"Same Same" - FraxCheck #24

I call this week the “Same Same” week. As the name suggests, this week things are... same same.

Feb 1, 2023

Welcome to Frax Check.  Your weekly frax vibe check.  I am your host Kapital_K and I’m joined 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 @flywheelfi on Twitter and tg.

This week..  I call this week the “Same Same” week.  As the name suggests, this week things are the same same.  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.  Enough intros, let’s dive in.

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 1 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 a 5 Frax Check now.  Following we have the Decentralize %.  A month ago, we saw a big reversal jumping but this week, we’re down small from last week by nearly 1%.  Still V v v v much bear market vibes across the board when it comes to these two metrics.  We want 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 but we’re stalling a bit.  Next, we have the FraxBP product, which imo is sort of like liquidity as a service.

The FraxBP has been holding steady at just about $500M for the past few months.  For this week we saw the TVL got to $495.2M, which is 1% more than last week so pretty much unchanged.  On the right side we have a new metric I wanted to start looking at which is the volume traded.  Since this Frax Check lands perfectly at the end of the month, we have the monthly volume for January at $8.9M which represents about only 1.8% utilization of the nearly $500M TVL.  Not great tbh.  Not great.  But I’m here to report the on-chain data.  But also said differently, there’s more than sufficient liquidity to facilitate magnitudes more volume than where we are at now.

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 2.52% for a $500M pool so the estimated $483k of yield.  The quick math is take TVL of $500M, multiply by 2.57%, 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 month so far, we paid $487.5k so rough back of the envelope math says we’re pretty much breakeven for the week.  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, $377 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 89% of the 3pool.  The FraxBasedPool is $495.2M versus 3pool's $559.3M.  What’s noteworthy is that the FraxBP didn’t gain the TVL but rather 3pool losing its TVL.  Note that we are STILL above the Frax3CRV pool!!!  Let’s keep the momentum going.  Steppingstones, 3Pool next.  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 $66.0M, an increase of 20.7% from last week.  We finally broke above the $50M level after 9 Frax Checks.  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.  We see that BUSD and GUSD is at 1.6% and 2.0% respectively – interesting that these CEX stablecoins aren’t requiring a higher premium.  This is below the FraxBP APR, who is LPing in these pools.  This could be an interesting on-chain analysis.  The alUSD and FRAXBP pair is paying out 8% APR at nearly $11M in TVL.  It was 9M last week and was paying 9%+ but a quick bump $2M in two weeks.  Honestly, still not too shabby if you believe/trust in alchemix’s mechanism and collateral set.  On the bribes front, Frax paid $59.2k for the month of January so far.  And if we look at Liquidity per Bribe Dollar, Frax was able to pull in $1,114 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 $16.8M of TVL from non-stable pairs in the Metapools.  These are pairs like cvxfxs/FraxBP and cvxcrv/FraxBP.  That is a nice jump of 6.3% 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 is offering a whopping 63% APR!  Wooh!  Then we have the usual flywheel suspects of CVX, cvxCRV, and cvxFXS at a range between 26 - 35%.  But we got a new contender throwback with Ohm+FraxBP paying 40%!  On the bribes side, Frax paid $34.7k so far in January and the liquidity incented is $480 of liquidity per $1 of bribe spent.

So, adding all of the stables and non-stables TVL, we have a total of $82.8M of liquidity paired against FraxBP – up 17.4% this week.

Summary time.  Liquidity Check.  FraxBP is 495.2M which is 89% of 3Pool.  The MetaPool is at $66M for stable pairs and $16.8M for non-stable pairs.  And TVL of All pairs (stables + non-stables) are at $82.8M.

Next, we have our FrxETH segment.  We start by checking the frxETH supply.  As always, it’s up only!  The count is at 81,271.  And look at that chart, I know you can’t read it but just appreciate the verticalness off that graph.  +9.7%.  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 49.6%, (pretty much unchanged from last week) of the frxETH is chilling and stacking ETH earning a nice 7.18% APR.  The other place you can take your frxETH is to the curve pool of frxETH/ETH, where you can join 48.7% (up 1% from last week) of the frxETH supply earning 8.2% APR in CVX, CRV, FXS.  The remainder 1.7% 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 is 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.  That’s not too shabby, down nearly 4 bps from last week.  And also let’s just note the TVL here, we broke $100M last week, and now we’re at $122M.  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 +73% so far.  The massive pump deposits this week led to a 10% increase in market share for frxETH, which sits at 0.41%.  And thus we have our first flippening with us overtaking Ankr Staking.  It’s not official-official yet since there’s a 1 week or so delay of validator set up, but next week I’m sure we’ll overtake Stakewise and be in the top 3!  Let’s keep fighting the good fight!  On the yield landscape, frxETH pretty much dominates with a 7.18% and the closest competitor is Stakewise at 4.91%.  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 our FraxLend section.  We’ve snatched a TVL of $233M with $50.5M 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 a 81.5% 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 12 pairs being offered on FraxLend but more and more are being added.  Also take a look at the current Supply APY for sfrxETH/FRAX pair.  A whopping 8.96% on pristine sfrxETH collateral.  I would probably park FRAX here.  Be sure to listen to our Governance Roundup to get any alpha on any future pairs.  There’s another cool visualization of the loan health that I want to highlight.  The largest position on FraxLend is nearly 21M FRAX being borrowed against 104M of CRV, as you can see the position is quite healthy, and from a quick glance, most positions on fraxlend are quite healthy.

The last leg of the DeFi Trinity: the DEX aka FraxSwap.  Per DeFi Llama, the TVL is $65.7M with a 147.5M monthly volume so far for January.  I just took the Monthly volume divided by the TVL to get a utilization rate of 218%.  Granted the volume this past week or two or three 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.  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 $1039.0M across all the AMOs.  This is largely unchanged over last week with a mere 9M gain across the two AMOs — Curve & Investor.  The Curve AMO is at 712M, Liquidity $80M, Lending $70M, and Investor 177M.  Things are quiet on the AMO front.

Onto the profitability of the Convex AMO.  For the month of January, we have $1.17M in revenue and $1.7M in expenses.  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 $540k to start our 2023.  We have a long way to climb to get over this profitability hurdle but it’s growth time so we gotta pay to play the game.

Quick summary money check.  AMO holdings was $1031.9M, +0.0% WoW.  Profitability, for January so far is subpar but I remain hopeful for the rest of the year!



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