Frax Ether

frxETH

frxETH is a derivative asset that is soft-pegged to ETH. Holding frxETH on its own does not accrue staking yield.

Risk Rating
Best
$3,207.96
3.96%
Summary
What we like
frxETH acts as a stablecoin that is soft-pegged to ETH and leverages the protocol's expertise in stablecoin design.
What we like less
The frxETH contract is currently exposed to centralization risks as the admin has significant control over minting/burning functions and withdrawal of underlying staked ETH.
What it means for you
Offers you a simple ETH derivative asset to earn trading fees on Curve with minimal impermanent loss given its 1:1 peg to ETH.
Information
Blockchain
  • Ethereum
Key Metrics
  • Market Cap: $983.4M
  • Fully Diluted Valluation: $983.4M
  • FDV / MC: 1
  • Ranking inside Exponential (excluding stables): #25
  • Circulating Supply: 304,879
  • Total Supply: 304,879
  • Volume (24H): $5M
  • ATH: $3,240.95 (02/27/2024)
  • ATL: $1,137.25 (11/23/2022)
Risk Assessment
Best
Asset Strength

frxETH is a low-cap, fully collateralized asset. This asset is exposed to the underlying risks of Frax Ether, a protocol rated as Average.

Asset Tokenomics

frxETH has an uncapped supply but has inflation control or burn mechanisms in place. frxETH is a derivative asset that is soft-pegged to ETH and can always be redeemed 1:1 for ETH. Holding frxETH does not earn any yield on its own. Instead, users can stake frxETH in the staking vault for sfrxETH to accrue staking yield of the Frax ETH validators.

Dependencies

Frax Ether

Things to know about frxETH

What is frxETH used for?

frxETH acts as a stablecoin that is soft-pegged to ETH. 1 frxETH always equals 1 ETH as the amount of frxETH in circulation matches the amount of ETH staked in Frax. When users deposit ETH into Frax, an equivalent amount of frxETH is minted. Holding frxETH is analogous to holding WETH as it is not eligible for staking yield on its own. Instead, users can choose to deploy their frxETH to third-party strategies like Curve to earn trading fees.

How does Frax Ether work

The Frax Ether system consists of three core components: frxETH, sfrxETH, and the Frax ETH minter. The underlying code for frxETH is largely forked from both the FRAX and FPI stablecoins. sfrxETH is obtained by first approving the sfrxETH contract as a frxETH spender, and then calling the mint function. As validators earn staking rewards, an equivalent amount of frxETH is minted and sent to the sfrxETH contract. This means the user may redeem a greater amount of frxETH than they initially minted. The Frax ETH minter mints frxETH when it receives ETH deposits. Whenever a deposit pushes the minter balance over 32 ETH, the contract automatically spins up a new validator. The protocol currently charges a 10% fee on all generated staking rewards.

How secure is Frax's liquid staking solution?

frxETH is designed to be a stablecoin that is loosely pegged to ETH. This means the price of frxETH could depeg from time to time based on current market conditions. Frax has also set the withdrawal address to the Frax multisig at launch.

frxETH Pools
Frax ETH Staking
3.7%
Yield
$986M
TVL
Risk
B
Protocol
Frax Ether
Chain
Ethereum
Curve ETH Market Making
0.6%
Yield
$38M
TVL
Risk
B
Protocol
Curve
Chain
Ethereum
Curve ETH Market Making
9%
Yield
$4M
TVL
Risk
C
Protocol
Curve
Chain
Ethereum
Convex TricryptoFRAX Market Making
19.2%
Yield
$541K
TVL
Risk
F
Protocol
Convex
Chain
Ethereum