Frax will introduce a liquid staking protocol that allows users to create an ether derivative token called Frax Ether. (FRXETH). Frax has completed a security audit on its liquid staking token prior to a final release.
Frax Finance, a decentralized stablecoin-issuer, is set to make its liquid stake protocol for Ethereum public within two weeks.
Users will be able to stake ether and get a Frax Ether (FRXETH) liquid derivative token. This token is intended to unlock the value of staked tokens. The derivative will reflect the price of ether, and can be traded on other DeFi protocols.
The Block was informed by Jack Corddry, a Frax core developer, that “everything will be fully accessible publicly within two weeks barring any unforeseen,” but the system is already live and is already proposing blocks.
Frax has completed a security audit on its liquid staking token before it is released to the Ethereum mainnet. A curve pool has been set up by the project so that frxETH can easily be exchanged with ETH without slippage or low fees.
Frex Finance is best known for its stablecoin, which relies on collateral and algorithmic mechanisms to maintain a 1:1 peg with US Dollars. Its stablecoin is partially backed by concrete collateral, principally USD Coin (USDC) and partly by Frax Finance’s native governance token FXS.
Frax’s decentralized liquid-staking offering will be competitive with other similar protocols such as RocketPool and Lido Finance. The Frax team stated that they are expecting the “most interesting ETH liquid staking derivative” from a major stablecoin issuance.
To stake, users must first deposit ETH via Frax ETH Minter. This function will mint the liquid derivative linked to the underlying value.
Frax will use customers’ ETH to spin Ethereum validateators to generate and distribute a staking return. This protocol allows people to delegate their assets, which will remove the complexity involved in setting up validators.
Users will need to exchange their first derivative token (FRXETH), to Staked Frax Ether (sfrxETH), in order to receive the yield. A second token will be used to accrue the staking yield from Frax’s Ethereum validators.
The second token will continue to earn interest and grow in value relative to ether over the long-term. By converting sfrxETH into frxETH, you can collect interest.