“Truth Hurts” – FraxCheck #48

https://flywheeldefi.com/p/truth-hurts-fraxcheck-48

TOP 3 TL;DR

  1. FRAX // 9% decrease down to $913M

  2. FraxBP // Exchange rate 0.9965

  3. frxETH // new ATH at 241,830

Frax Supply & Peg

We’re not going to sugarcoat it. The $FRAX stablecoin supply dropped by 9% down to 912.6M. But this is also part of Frax’s mechanism to protect the peg.

A stablecoin needs to be able to scale up as well as scale down — reacting dynamically to market conditions and actions. This decrease in the $FRAX supply came out of the Curve AMO. As expected the exchange rate for FraxBP took a hit.

FraxBP

This Curve pool experienced a 21.2% drop in TVL, from 623M down to 491M since the last Frax Check. Ouch. Though the volume that the pool facilitated was $41M for July, which is an 8.3% utilization rate. The key issue though is that the exchange rate is now 0.9965. As we’ve said numerous times, we don’t want to see anything below 0.9970 as we’re now paying non-stable swap fees to swap stable assets.

Another area is that the pool is still at a 72/28 balance. We want to see this brought down to the mid 60s. Thankfully we have a new round of Votium bribes closing soon so perhaps the Frax team would juice the incentives a bit more for FraxBP for the next 2 epochs so we can rebalance the pool.


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 109%. There are 1848 holders of IQ on Ethereum but only 184 are staked. There’s definite value in staking as the treasury is $16.9M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

We are SO back. Not all things are red. We see a new ATH for the crowd favorite frxETH. There’s 241,830 frxETH supply. Finally resuming our up only action.

Two-thirds of all frxETH is staked in the sfrxETH vault earning that sweet-sweet native yield. Nearly a quarter is in the Curve pool faciliating the swaps between frxETH and ETH. Lastly there’s 11% of frxETH just chilling in the ether.

Though there are some bad news as for the last 30 days, we really haven’t grown much in terms of market share. We’re still at 2.3%. This is relatively bad when you see Rocketpool growing faster than we are and worse is that Lido is growing faster than we are. Queue frxETH v2. SoonTM.


Profitability

Revenue, Expenses, Profit

Show me the money! Well, here it is.

Spicy spicy spicy month so far. For the Convex AMO we are currently down $862k. That is not a typo. Though we suspect the team has yet to hit the “claim” button on some rewards so the dune isn’t populating correctly yet. So we will check back in on this one.

Next up we have our Fraxlend which is pulling in nearly $100k for the month of July. And this is real yield, no token emissions at all. If you include the liquidations then we crossed the $100k threshold. This isn’t the highest ever, however, last month’s $250k liquidations really put us over the top with Fraxlend. Nuts. Stay safe out there y’all.

Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 6.5% for the staking yield then multiplying again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $193k — awesome. Lastly, we have the FPI which generated $53.3k in profit, that is after the requirement for the peg.

That is it for this week’s Frax Check #48! We hope you guys enjoyed this one and see you next week to welcome in the month of July!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“Transparency Maximalism” – FraxCheck #47

https://flywheeldefi.com/p/transparency-maximalism-fraxcheck

TOP 3 TL;DR

  1. FRAX // Balance Sheet ($1,118M Assets, $1,074M Liabilities)

  2. FraxBP // All of Frax Liquidity (FraxBP, FraxPP, Frax3CRV) is 3.0x of 3Pool

  3. FraxLend // ATH TVL at $242M

Frax Supply & Peg

We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9982. Let’s keep this rate above $0.9980.

Big news this past week as Frax Finance dropped the long-awaited Balance Sheet for the FRAX stablecoin. This was a treasure trove of data points. Let’s walk through it. We have Owned FRAX-USD, these are all the FRAX and the Stablecoin pairs. Owned FRAX are FRAX straight up just on the balance sheet. Owned Volatile are the volatile assets like vlCVX. Owned FRAX-FXS are FRAX in the FRAX-FXS pair. Owned FRAX-Volatile are all the FRAX and the corresponding non-stable pairs. Owned USD are all non-FRAX stablecoins. Owned FXS-Volatile is just WETH paired against FXS.

Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

Flat across the board for the past 8 Frax Checks. But, we want to highlight that you’re able to calculate the Collateral Ratio of FRAX by utilizing information on the balance sheet. If we take the Total Assets minus Locked Liquidity, then divide by Total Liability, we receive the Collateral Ratio. Moving on.

