"What the frxETH is going on?" - FraxCheck #55

Nov 1, 2023

This week... I call this week the “What the frxETH is going on?” week. As the name suggests, we're focusing on frxETH for this week's check.


  1. frxETH // APY 6% (50% more than rETH and 31% more than stETH
  2. frxETH // peg at 0.977 (swapping 3.5k frxETH)
  3. frxETH // +6% ∆ 30-day growth rate (highest growth)

Frax Supply & Peg

We're finally NOT DOWN on the FRAX supply. We're currently at 671.7M for the whole month of October. 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 0.999. In the market, we saw an exchange rate of $0.994 when swapping 100M FRAX for USDC. We were at $0.998 earlier but now we're moving a little lower. Will continue monitoring.

Small bump on the assets side of the balance sheet, plus $3.5M, for this Frax Check. Our Liabilities decreased by $0.2M, so our balance equity had a nice bump up to $3.7M. We currently have $813M in Total Assets, $742.6M in Liabilities, and $70.3M in Balance Equity.

Collateralization Ratios

The Collateralization Percentage bumped by 70 basis points up to 92.7%. We got this number by taking the Total Assets ($813M) subtracting the Locked Liquidity ($125M) then dividing that by the Total Frax Supply (742M).

This is thanks to the rally in the market as CRV and CVX gained, 9% and 8% respectively.


Down 62%! FraxBP's TVL experienced a massive drop – or rather a massive rebalancing. There were about $62M USDC so Frax had to balance the pool, which meant pulling over $200M+ of FRAX from the liquidity pool.

When we add up all the FraxBP, Frax3CRV, and FraxPP, we receive a total of $197M, which is 0.9x of the 3Pool. This is one of the lowest ratios we've seen.


sFRAX been live for three weeks and we've amassed $44.6M. Come get real-world yields via sFRAX now. The APY at the time of writing is 6.1%. There are 189 sFRAX holders, which is a drop of 15% from 2 weeks ago and what's good to see is that 80% of folks are actually buying FRAX to stake it into sFRAX!

FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 281,501 frxETH supply, a 2.6% increase from the last Frax Check. sfrxETH remained flat at 73%. The frxETH/ETH Curve pool has found a bottom! The liquidity fled to frxETH/WETH, which increased to 11% of all frxETH (+37.5% since two weeks ago).

frxETH's monetary premium is at 8%! This means that 8% 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 0.977. We do not like seeing this exchange rate.

This is a little concerning. The 0.977 peg is raising flags for me. We're also seeing similar signals of imbalance in the Curve Pools with a 79/21 split between frxETH and its counter pairs.

Competitive landscape

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

We are up 4%!

We finally bumped up to 2.5%. For the last 30 days, we've grown 6.2% but our competitors such as rETH and stETH, grew by 5% and 0.2%, respectively.

For this Frax Check, there was some conflicting information on the APR count. On DeFi Llama it shows frxETH 3.7% but on the frxETH facts.finance page we see 4.1%. I'm unsure what accounts for the discrepancies since there aren't any validators in the queue.

frxETH has grown faster than rETH by 49% and stETH by 30% since YTD and we've been maintaining this slope rate.


The final stablecoin: FPI. The Annual Inflation Index also is at 3.7%. Good thing that the FPI is still above Peg by 40 basis points. The treasury consists of $93.1M with an excess equity of $3.7M.


FraxLend's stable. We've found a good level at around 250M-ish TVL with $64M borrowed. A 78% utilization rate is healthy. I like to see utilization in this range.


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 $60.8M TVL across all the pools. We saw decent volume in the FXS/FRAX pair these past 2 weeks with an avg 7D volume of $11M, previously we were in the $3-5M range. For October, this DEX turned over 78% 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 $135k. There hasn't been any new FRAX minted and the amount of FRAX lent is hovering between 61M to 65M.

Another revenue stream from FraxLend is liquidation fees. For October we pulled in $36.6k. Recall that in August we had $225k+ in liquidations.

FPI basically broke even this month. But if we zoom out, we see that over the months we've been slowly bleeding. Fortunately, we have a $3.6M buffer to draw down upon.

Lastly, if we do some rough math we could estimate the run rate of frxETH at $1.4M for the year. The math goes as such: 26.2 frxETH rewards per day* 365 days * 8.0% fee rate * Price of ETH. Then divide that by 12 to get the monthly figure of $115k per month or 63.75 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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