This Year in Frax 2023 Edition

Samuel McCulloch
Samuel McCulloch
Dec 18, 2023
This Year in Frax 2023 Edition

It's been an incredible year for Frax and Flywheel this year. We've experienced all the highs and lows frp, the depths of the bear market to witnessing the launch of Frax v3, Fraxlend markets, veFPIS and more. We've wrapped up the whole year with the best parts all in one place. Enjoy.


  • Flywheel Grant Proposal: We kicked off the year with a bang and a DAO vote that funded Flywheel with a grant of $214.2k that we used to create content, run hackathons, hold events and drive growth for Frax.
  • Eigenlayer x Frax: DeFi Dave was first on the ball for the modular blockchain future when he proposed integration of Eigenlayer into sfrxETH. We also interviewed Sreeram at this time and were one of the first protocols to cover the hottest narrative for crypto right now.
  • veFPIS Docs Update: We first learned about the mechanics of veFPIS in January when an anon found stealth updates to the docs.
  • Curve Wars: Presented without comment

February - Flatcoins & CR to 100!

  • veFPIS Launch: One of the biggest launches for Frax this year was veFPIS, with 5 million FPIS locked in the first week and high yields in the triple digits drove a burgeoning narrative for FPIS and its addition of an inflation pegged stablecoin for the Frax ecosystem.
  • Setting the CR to 100%: In a post Luna/UST world, it became clear to Frax that relying on the algorithmically backing for our stablecoin was dangerous and created unfixable systemic risk for the protocol. The DAO voted to stop FXS buybacks and instead acquire ETH at a rate of up to $3m a month to close the CR gap. At the time, the CR was hovering at 91%, and at the end of this year, is at 95%. Slow and steady, but eventually will be executed.
  • sFrxETH Proposal by Marc Zeller: Aave first proposed to add sfrxETH to their platform back in February, however, without a functional Chainlink oracle for Frax's LSD, the proposal say dormant for almost the whole year until recently when Aave restarted the governance process for adding sfrxETH to their protocol.
  • Convex FXS Single-sided Staking: A governance vote at Convex Finance shifted rewards to single-sided staking to address cvxFXS and FXS peg issues. Convex moved the 10% Convex Frax protocol fee from the cvxFXS-FXS curve liquidity pool to a single sided staking cvxFXS contract and also the veFXS fees from the cvxFXS-FXS curve liquidity pool to single sided cvxFXS staking contract. The CVX peg was off by nearly 30% at the time and this proposal was able to bring the peg back to near 1:1.
  • FRAX/mUSD ragequit: The first of the ragequits was proposed and voted on. It was a brief trend that allowed for unlocks of deprecated LP.
  • Something Stable: Flywheel hosted a great event with RAI and Reserve protocol.
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March - Stablecoin Maximalism, Frax v3 & USDC Depeg

  • USDC Depeg: In one of the craziest black swan events post-Luna, over $3bn dollars of USDC's dollar collateral was questioned for solvency when Silicon Valley Bank was shuttered by the FDIC. After the closure of Silvergate Bank, SVB's demise was due to the ongoing fallout from crypto's collapse and rising interest rates. This event was more influential in driving significant change to the Frax ecosystem than any other that had precipitated before it and the biggest test for FRAX since its launch in 2020.
  • sfrxETH Fee ATH: While the USDC depeg was brutal for all of DeFi, one area that was a positive was the amount of fees generated during the havoc. Our validators earned their highest 1 day revenue in that week with more than 80 ETH captured from fees and MEV.
  • ETH Denver Success: Frax's impactful presence at ETH Denver, with presentations by Sam K and DeFiDave, introduced the idea of Stablecoin Maximalism and explored discussions around regulation. Sam K's talk was heavily attended and set the stage for Frax v3 which was announced later that month.
  • Frax v3 Announced: Sam K dropped a tweet with "FRAX v3 👀" to all of our surprise, setting the stage for its launch later that year.
  • WETHR Incentives: Frax started to use its revenues to provide extra incentives for several LP pools on Curve to pair against frxETH, in the same manner that FRAXBP does. It was a huge step for the growth of frxETH and was one of the best Curve additions this year.
  • Frax Arbitrum Airdrop: We received 500,000 ARB to the DAO for our continued deployment on the novel L2.
  • Coinbase Calls for Flatcoins: Coinbase published a blog article requesting builders to come to their L2 ecosystem. The first “Idea for Builders” was flatcoins and Frax was specifically named as one of the protocols that they would be excited to see deploy there.
  • Reserve Launches eUSD: One of the biggest decentralized stablecoin launches of 2023, Reserve kicked off with an eUSD-FRAXBP deployment on Curve, attracting tens of millions of dollars and providing high incentives for liquidity providers.
  • Flux Finance AMO: The longest governance proposal in the history of Frax proposed adding Flux to the approved list for AMO liquidity deployment. Flux is the lending market for OUSD, an RWA interest bearing treasury product that gives exposure to US T-bill short term rates.
  • Fraxlend Deployed to Arbitrum: The DAO voted to add new Fraxlend markets on Arbitrum. While we still only have 1 pair at the end of this year, new collateral assets are planned to launch with the ongoing STIP program.
  • Metronome adds msETH/sFrxETH: The launch of msETH using sfrxETH as collateral, and the Metronome partnership. This was the first synthetic borrow asset that could be used to provide leverage for Frax's ETH LSD.

