Frax Q3 Update

After another quarter in the grueling bear market, FXS, like other DeFi tokens, failed to maintain a strong bid. FRAX’s supply dropped by ~$300M since early September, likely due to increased publicity around regulatory uncertainty with regards to stablecoins. Despite this drop in FRAX supply, the FraxBP on Curve remains steadfast with nearly $800M TVL, which rivals the Curve 3pool, composed of USDT, USDC, and DAI. Convex continues to provide double digit staking yield on several FraxBP pairs, including Synthetix’ SUSD and JPEGd’s PUSD.

Further, FraxSwap has garnered TVL of $69M for several pairs, including FXS/FRAX and SYN/FRAX. By deprecating the Uniswap FXS emissions gauge, FXS liquidity providers have been incentivized to migrate to Fraxswap, which has driven deep liquidity to FXS and more trading volume to Fraxswap.

Throughout the quarter, the team continued to push out new developments for the protocol. First, they shipped Fraxlend, an isolated lending market dApp. This helped Frax reach its goal of the “trinity,” where the protocol has its own stablecoin, DEX, and lending market all working in tandem. Supplementing this, Frax’s most exciting development for Q3 was the release of its liquid staking derivative, frxETH.

Fraxlend

Fraxlend provides users access to leverage via its isolated lending markets. Frax set up a lending AMO, which allows the protocol to mint FRAX directly into Fraxlend pools. Ideally, with Fraxlend adoption, this could help drive up the supply and utilization of FRAX. Users can collateralize ETH, BTC, CVX, FXS, or CRV and borrow FRAX against their positions. The Fraxlend pair deployer utilizes Chainlink to retrieve collateral prices. Interest rates are set dynamically utilizing an algorithmic rate calculator that adjusts rates based on the amount of assets in the system. FXS holders maintain the right to control various parameters, such as whitelisted collateral.