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DeFi

Frax Finance Wants To Integrate New Stablecoin To Promote The Ecosystem

September 6, 2023 - Around 2 mins mins to read

Key Points:

  • Frax Finance introduces the sFRAX governance proposal, revolutionizing stablecoin yields.
  • Users can deposit FRAX stablecoins to earn passive interest in FRAX through sFRAX.
  • This innovation bridges FRAX’s yield curve gap and promotes liquidity while ensuring stability in the ecosystem.
The community behind the stablecoin protocol, Frax Finance, has unveiled the “FIP-2XX” sFRAX governance proposal. This visionary initiative, proposed by the core team at Frax Finance, seeks to integrate Staked FRAX (sFRAX) into the Frax ecosystem.
Frax Finance Wants To Integrate New Stablecoin To Promote The Ecosystem
Frax Finance Wants To Integrate New Stablecoin To Promote The Ecosystem 2

The primary goal is to enable users to deposit FRAX stablecoins into a smart contract (following the Standard ERC-4626) and, in return, earn interest, which will be denominated in FRAX stablecoins.

Essentially, sFRAX presents a solution to the challenge of Frax’s near-zero duration yield curve, akin to the Dai Savings Rate (DSR) concept. This approach empowers users to accrue passive FRAX stablecoins while contributing to the expansion of the FRAX supply.

It is essential to note that sFRAX doesn’t guarantee earnings or any redemption rights beyond the deposited and earned stablecoins.

The introduction of sFRAX aims to bridge the yield curve gap of FRAX by offering a low-duration savings option, compliant with the ERC-4626 token standard.

This opens up possibilities for integration into various protocols, bridges, cross-chain applications, and more, allowing users to earn stablecoins passively at the “Frax Staking Rate.”

This innovation enhances the stablecoin ecosystem, promotes liquidity in the protocol, and encourages user participation in earning rewards while stabilizing the supply dynamics.

The sFRAX contract enables users to deposit their FRAX stablecoins, earning APR on their holdings through newly minted stablecoins. Users receive sFRAX tokens reflecting their proportional pool share, facilitating trading and transfers.

Additionally, Frax Protocol ensures consistent weekly deposits of generated yields into the sFRAX Vault, ensuring APR growth over time.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Dai Savings Rate

ERC-4626

Frax Finance

FRAX stablecoins

sFRAX

Staked FRAX

Avatar of Harold

Author

Harold

With a passion for untangling the complexities of the financial world, I've spent over four years in financial journalism, covering everything from traditional equities to the cutting edge of venture capital. "The financial markets are a fascinating puzzle," I often say, "and I love helping people make sense of them." That's what drives me to bring clear and insightful financial journalism to the readers of Coincu.
DeFi

Frax Finance Wants To Integrate New Stablecoin To Promote The Ecosystem

Key Points:

  • Frax Finance introduces the sFRAX governance proposal, revolutionizing stablecoin yields.
  • Users can deposit FRAX stablecoins to earn passive interest in FRAX through sFRAX.
  • This innovation bridges FRAX’s yield curve gap and promotes liquidity while ensuring stability in the ecosystem.
The community behind the stablecoin protocol, Frax Finance, has unveiled the “FIP-2XX” sFRAX governance proposal. This visionary initiative, proposed by the core team at Frax Finance, seeks to integrate Staked FRAX (sFRAX) into the Frax ecosystem.
Frax Finance Wants To Integrate New Stablecoin To Promote The Ecosystem
Frax Finance Wants To Integrate New Stablecoin To Promote The Ecosystem 4

The primary goal is to enable users to deposit FRAX stablecoins into a smart contract (following the Standard ERC-4626) and, in return, earn interest, which will be denominated in FRAX stablecoins.

Essentially, sFRAX presents a solution to the challenge of Frax’s near-zero duration yield curve, akin to the Dai Savings Rate (DSR) concept. This approach empowers users to accrue passive FRAX stablecoins while contributing to the expansion of the FRAX supply.

It is essential to note that sFRAX doesn’t guarantee earnings or any redemption rights beyond the deposited and earned stablecoins.

The introduction of sFRAX aims to bridge the yield curve gap of FRAX by offering a low-duration savings option, compliant with the ERC-4626 token standard.

This opens up possibilities for integration into various protocols, bridges, cross-chain applications, and more, allowing users to earn stablecoins passively at the “Frax Staking Rate.”

This innovation enhances the stablecoin ecosystem, promotes liquidity in the protocol, and encourages user participation in earning rewards while stabilizing the supply dynamics.

The sFRAX contract enables users to deposit their FRAX stablecoins, earning APR on their holdings through newly minted stablecoins. Users receive sFRAX tokens reflecting their proportional pool share, facilitating trading and transfers.

Additionally, Frax Protocol ensures consistent weekly deposits of generated yields into the sFRAX Vault, ensuring APR growth over time.

DISCLAIMER: The information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.