April - Shapella Upgrade

  • Shapella Upgrade: The Ethereum devs built a 747 in mid-air when they succesfully moved ETH from proof-of-work consensus to proof-of-stake and with Shapella for the first time users and validators could unstake their ETH. Over 1.5m ETH was queued to be withdrawn in the first weeks and led to significant inflows for frxETH. Frax added several thousand ETH at the time in the "Great Reshuffling."
  • USDP Base Pool Proposed: Paxos' stablecoin was added as a new base pool, called the FRAXPP. It helped diversify FRAX's collateral backing and opened up new opportunities with Paypal's PYUSD launch later in the year.
  • Frax Educational Incentives and Dorahacks Fraxbuild Hackathon: Flywheel proposed a grant for $57.5k worth of FXS for the first ever Frax sponsored hackathon. We saw some great projects emerge out of the contest, with Sommelier's Frax vault and Revest's NFT system leading the charge.

May - crvUSD

  • crvUSD Launches with sfrxETH Collateral: Frax's LSD was the first and only asset available to be used to mint crvUSD in the early production launch period. Curve Founder Michael Egorov's close relationship with Frax was highlighted as he chose our LSD because it had the most optimal oracle integrations to support crvUSD. We had an amazing  hour long celebratory livestream when the contracts went live.
  • Hourglass Protocol Launch: Pitch rebranded to Hourglass and launched their Timer Bound Tokens for Frax assets. This model would later be used when they decided to unlock PitchFXS over a multi-year period.

June - frxETH v2 + CRV Drama

  • FXS Bottoms: The Frax governance token hit yearly lows just under $5 in one of the biggest moves ever. Several millions were liquidated in Fraxlend.
  • frxETH v2 Announcement: Sam K dropped all the alpha about frxETH v2 in the Dorahack's workshop talk he gave. He detailed how the new staking system would work and also how it would introduce a dynamic lending model for LSD's. Sam K then also went on the Rocketpool Discord to answer questions from a hostile crowd about the benefits of the new staking model and how it would be more efficient than RP. We think he won over the crowd in the end.
  • Michael CRV Positions Under Threat: What turned out to be one of the biggest drama fueled narratives for 2023, Curve Founder Michael Egorov's lending positions almost were liquidated when the price of CRV dropped to $.60, only .20 away from liquidation. Michael was forced to OTC over 120m wroth of CRV at the time to raise capital to repay his debts on Aave, Abracadabra and Fraxlend, and it was Frax's lending market that emerged the winner after the market understood the lending markets liquidation mechanisms, interest rate changes, and loss socialization.
  • Buybacks Resumes: With the price of FXS hovering around $5, the Frax DAO resumed buybacks of the governance token using the TWAMM. While we ultimately repurchased a minimal amount of FXS, the buyback narrative helped change market dynamics towards positive price increases that continued into the end of this year.
  • FraxBonds + Fraxchain Leaked: Travis dropped the logo for Fraxbonds in chat, spurring discussions about the soon to be launched RWA-like product. We most likely will see the first FXB's released at the end of the year or in the first week of 2024. We also heard for the first time that Fraxchain was on the product roadmap and that it would be a novel L2 in support of the Frax protocol.
  • Chainlink Integration: After almost a year, Chainlink finally added an oracle for sfrxETH.