FraxBP

Nothing much to report here out of the usual. FraxBP gained 60 bps and is currently at $623M. However, the volume for July so far has been abysmal — literally less than 1% of the TVL is being used. Frax liquidity pools are now nearly 3.0x that of 3POOL. We are in a new regime in the Frax-Curve flywheel relationship.


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 110%. There are 1820 holders of IQ on Ethereum but only 184 are staked. There’s definite value in staking as the treasury is $16.3M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 236,091 frxETH supply, an 1.8% increase from last 2 weeks — frankly one of the lowest growth rate we’ve seen.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9991, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9989, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape.

Competitive landscape

Speaking of landscape, let’s look at the LSD market.

We are DOWN!

We were at 2.33% at the end of June but now we’re at 2.30%. We saw strong growth in May but pretty much down all of June and starting July quite slow. But at least we’re top-of-the-charts in the yield department. There’s also another chart on Frax Facts that we should check out. This chart tracks earnings for 1000 ETH staked across the top four LSD providers. Evidently, sfrxETH kicks butt. The actual APY is at 6.71% versus the closest competitor of stETH at barely 5.01% — sfrxETH is higher by more than 50%.

FPI

The FPI has remained quiet for some time now since the release of veFPIS. We saw a flat week this week so nothing to report.

Fraxlend

FraxLend had an amazing 2 weeks. The collateral value and the borrowed amount are back up to levels before the USDC crisis. The Utilization rate is also climbing back to the low 70s. We want to be in the mid-80s here.

Fraxswap

Lastly, we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or knows about but it’s pushing out major volume relative to its size. There are only $70M TVL across all the pools. Though this has been one of the slower weeks since our usual FXS/FRAX pair normally facilitates $15M in volume but, this week we only processed $10M. Regardless, we are putting great numbers with 26% of the TVL used to facilitate $18M+ of volume.


Profitability

Revenue, Expenses, Profit

Show me the money! Well, here it is.

For June, we had a great run. Our Convex AMO were at a negative but FraxLend Liquidations offset that loss and some. We ended JUne with $341k in profits.

Two weeks into July and we’re at $120k loss across all the business units. We’re down bigly on the Convex AMO with over $400k in the red. On the FraxLend front, even though we didn’t increase the AMO, we generated $23k in revenue each week. No Liquidations.

Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiplying again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $204k — awesome. Lastly, we have the FPI which generated $42k in profit, that is after the requirement for the peg.

That is it for this week’s Frax Check #47! We hope you guys enjoyed this one and see you next week!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“The Party Continues” – FraxCheck #45

https://flywheeldefi.com/p/the-party-continues-fraxcheck-45

TOP 3 TL;DR

  1. FraxBP // FRAX-related pools are 2.8x of 3Pool

  2. frxETH // 2.3% Market Share

  3. FraxLend // $250k liquidation fee

Frax Supply & Peg

We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9982. This isn’t too bad but definitely on the borderline. Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

Flat across the board for the past 8 Frax Checks. We saw a slight bump in the Decentralization % to 22.3%. Nothing much to report, moving on.

FraxBP

FraxBP TVL is staying strong above $600M for the past few weeks. The volume for June is quite respectable at almost $146M which is 24% of the TVL. Frax liquidity pools are now nearly 3x that of 3POOL. We are in a new regime in the Frax-Curve flywheel relationship.


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 112%. There are 1812 holders of IQ on Ethereum but only 180 are staked. There’s definite value in staking as the treasury is $15.4M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 232,004 frxETH supply, an 1.8% increase from last week — frankly one of the lowest growth rates we’ve seen.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9989, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9983. This is getting close to the 0.9970 rates that we do not want to see.

Competitive landscape

Speaking of landscape, let’s look at the LSD market.

We are FLAT!

We are at 2.33%. We saw strong growth over May but since June started we’ve been bleeding down. But at least frxETH is leading the pack in the yield department. Offering a nice 5.1% APY of that sweet native ETH yield. The yield is also particularly lowered since the validator queue is still quite long.

FPI

The FPI has remained quiet for some time now since the release of veFPIS. We saw a flat week this week so nothing to report.

Fraxlend

FraxLend had an amazing week, frankly the last couple of weeks. We see the collateral value and the borrowed value drop off a cliff after the market chop suey liquidated a bunch of folks.

Another point is that the CRV and FXS pairs are popping off, offering great yields at 7 and 9% respectively. If one’s looking to lever up, the sfrxETH/FRAX pair is still quite cheap at 3.5% to borrow.

Fraxswap

Lastly, we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or knows about but it’s pushing out major volume relative to its size. There are only $69.5M TVL across all the pools. For the month of June, there was $46.9M volume facilitated across all the FraxSwap pools.


