"Ah, ha, ha, ha, Stayin' Alive (Oh!)" - FraxCheck #53

This week... I call this week the “Ah, ha, ha, ha, Stayin' Alive (Oh!)” week. As the name suggests, we LIVE to fight another month.

Oct 3, 2023


  1. FRAX // 92.1% Collateral Ratio
  2. frxETH // YTD Returns is +50% more than rETH
  3. frxETH // 7% Monetary Premium

Frax Supply & Peg

We're finally NOT DOWN on the FRAX supply.  We're currently at 671.7M.  Though this is still -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 1.000 and as low as 0.998.  In the market, we saw an exchange rate of $0.993 when swapping 100M FRAX for USDC.  A little wobbly but at least it's still above 0.99.  We, however, expect another drop in supply to balance the pools.

With the lift in the markets, our balance sheet assets grew by $2.2M (+0.30%) but our liabilities only grew by $500k (-0.0%) so that means our balance – aka equity – grew by $1.7M (+2.5%).  We currently have $809M in Total Assets, $741.7M in Liabilities, and $68M in Balance Equity.  

Collateralization Ratios

The Collateralization Percentage is currently at 92.1%.  We got this number by taking the Total Assets ($809M) subtracting the Locked Liquidity ($126M) then dividing that by the Total Frax Supply (741M).  


We're hanging onto our TVL at $326M down 1.2% from last Frax Check.  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 $464M, which is 2.16x of the 3Pool.  Let's set the floor here please!

FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 268,198 frxETH supply, a 3.0% increase from two weeks ago.  There's been notable growth in the frxETH/WETH pool which jumped from 4% to 7% of all frxETH supply and the frxETH/stETH pool doubled from 1% to 2%.

Most significant is that frxETH's monetary premium is at 7%!  This is definitely in the high range.  This means that 7% of the supply of frxETH holders are happily holding or utilizing frxETH outside of the Frax native ecosystem.  

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 0.9976.  We do not like seeing a 7 in the exchange rate.  We shouldn't have to pay regular swapping fees rate to swap between similar assets.  We're also seeing similar signals of imbalance in the Curve Pool with a 79/21 split between frxETH and ETH, respectively.  

But we do have a few new pools to monitor as well.  The frxETH/WETH pool has nearly 22.5k ETH worth and the frxETH/stETH has 8.8k ETH worth.  PSA: The frxETH/WETH pair is paying 5% in APR, which is 16% more than the frxETH/ETH pool.

Competitive landscape

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

We are (pretty much) FLAT!

We were at 2.2% four weeks ago.  For the last 30 days, we've grown 4.2% but our competitors such as rETH, stETH, and even cbETH, grew by 3.3%, 3.1%, and 3.9%.  Not to mention Binance staked ETH grew by 159% in the last 30 days.  This isn't great because rETH is 3.5x larger than frxETH.  We need to be growing faster.

Even though frxETH is paying out the highest yield at 3.9%, our growth rate pales in comparison to others.  What's more frustrating is that YTD, frxETH has grown faster than rETH by 50% and stETH by 33%.  


The final stablecoin: FPI.  The Annual Inflation Index also is at 3.7%.  Good thing that the FPI is still above Peg by 63 basis points.  The treasury consists of $92.7M with an excess equity of $3.6M.


FraxLend's recovery run has stalled a bit since the crazy price action at the end of August and early September.  The borrowed value seems to have turned over and heading lower. The collateral value is steadily rising since the August cleanse. Currently, we have $226M in TVL with a 67% utilization rate.  


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 $61M TVL across all the pools.  We saw decent volume in the FXS/FRAX pair these past 2 weeks with an avg 7D volume of $10M, previously we were in the $3-5M range.  For September, this DEX turned over 57% of its TVL.


Revenue, Expenses, Profit

Show me the money! Well, here it is.

The AMO Dashboard is also undergoing some upgrades so we will report 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 $105k 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 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 down $46.5k.  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 $1.2M for the year.  The math goes as such: 24.5 frxETH rewards per day* 365 days * 8.0% fee rate * Price of ETH.  Then divide that by 12 to get the monthly figure of $99k per month or 59.6 ETH.


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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