Frax Ether (FRXETH)
Frax Ether (frxETH) is a liquid ETH staking derivative and stablecoin system designed to simplify and secure the Ethereum staking process. It uses the Frax Finance ecosystem to allow users to earn interest on their ETH holdings while optimizing their staking yield.
Overview
The Frax Ether system consists of three main components: Frax Ether (frxETH), Staked Frax Ether (sfrxETH), and the Frax ETH Minter.
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frxETH: This acts as a stablecoin loosely pegged to ETH, utilizing Frax's strategy on stablecoins to integrate ETH into the Frax ecosystem.
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sfrxETH: This is the version of frxETH that accrues staking yield. Profits from Frax Ether validators are distributed to sfrxETH holders. By converting frxETH into sfrxETH, users become eligible for staking yields, redeemable upon converting back to frxETH.
| Ticker | FRXETH |
| Category | Decentralized Finance (DeFi) |
| Website | https://app.frax.finance/ |
| @fraxfinance | |
| Contract Addresses | |
|---|---|
| ethereum | 0x5e...1f Copied! |
| moonbeam | 0x82...99Copied! |
| fantom | 0x9e...eeCopied! |
| polygon-zkevm | 0xcf...79Copied! |
| optimistic-ethereum | 0x68...8bCopied! |
| binance-smart-chain | 0x64...5eCopied! |
| arbitrum-one | 0x17...2aCopied! |
| polygon-pos | 0xee...96Copied! |
Frax ETH Minter (frxETHMinter): This component allows for the exchange of ETH for frxETH, facilitating the entry of ETH into the Frax ecosystem and minting new frxETH equal to the ETH provided. It also establishes new validator nodes as needed. Holding frxETH alone does not yield staking rewards; it is akin to holding ETH.
FrxETH v2
Launched in June 2023 by founder Sam Kazemian, the frxETH v2 protocol enables users to lend and borrow ETH. Kazemian describes FraxETH v2 as more efficient and decentralized compared to other protocols.
The protocol operates by establishing a peer-to-pool lending market. Users can lend ETH by depositing it into the FraxETH v2 pool, while those wishing to borrow ETH can do so by taking out loans against their ETH collateral. The borrowing interest rate is determined by market dynamics and utilization rates, ensuring competitive interest rates and high demand for ETH.
In frxETH v1, users could deposit ETH and receive frxETH tokens, which could then be staked to earn sfrxETH tokens as a reward, or paired with ETH-frxETH on Curve Finance for CRV mining. In frxETH v2, users can "borrow" validators based on their loan-to-value ratio by providing a specific amount of ETH as collateral, which can exceed 8 ETH. This collateral allows users to borrow and operate validators on Frax Finance, with loan interest deducted directly from their ETH and validator rewards.