July - Bridge Goes Bust (Frax SAFU)

  • Frax’s Balance Sheet: In what was a world first, Frax published the first fully transparent and continuously updated balance sheet for FRAX. No protocol or company had ever given such radical transparency into their books, but with the public nature of blockchains we now can track every cent of Frax and its collateral backing on a block by block basis.
  • Multichain Goes Bust: A disastrous turn of events, Chinese authorities arrested the founders of Multichain and stole a $100m worth of assets held in the bridge contract. It led to widespread depegging of many bridged assets on networks like Fantom and impacted several DeFi protocols. Frax was able to escape unharmed due to FraxFerry's isolated bridge mechanics and debt model. No Frax assets were affected, highlighting the resiliency of Frax's bridge design.
  • Frax Supply Drops Under a Billion: Rising interest rates put pressure on all stablecoins to adjust as the bear market continued and USDC supply kept shrinking.
  • Ouroboros FXS Investment Analysis: FXS: Coiled Spring was a seminal research and analysis published this year. It detailed the potential growth prospects for all of Frax's products and the future impact that Fraxchain and frxETH v2 might bring for the next years. One of the best, if not the best write up about Frax this year.

August - v3!

  • Frax v3 Proposal: Riding on the heels of ETH Denver, Sam K proposed Frax v3 to transform FRAX into an All Weather Stablecoin with the addition of FXBs, sFRAX, and the creation of FinresPBC. This impactful product addition cemented FRAX's security model and collateral backing, increasing its resilence and lessening its dependency on any one single collateral type. It also introduced the idea of FRAX eventually acquiring a Fed Master Account at some point in the future once the regulatory landscape enables its addition.
  • Vyper Exploit and CRV Acquisition: While the Curve hack happened on July 30 due to a bug in one of the older Vyper dependencies, its effect and asset recovery played out over the month of August as Michael and crew negotiated return of the stolen assets. Frax also voted to acquire $1m worth of CRV from Michael as the last deal of his OTC distributions.
  • frxGov Launches: Frax Core Dev Jon Walch announced the finalization and deployment of Frax's new two-tiered governance module, which will eventually fully decentralize the protocol and remove the ability of the Frax Core Dev's multi-sig from making protocol changes.
  • FraxEtherRedemptionQueue Goes Live: After feedback from staking participants, Frax added a new method to remove ETH from staking without having to sell it through Curve. This was a request for appease those with larger amounts of ETH staked that would like to withdraw without incurring significant slippage.
  • Largest Fraxlend Liquidation: On August 17, the price of FXS collapsed by more than 20% in an hour, led by massive liquidations in all of crypto totaling over $1 bn notional. Several large whales in the FXS/FRAX Fraxlend pair were liquidated. One anon was liquidated for more than 100k FXS, worth more than $500,000 at the time, setting the record for the largest liquidation the protocol has ever facilitated.
  • PYUSD Launches: Paypal entered the stablecoin game with the release of its Paxos' managed whitelabel token. While its seen significant growth this year, reaching over $100m in supply, the most exciting developments for it will be in 2024 once it starts to be incentivized through Curve.
  • Balancer Boosted Pools At Risk: A high-risk exploit was found by Balancer and white hats that put millions of dollars at risk. Balancer advised that all LPs remove their funds and migrate to a new LP contract. No funds were exploited, and Balancer Comms team handled this potentially disastrous event with calm and clarity.

September - Growth Votes

  • Frax's 1.5m ARB Incentive Grant: Frax successfully applied and received a 1.5m ARB grant to incentivize liquidity on Arbitrum. You can take advantage of these yields right now by staking LP assets with Frax.
  • Prisma Finance Launches: As one of the biggest DeFi projects to launch this year, Prisma forked Liquity to integrate LSDs as the collateral backing and also partnered with Curve, Convex and Frax.
  • Cryptovestor Comes on The Scene: Our mega-bull to emerge this year in the Frax community this year, Cryptovestor's enthusiasm and investigations created a new found buzz for all things Frax. We saw the potential for him and graciously asked him to join at Flywheel to write a Bi-weekly article covering Frax alpha.

