• Home
  • Markets
  • Frax Finance's Yield-Matching Staking Vault Secures $30M, FXS Holds Firm

Frax Finance's Yield-Matching Staking Vault Secures $30M, FXS Holds Firm

Oct 17, 2023 at 06:48 am

In the early hours of Thursday, Frax unveiled its latest breakthrough: the sFRAX staking vault, providing users a golden opportunity to tap into the higher interest rates available in the U.S. The stability of Frax's governance token, FXS, remains unwavering as the introduction of this innovative high-yield staking feature in the decentralized finance protocol is attracting substantial investments.

This new addition, sFRAX, operates as an ERC4626 staking vault, empowering FRAX holders (the protocol's partially collateralized fractional-algorithmic stablecoin) to generate returns that mirror the interest rate on reserve balances (IORB) established by the U.S. Federal Reserve, which currently stands at approximately 5.4%.

Upon its launch, the product boasted an impressive Annual Percentage Yield (APY) of 10%, eventually aligning with the Fed's IORB rate of 5.4%. Presently, more than 150 users have collectively deposited over $35 million into the vault, according to data from Dune Analytics.

FXS experienced a significant surge of 7%, reaching $5.66 on Thursday. However, it later retraced to $5.49, indicating a 0.5% gain over a 24-hour period, as per Bitsday's data. This steady price movement mirrors the ongoing low-volume trading range observed in leading cryptocurrencies like bitcoin and ether.
Data by DuneData by Dune 

This recent development coincides with MakerDAO's strategic advantage in capitalizing on the high-interest market in the U.S. According to Parsec Finance reports, since February 2022, MakerDAO has allocated over $2 billion to short-term bonds via off-chain structures, offering a 5% savings rate on DAI and initiating buybacks of its MKR token.

In terms of year-to-date performance, MKR has surged by over 168%, surpassing bitcoin's increase of 62% by a significant margin. In contrast, FXS has seen a more modest gain of 32% this year. Some members of the crypto community anticipate FXS catching up with MKR. McKenna, the pseudonymous founder of Arete Research, commented on this progress, stating:

 "Impressive growth from sFRAX with $24.6M allocated to Frax Finance's FinresPBC short-term U.S. Treasuries strategy currently yielding 10%. FXS set to make a MKR catch-up trade and reignite protocol revenue with the 5.25% risk-free rate," in a statement on X.

Read more: Unmasking the Myth: Tether Freezes Illicit Crypto Addresses, Proving Transparency Prevails

Read more about

Related News

Sign up for daily crypto news in your inbox

Get crypto analysis, news and updates right to your inbox! Sign up here so you don't miss a single newsletter.