Profitability

Revenue, Expenses, Profit

Show me the money! Well, here it is.

For June, we’re at a loss of $205k for the Convex AMO. On the FraxLend front, even though we didn’t increase the AMO, we generated $92k in revenue. Unfortunately, we had a lot of liquidation this month. Good for the protocol’s bottom line but not great for the users. There was $250k worth of liquidation fees.

Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiplying again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $200k — awesome. Lastly, we have the FPI which generated $27.5k in profit, that is after the requirement for the peg.

That is it for this week’s Frax Check #45! We hope you guys enjoyed this one and see you next week to welcome in the month of June!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

Accessing *Near* Infinite Leverage with InfinityPools

https://flywheeldefi.com/p/accessing-near-infinite-leverage

InfinityPools are a forthcoming leveraged trading platform that takes advantage of Uni V3’s option-like characteristics. The protocol uses its architecture to provide high leverage trading for any ERC20. However, as with any trading strategy, there are tradeoffs that must be accepted by LPs

But what exactly are InfinityPools and why are they so revolutionary?

What It Is & How It Works

InfinityPools are an oracle-less decentralized perpetual exchange utilizing UniV3 mechanics to allow for leveraged trading with near-infinite leverage and no liquidations.  

With InfinityPools, traders take fixed duration loans against existing Uni V3-like positions. They pay an upfront fee to cover the fees for the duration. If at the end of the trade, their position has a negative balance, the assets are returned in kind to the LP. However, if the trade is in profit, they can either extend the duration of the loan and continue to pay interest, or they can close and collect their profits.

This sounds too good to be true but hear us out for a second.  This explanation requires an understanding of Uniswap V3.

Providing liquidity to Uniswap V3 pools is similar to selling options. By creating a range based Uni V3 LP position, you go short Gamma and collect Theta. This is just fancy speak that means you make money as long as price stays within your range.

As an LP, when you are short Gamma, the risk you take on is that the asset price moves too far, too fast, and the fees you collect don’t offset the price movements. LP’s typically provide liquidity over a single or multiple ranges to ensure they have a wide enough range to ensure near constant fee collection while tight enough to maximize returns.

In options land, Uni V3 risk profiles are most similar to a covered call. The expectation is that price stays within the bands. If it exits, you lose money, or in the case of Uni V3, you suffer impermanent loss.

It’s not entirely perfect to call a covered call a range order, but the risk profiles are very similar. Remember above we said that all InfinityPools trades are fixed duration. This means that as an LP, you have no power or control to remove your assets if the market is moving against you. You effectively trade for higher yield (theta) in return for being yield insensitive. So while it’s great to be an a trader at IP (no liquidations, fixed duration trades, etc), this simply means that LPs lose a ton of protection against Gamma risk.

Let’s look at a couple of trades from both sides, trader and LP, to better understand the mechanics. The most important distinction to understand about InfinityPools is that it removes the ability of the LP to remove their assets.

Assuming we’re all caught up here, let’s dive in.  

Imagine the price of ETH is $1000 and we have a Liquidity Provider contemplating where to deploy 900 USDC into a UniV3 position.  Let’s call her Alice.  Alice is slightly bearish; she expects ETH to drop to $900 so she provides liquidity in a single-tick wide band at $900 ETH with her 900 USDC.  Currently, her position is out of range, so she won’t earn any trading fees – a big fat zero return. 

But when Alice decides to utilizes InfinityPools, she would earn a yield even when she is out of range.  Here’s why.  

Now, imagine again that there’s a trader named Bob, who believes that ETH is going to the moon, but he only has 100 USDC so he wants to take on that sweet-sweet leverage.  He wants to go big, 10x-leverage big.  Bob puts up 10% of the collateral in ETH, which is $100 in ETH (at the current price of $1000, that equals 0.10 ETH), and borrows 900 USDC from the InfinityPools.  For this loan, Bob must pay an interest fee upfront that’s set by the utilization rate – but for now let’s assume 12% APR.  

The terms of the loans are: 

  • Principal = 900 USDC

  • Interest = 12% APR (paid upfront)

  • Terms = Exponential expiry over a 7-day period (but can be repaid in full anytime)

  • Loans have a half-life of a day (this will be explained later in the article)

ETH is still $1000.  Bob takes Alice’s 900 USDC and purchase 0.90 ETH. 

So, he now holds 1.00 ETH (0.10 ETH collateral plus 0.90 ETH he just bought).  This ETH is locked in InfinityPools and removed from the liquidity pool.  

