Frax Finance Is Set To Debut Liquid Staking Protocol In 2 Weeks
- Frax Finance, the firm behind decentralized stablecoin FRAX, is all set to debut its Ethereum-based liquid staking protocol within two weeks from now.
- The new liquid staking protocol will enable users to stake Ethereum (ETH) and receive a liquid derivative token Frax Ether (frxETH), aiming to unlock the staked tokens’ values.
- The offered derivative token, which mirrors the ETH price, will be freely available for trade on other DeFi protocols.
The company behind decentralized stablecoin FRAX, Frax Finance, is reportedly planning to publicly launch its Ethereum-based liquid staking protocol.
According to a recent report by The Block, Frax Finance will officially launch the protocol in the coming days. The new liquid staking protocol will enable users to stake Ethereum (ETH) and receive a liquid derivative token, Frax Ether (frxETH), aiming to unlock the staked tokens’ values.
Notably, the offered derivative token, which mirrors the ETH price, will be freely available for trade on other DeFi protocols.
“Everything will be fully available publicly within two weeks barring anything unforeseen, but the full system is already live, and is already proposing blocks,”
Frax Finance’s core developer Jack Corddry commented on the upcoming launch.
It is important to note that the company has already finished a security audit of its liquid staking token to be ready for the final launch on the Ethereum mainnet. Moreover, it has also set up a Curve pool to offer a smooth swap of frxETH and ETH with low or zero slippage.
Frax Finance’s liquid staking mechanism
Users must first deposit their ETH using Frax ETH Minter, a feature that will mint the liquid derivative linked to the inherent value of the deposited ETH.
Frax will spin Ethereum validators using ETH from its users to create and distribute a staking yield. By allowing users to assign their assets to the protocol, this approach aims to abstract away the difficulty of setting validators.
Users must trade the FRAX Ether derivative token (frxETH) for Staked Frax Ether (sfrxETH), a separate token that will earn staking yield from Frax’s Ethereum validators.
This second token sfrxETH will keep on earning interest and increase in value compared to ether over time. The interest would be obtained simply by converting sfrxETH back to frxETH.
The stablecoin that Frax Finance is most known for uses algorithmic methods and collateral to maintain a 1:1 peg with the US dollar. FRAX stablecoin is partially backed by hard collaterals like USD Coin (USDC), and partially by FXS, the stablecoin issuer’s native governance token.
The decentralized liquid staking service that Frax intends to offer will compete against comparable services already on the market, such as Lido Finance and RocketPool.
The Frax team states:
“Get ready for the most interesting ETH liquid staking derivative released by a major stablecoin issuer.”
A crypto journalist with over 3 years of experience in DeFi, NFT, metaverse, etc. Parth has worked with major media outlets in the crypto and finance world and has gained experience and expertise in crypto culture after surviving bear and bull markets over the years.
