Research Summary
This report provides a comprehensive analysis of Frax Finance, a DeFi ecosystem centered around three stablecoins. The report covers various aspects of Frax, including its use case, adoption, revenue, tokenomics, treasury, governance, team and investors, competitors, risks and audits. It also highlights the upcoming developments in the Frax ecosystem, such as the launch of Fraxchain in 2024.
Key Takeaways
Frax Finance: A Comprehensive DeFi Ecosystem
- Frax Finance Overview: Frax Finance is a DeFi ecosystem built around three stablecoins: $FRAX, $FPI, and $frxETH. The ecosystem includes several subprotocols like Fraxswap (DEX), Fraxlend (Lending), Fraxferry (Bridge), and Liquid staking (frxETH). The total value locked (TVL) across all Frax Finance products is currently at $690 million.
- Revenue Generation: Frax Finance generates revenue through Frax swap and Frax Ether. Over the last 30 days, Frax has generated $1.21 million in fees and $106,000 in revenue.
- Tokenomics and Treasury: Frax Share ($FXS) is the governance token of the Frax ecosystem. The circulating supply is 74.8 million, with a maximum supply of 99.7 million. The market cap is $399 million. Frax has approximately $153 million USD in their Treasury.
- Governance and Team: Frax is controlled by veFXS holders through on-chain governance. The project was founded in 2020 by Sam Kazemian and has grown to a team of around 50 key contributors. Investors and backers include ParaFi Capital, Mechanism Capital, Dragonfly Capital, Electric Capital, Multicoin Capital, and Galaxy Digital.
- Risks and Audits: The project has been audited and has been given a security score of 91.48 by CertiK. Risks involved include peg stability, liquidity for $sfrxETH on-chain, smart contract vulnerability, and counterparty.
Actionable Insights
- Investigate the Potential of Fraxchain: Fraxchain, a Layer 2 solution, is set to be released in 2024. This could potentially enhance the scalability and efficiency of the Frax ecosystem.
- Explore the Growth of Liquid Staked ETH: Over 65% of TVL in Frax Finance is from the liquid staked ETH product (frxETH), indicating a growing interest in this product.
- Consider the Impact of Governance: The governance of Frax is controlled by veFXS holders, which could influence the future direction and development of the Frax ecosystem.
