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

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 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.

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