"It's Quiet... Too Quiet" - FraxCheck #40
This week... I call this week the “It's Quiet... Too Quiet” week. As the name suggests, this week things feel muted yet there's this vibe in the air, unsure if gud or not.
TOP 3 TL;DR
% of 3Pool // 130% — We’re sunsetting this metric as we’re now firmly in a new regime.
frxETH // ∆ +11.9% and breaking 200k frxETH
Aggregate Profitability // Net Loss of $160k so far in May
Frax Supply & Peg
This week things are quiet in the $FRAX realm. We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9979. As we’ve said, we do not like to see a 7 number in that rate. Let’s get this rate back above 0.9980 bls. Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.
Collateralization & Decentralization Ratios
Again, very calm on this front as well. The Collateralization Percent remains at its all-time-high of 94.8%, been this way for the past 5 Frax Checks. The Decentralization Percent jumped bigly up 4.4% this week to 21.5%. We’ve been on a downtrend for nearly 8 weeks now so we’re glad to see this slight reversal.
For Frax’s liquidity-as-a-service in the form FraxBP, we have 498M TVL which experienced a 0.6% drop. The volume is at 32.2M so far for May, which is only a 6.4% utilization rate, fairly low when compared to what happened in March with the USDC fiasco. The LPers in the FraxBP and all the associated metapools are positioned to facilitate large liquidity-required swaps but we feel that idle capital could be put to use. If only Frax had something planned for this, oh wait, there is. It’s called BAMM — more info soon.
% of 3 pool
We are definitely in a new regime for the % of 3Pool. This marks a significant milestone in the relationship between Frax and Curve as Frax pools are now the predominant stable coin pools on Curve. Given that we’re now in this new era, we believe it’s best to sunset this metric. So this would be the last time we see % of 3Pool in our Frax Checks! Say good bye!
Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!
Additionally, you can stake IQ today to earn a whopping 124%. There are 1745 holders of IQ on Ethereum but only 179 are staked. There’s definite value in staking as the treasury is $15.7M. There needs more governance power to secure and direct the treasury.
Be sure to go to the staking page today here.
FrxETH supply and distribution
Now onto the crowd favorite, le frxETH. We rocking strong here with 214,804 frxETH supply, a 11.9% increase from last week(!!). We were tapering off a little after Shapella going down to a WoW growth of 4-6% but this previous week we blew off the top again. Resume the rocket ship.
Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9992, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9991, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape.
Speaking of landscape, let’s look at the LSD market. Unlike last week, we are up in our marketshare this week. We’ve risen 13% to a 2.42% of the total ETH LSD market. We saw strong growth over the last 30 days of 39% and our 7-day change is at 13%. Though, we’re not alone. Rocketpool also had a great week and month so they’re climbing strong. Lido lead is sliding from where they started which was around the 75% mark, now down to 72.9%. But you know the one department frxETH is dominating is in the yield arena. Here we witnessed one of the higher APY at 6% — that sweet native ETH yield.
The FPI has remained quiet for some time now since the release of veFPIS. We saw the supply increase slightly by $100k, which brings it to 82.6M but note that FPI is actually above the required peg by 37 basis points. The Treasury TVL is flat this week at $89M. We like to see the Treasury TVL increasing as well as the equity value increasing. The equity value is at $4.5M.
One of the pillars of the DeFi Trinity is lending leg so here we have FraxLend. Unfortunately this week there’s a technical issue with the FraxFacts dashboard for the FraxLend page so we were unable to pull the metrics. Though we were able to look at the pairs and we saw some interesting things. We have a new pair AAVE/FRAX added to the mix. On the other hand, the sfrxETH/FRAX is still only putting out 1.92% borrow rate with a staking yield of 6%. And of course, the ol’ reliable CRV/FRAX is putting out steady yields of 7%.
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 but it’s pushing out major volume relative to its size. There are only 65.5M TVL across all the pools yet it facilitates $37M in volume which is a 56.5% utilization rate, and the month is not over!
Revenue, Expenses, Profit
Show me the money! Well, here it is. We know this month is going to be an expensive month for the Convex AMO since the bribe epoch payment fell on the 1st and 30th of this month. We’re experiencing it now with a loss of $520k in the Convex AMO. But do not fret as the other AMOs and revenue streams are stepping up. For FraxLend, we’re pulling in about $15.1k per week so we’re at $45k for May. Fortunately, everyone is behaving responsibly so we do not have further liquidations this month so we remain at $15.5k. Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiply again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $182k — awesome. Lastly, we have the FPI which generated $116k in profit, that is after the requirement for the peg.
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.