Frax - sfrxETH

Description

sfrxETH is an ETH liquid staking derivative issued by Frax Finance. Frax is a DeFi powerhouse mostly known for its algorithmic stablecoin FRAX. Frax also offers a variety of products, such as Fraxlend, Fraxswap and Fraxferry with frxETH (and its staked version sfrxETH) being a new addition to the extensive line of DeFi products.

Risk Level — 'A'

Narrative

The strategy is part of the LSDfi narrative, aiming to provide accessibility and composability for staked ETH.

Using a two-token model (frxETH and sfrxETH), Frax is able to generate above-market yields for ETH stakers and liquidity providers. By utilizing Frax’s automated market operators (AMOs), sfrxETH manages to consistently beat returns of other protocols innovating in the LSDfi space (such as Lido and Rocketpool).

Frax staked ETH has been operating with no exploits or hacks and has attracted $400M+ in TVL in less than a year. frxETH has now become the third largest ETH liquid staking token, following Lido stETH and Rocketpool rETH. Frax team has also announced frxETH v2, which is supposed to further boost frxETH security, decentralization and adoption.

Why Invest?

sfrxETH simplifies ETH staking, while also offering above-market returns, making the strategy a perfect fit for non-technical investors looking to earn yield on their ETH.

The vault also requires no management as the staking rewards are harvested automatically and are reflected in the price of sfrxETH.

What’s Inside?

User funds are first converted into frxETH, which is then staked as sfrxETH on Frax Finance. Earned staking rewards are harvested by Frax and reflected in sfrxETH price.

What Makes It Stand Out?

The Frax team have come up with a novel model for their ETH liquid staking token. As a result, frxETH stakers can enjoy competitive returns on their staked ETH.

Safety Scoring

Simplicity - 5/5	Longevity - 5/5	Protocol safety - 2/5	Overall score - 4/5
Strategy is easy to understand and execute. No leverage is involved. Losses are highly unlikely.	The strategy has been running for more than 9 months without any issues and major changes to the codebase.	Utilized protocols have been audited. No active bug bounty program.	Low risk