV was down $100M I need to make a correction here, it wasn’t – my mistake.  It was supposed to be $456M but last week I said it was $347M.  This week we saw the Frax3CRV gaining a nice $10M in TVL while the other two pools TVL dropped.  Now lets move to over metapools.

Reminder the metapool are pools that are PAIRED with the BasedPool, examples like LUSD/FraxBP.  We’re at $72M, a decrease of 9% 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 8.5% APR at nearly $46M in TVL. Honestly, still not too shabby if you believe/trust in alchemix’s mechanism and collateral set.  On the bribes front, Frax paid $29.8k this epoch.  And if we look at Liquidity per Bribe Dollar, Frax was able to pull in $2,416 per $1 of bribes spent.  For the whole month Frax spent $29.8k and got $2,416 of liquidity per $1 bribe dollar 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 $19.7M of TVL from non-stable pairs in the Metapools.  These are pairs like cvxfxs/FraxBP and cvxcrv/FraxBP.  That is decrease of 10% 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 ALCX-FRAXBP pool is printing over 54% with $1.4M in TVL.  What is interesting this week is that the usual suspect of cvxCRV, cvxFXS didn’t even make the top 4 list in terms of APR.  On the bribes side, Frax paid $12.4k this epoch and incentivized over $1.5k in liquidity.  So far this month, Frax paid $12.4k and the liquidity incented is $1,588 of liquidity per $1 of bribe spent.

So, adding all of the stables and non-stables TVL, we have a total of $91.7M of liquidity paired against FraxBP – down 9% this week.  Pain.

Next, we have our FrxETH segment.  We start by checking the frxETH supply.  As always, it’s up only!  The count is at 112,126.  And look at that chart, I know you can’t read it but just appreciate the verticalness off that graph.  +6.6%.  Hot.  I do think we may slow down in percentage growth terms as we’re getting to size but I hope we don’t!  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 57% of the frxETH is chilling and stacking ETH earning a nice native staking yield.  The other place you can take your frxETH is to the curve pool of frxETH/ETH, where you can join 34% of the frxETH supply.  The remainder 9% is floating in the ether somewhere.  I 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, I think we’ll see this heavier flow into sfrxETH.  And also lets note that there’s 9% of frxETH just chilling, this number is increasing more and more these last few weeks.  But enough talk of the supply and the yield, let’s get down to the peg.

Peg check is ABOUT as strong as it could be, you see the price delta at 0.0001 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 0.9985  And also let’s just note the TVL here, we’re at $117M.  Still 9 SOLID FIGURES baby.  Peg check strong.  Curve swap strong.  Count up-only.  Staked % healthy.  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 74.8% of the market.  Frax REMAINED the highest 30-day delta in the group, at +30% so far.  FrxETH’s market share is at 1.44%.  Let’s keep fighting the good fight!  On the yield landscape, frxETH pretty much dominates with a 6.3% and the closest competitor is Stakewise at 4.7%.  We are the best game in town so come get some of this gud gud!

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 82.3M supply of FPI, current inflation reading is 6.3% and the FPI peg is ABOVE by 0.81% of its peg.  And you’re wondering how it maintains its peg to inflation, well that’s what the treasury is for.  For the record, FPI’s treasury is at $88M.  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 $232M with $54M 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 80% 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 CRV/FRAX pair.  A whopping 10.8%.  then right behind it is the gOHM/Frax pair at 10.5%.  Folks sure are degening hard into these two – maybe crvUSD is on the horizon.  A little further down the list you see there’s the sfrxETH/FRAX pool with a juicy 7% APY.  Be sure to listen to our Governance Roundup to get any alpha on any future pairs.

The last leg of the Stablecoin Maximalism: the DEX aka FraxSwap.  Per DeFi Llama, the TVL is $69M with a 23M monthly volume for March.  I just took the Monthly volume divided by the TVL to get a utilization rate of 33%.  Granted the volume this last 2 months have been picking up so if you look at December, the utilization rate could be in the 70%s for the lows, but that’s still pretty good.  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 $1048M across all the AMOs.  The Curve AMO is at 710M, Liquidity $80M, Lending $79.9M, and Investor 179M.

Onto the profitability of the Convex AMO.  For the month of March, we have $360k in revenue and $890k in bribe expense, which means we are at a loss of $530k for March.  I think we definitely lucked out last month since the bribe payment fell into this first week of March instead of the last week of February.



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