October - Frax v3 Launch

  • Frax v3 Rollout: The official launch of Frax v3 happened in October, with sFRAX the crown jewel of the new RWA offering. The "All Weather Stablecoin" entered into its final form, marking a key milestone for the Frax DAO.
  • sFRAX Launched: At the height of rising interest rates, Frax added sFRAX to great fanfare, drawing in more than $50m in a couple of days as the first product released to support Frax v3.
  • StableScarab Creates sFRAX Dashboard: Lightning quick StableScarab deployed a fantastic sFRAX dashboard within a day of it launching, giving deep analytical insight into Frax's newest v3 product.
  • Whitelisting sFRAX and FXBs as FPI Collateral: The DAO voted to add sFRAX as FPI collateral, allowing the protocol to backstop the inflation tracking stablecoin with RWA products.
  • Aave Integration of FXS: Aave's decision to add FXS to its v3 lending protocol reflected Frax's renewed strength and growth prospects for 2024.
  • Ragequits No More: After several ragequit proposals had passed earlier in the year, the VST-FRAX ragequit proposal failed after the DAO communicated that no more LPs would be unlocked until 100% CR was achieved.
  • FXB's on Testnet: Travis announced that the FXB contracts were now public and that they would be testing them on Polygon. He also shared a newly updated FXB logo design... the all seeing eye.

November - Security Incident

  • Frax.Finance Registrar Incident: Attackers were able to compromise the registrar settings for the website, pointing it to a Russian based clone. Thankfully no one lost any funds from the incident.
  • Prisma Partnership: Prisma raised their deposit cap for sfrxETH to $30m and officially launched their governance token. Yields were incredibly high for the first weeks, and drove more than $60m worth of sfrxETH collateral deposits and over $30m mkUSD paired with FRAX in Curve.
  • PitchFXS to Switch to TBT: Hourglass, previously Pitch, voted for PitchFXS holders to change the locking dynamics from permalocked to timed locked. The governance proposal came after PitchFXS has lost its peg by 50% to FXS. The new mechanics would eventually allow unlock of the protocol held veFXS.
  • Aave Remembers sfrxETH: Aave had originally proposed to onboard Frax's LSD back in February, however the lack of Chainlink support sidelined the vote at the time. In November, the issue was brought back up again and Aave restarted the governance process to create a lending market for the LSD in its v3 protocol.
  • Axelar Proposes Bridging Services: Axelar and the Core Team proposed to adopt Axelar network’s representation of Frax Finance tokens on chains where a dedicated Frax Ferry is unavailable. This adoption will enable the seamless transfer of Frax Finance tokens between supported chains. This added support for Frax assets to smaller networks like Scroll, Kujira and 4 others.

December - Fraxchain Testnet

  • ETH Redemptions Go Live: While the contract had been published in August, full implementation of the redemption system didn't go live until the end of the year. Now anyone can redeem an unlimited amount of frxETH for ETH without having to sell through Curve.
  • Fraxchain Testnet: We finally got to see Fraxchain when the test net went live earlier this month. The team said that Etherscan support is coming soon and the that the L2 should launch in January.
  • Arbitrum STIP Incentives Start: Frax started distribution of its 1.5m ARB to LPs and other market participants on Arbitrum this month. Read our full report for all the details.
  • Frax Invests into Curvance: Curvance is an omnichain yield optimized money market that aims to simplify the cross-chain DeFi experience. The team has been working on the product for 19 months and has secured a $3.6 million funding round with investors from Curve, Convex, Pendle, and Frax. Curvance aims to provide a cohesive, Web2-esque UI/UX for DeFi users, consolidating steps and simplifying complex processes. The protocol will use a routing system to execute transactions and optimize yields for users. The distribution of the CVE token will reward early adopters and active community members. Curvance plans to launch its testnet soon and aims for a full launch in Q1 2023.

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