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Cryptocurrencies

Staked frax ether

Staked Frax Ether (SFRXETH)

Frax Staked Ether is a liquid staking derivative stablecoin developed by Frax Finance. It represents the staked version of Frax Ether (frxETH) and is designed to accumulate the staking yield generated by Frax ETH validators. Over time, the exchange rate of frxETH per sfrxETH increases as staking rewards are added to the vault.

Overview

The Frax Ether system consists of three key components: Frax Ether (frxETH), Staked Frax Ether (sfrxETH), and the Frax ETH Minter.

  1. frxETH: This acts as a stablecoin loosely pegged to ETH, incorporating Frax's expertise in stablecoin management to integrate ETH into the Frax ecosystem.

  2. sfrxETH: This variant of frxETH accrues staking yield. Profits from Frax Ether validators are distributed to sfrxETH holders. By converting frxETH to sfrxETH, users become eligible for staking rewards, which can be redeemed when converting back to frxETH.

Ticker SFRXETH
Category Decentralized Finance (DeFi)
Website https://app.frax.finance/
Twitter @fraxfinance
Contract Addresses
ethereum 0xac...8fCopied!
moonbeam 0xec...8dCopied!
fantom 0xb9...4aCopied!
optimistic-ethereum 0x48...8cCopied!
binance-smart-chain 0x3c...53Copied!
arbitrum-one 0x95...39Copied!
polygon-pos 0x6d...61Copied!

  • Frax ETH Minter: Known as frxETHMinter, it facilitates the exchange of ETH for frxETH. It integrates ETH into the Frax system, initiates new validator nodes when possible, and mints new frxETH equivalent to the ETH received.

    • Liquid staking

    Liquid staking allows users to earn staking yield without needing the technical expertise or initial setup required for running a validator node. It enables staking with any amount of ETH, providing flexibility for withdrawals and enhancing composability within decentralized finance (DeFi).

    frxETH and sfrxETH

    Within the Frax ecosystem, ETH is represented in two forms: frxETH and sfrxETH.

    • frxETH: This acts as a stablecoin linked to ETH, ensuring that 1 frxETH always equals 1 ETH. The circulation of frxETH mirrors the amount of ETH in the Frax system. Holding frxETH alone does not qualify for staking yield and is similar to holding ETH.

    • sfrxETH: This is an ERC-4626 vault designed to accumulate staking yield from Frax ETH validators. Users can exchange frxETH for sfrxETH by depositing it into the sfrxETH vault, thus earning staking yield. Over time, as validators generate staking yield, the vault mints an equivalent amount of frxETH, allowing sfrxETH to be redeemed for a greater amount of frxETH than initially deposited.

    Technical specifications

    • frxETH: It shares much of its code with Frax and FPI stablecoins and supports the ERC-2612 standard, permitting spender approvals through ERC-712 signatures.

    • sfrxETH: This is compliant with the ERC-4626 standard. To obtain sfrxETH, users must first approve the sfrxETH contract as a frxETH spender and then use the mint() or deposit() functions. The approval and minting steps can be combined using depositWithSignature() or mintWithSignature().

    As validators generate yield, an equivalent amount of frxETH is minted and sent to the sfrxETH contract. This setup ensures that sfrxETH can be redeemed for more frxETH than initially minted. Reward distributions are smoothed over time to prevent misuse, with additional frxETH being distributed linearly over a cycle window when syncRewards() is called.

    • frxETHMinter: It mints frxETH upon receiving ETH through submit() or receive() functions. When the minter balance exceeds 32 ETH, it automatically initiates a new validator by transferring 32 ETH to the ETH 2.0 deposit contract. New validator credentials are continually added to maintain a ready state for deposits. Validators share a common withdrawal address, managed by the Frax Multisig, ensuring secure withdrawal handling.