This week... I call this week the “Wake Me Up When September Ends” week. As the name suggests, I want this whole month to be over already.
TOP 3 TL;DR
- frxETH // ∆ 0.0% growth in market share
- FRAX // -35% Supply Drop YTD
- FraxBP // -25% TVL but still 80/20 Imbalance
Frax Supply & Peg
We're down another 10% on the FRAX supply since our last Frax Check. We're currently at 671.7M. PAIN. This brings us to a total of -35% YTD since we started the year at 1B in supply. Nothing else to report here, moving on the peg.
We saw the peg got as high as 0.998 and as low as 0.997. In the market, we saw an exchange rate of $0.992 when swapping 100M FRAX for USDC. A little wobbly but at least it's still above 0.99. We expect another drop in supply to balance the pools.
Even though we saw such a drastic drop in FRAX supply, our balance sheet is holding strong. Because our liabilities decreased by the same amount as our assets, our equity balance remained unchanged at $66M.
Collateralization Ratios
The Collateralization Percentage is currently at 91.8%. We got this number by taking the Total Assets ($807M) subtracting the Locked Liquidity ($127M) then dividing that by the Total Frax Supply (741M).
FraxBP
We experienced a big drop in TVL for the FraxBP, down nearly 25% to $330M. The important thing to note is that the pool is still imbalanced with nearly an 80/20 split, between FRAX and USDC respectively.
When we add up all the FraxBP, Frax3CRV, and FraxPP, we receive a total of $469M, which is 2.13x of the 3Pool. We're about to go under the 2.0x mark.
FrxETH supply and distribution
Now onto the crowd favorite, le frxETH. We rocking strong here with 260,142 frxETH supply, a 1.0% increase from two weeks ago. There's been notable growth in the frxETH/WETH pool which jumped from 2% to 4% of all frxETH supply.
FrxETH peg
Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9981, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape. We're also seeing similar signals of imbalance in the Curve Pool with a 76/24 split between frxETH and ETH, respectively.
Competitive landscape
Speaking of landscape, let’s look at the LSD market.
We are (pretty much) FLAT!
We were at 2.2% two weeks ago but now we're at 2.16%. For the last 30 days, we've grown 3% but our competitors such as rETH, stETH, and even cbETH, grew by 5.8%, 5.9%, and 6.1%. Not to mention Binance staked ETH grew by 377% in the last 30 days.
Even though frxETH is paying out the highest yield at 4.4%, our growth rate pales in comparison to others. What's more frustrating is that over the last 6 months, frxETH has grown faster than rETH by 40% and stETH by 24%.
FPI
Finally! Some movement on the FPI front. We saw an increase of 0.4% which represents nearly a $350k bump. The Annual Inflation Index also jumped to 3.7% from 3.3%. But good thing that the FPI is still above peg by 63 basis points. The treasury consists of $92.3M with an excess equity of $3.6M.
Fraxlend
FraxLend has been on a nice recovery run since the crazy price action at the end of August and early September. Currently, we have $230M in TVL with 68% in utilization rate.
Fraxswap
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. There are only $60.2M 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 $4M. This may be the new norm, however, so keep yourself steady lads.
Profitability
Revenue, Expenses, Profit
Show me the money! Well, here it is.
The AMO Dashboard is also undergoing some upgrades so we will report in those figures next Frax Check.
Instead, let's look at the FraxLend AMO as that's one of the key revenue drivers with $26k revenue per week and $70.8k so far for September. There hasn't been any new FRAX minted or lent out of this AMO.
Another revenue stream from FraxLend is liquidation fees. Fortunately, we only saw $5k in liquidations so far in September. Recall that in August we had $225k+ in liquidations. RIP to the homies.
FPI is a little testy in September as we're slightly down with a loss of $321. But in August we pulled in a large chunk of revenue at $72k.
Lastly, if we do some rough math we could estimate the run rate of frxETH at $1.37M for the year. The math goes as such: 28.5 frxETH rewards per day* 365 days * 8.0% fee rate * Price of ETH. Then divide that by 12 to get the monthly figure of $114k per month.
ACCESS TO SLIDES: Here
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.