Bob is pumped since he got his leverage, and his body is ready for Valhalla. Alice is stoked. She’s earning 12% APR, while being out of range, meaning she’s taking zero market risk.  

Check out these two scenarios:

  • [Scenario A] ETH Moons – ETH hits new All-Time-High (ATH) of $5000.  Bob sells his 1.00 ETH for 5000 USDC, then he repays his 900 USDC loan and pockets the remaining USDC.  Everything is great and everyone is happy.  Bob made a killing and Alice earned 12% APR on her idle capital.

  • [Scenario B] ETH Dumps – ETH drops to $100.  Bob decides to close his position.  He lost his 0.10 ETH collateral.  Bob is sad.  Recall that Alice provided 900 USDC into the pool in a single-tick wide band at $900 ETH.  Since ETH is $100, that means Alice’s 900 USDC LP position fully converted into 1.00 ETH.  Therefore, the InfinityPool Protocol will take Bob’s 1.00 ETH and give that to Alice.  Alice is satisfied as she had earned a 12% APR on her 900 USDC plus she got to purchase ETH at $900 – her desired price.  

Note that regardless of how low ETH dropped in price, Alice is always made whole, and Bob never had to increase his collateral, nor did he get liquidated even when the price dropped 90%.  This is because the position was fully backed at the point of origination.  

When ETH is above $900, Bob owes Alice 900 USDC and since ETH is worth more than $900, Bob could fully repay Alice.  When ETH is below $900, Bob owes Alice 1.00 ETH and since Bob already has the 1.00 ETH, he simply just gives that ETH to her.  That’s the math magic or “mathgic” of InfinityPools.  

Benefits & Drawbacks to Liquidity Providers (LPers) 

As stated previously, InfinityPools removes volatility sensitivity and Gamma protection from LPs by locking their assets into a trade. In return LPs earn an additional yield along with base trading fees from lending their assets to traders. 

We have an exclusive look at InfinityPools’ UI, and this should look familiar as it’s basically the same as Uniswap V3’s frontend.  The LP sets their desired liquidity band; it’s a set-it-and-forget-it situation.  

Now even though the selected liquidity bands may be out of range, the underlying liquidity could still be lent to traders so the LPs earn an interest payment for providing their capital.  No market risk while still getting a return sounds sweet, but it’s not without some drawbacks. 

The LPs have two withdrawal options: [1] Withdraw Gradually; [2] Withdraw Now.  

Option 1 enables the LPs to exponentially pull their capital over a 7-day period.  For example, on Day 1 the LP withdraws 50% of their position; on Day 2, they withdraw 25% of their position; on Day 3, they withdraw 12.5% of their position, so forth and so on until Day 7.  

A hidden benefit of this 7-day gradual withdrawal is that the LPer is protected from Just-In-Time (JIT) snipers.  These snipers do not want to deal with the delayed unlock as they need their capital back effectively within the same block that they provided liquidity in.  

Option 2 allows for immediate withdrawal of 100% of the LPer’s position but it comes with a price.  This fee is set by the utilization rate of the pool so effectively the LP is taking out a loan – just like the trader did – to withdraw their full position and the LPer must pay the interest rate upfront.  

Ok so given all this, when the market goes haywire in any direction, you have no recourse to exit your trade, except through paying fees to the protocol. If you get caught in a high Gamma event, which means the market moves really far and fast, there’s no way to adjust your asset positioning.

For larger market cap assets like ETH and BTC, there is always a possibility of hedging using CEX derivatives. You could buy a put option at or below your range low price with the expectation that the yield and interest income will outpace the option premiums. Congrats, you now have a modified options collar.

What Are Options Collars? | Charles Schwab

InfinityPools are marketing itself as a platform where any token pair can be created and traded with leverage. It’s actively marketing itself as a place where high leverage shitcoin trading will operate. In these environments, market makers will not be able to hedge. In this scenario they take on an incredible amount of Gamma risk that caps profits on the upper bound and with near 100% losses possible on the lower. If SUPERPEPEMOONCOIN drops 70% while stuck in the protocol, there’s no way to hedge losses. LPs are screwed, as the utilization rate maxes out, much like an Aave/Fraxlend loan with no liquidation mechanism. They just have to eat the bad debt (Gamma) in this case.

Aave loans with no liquidation are probably the best way to think about being an LP. You lend your assets to the protocol, who then lends those out for interest. It’s a fixed term and you have no power to recall or liquidate. As an LP, your only choice is either to withdrawal gradually (less bad), or fully withdrawal with fees (weirdly bad). Adding fees to withdrawal immediately is necessary, LPs would just rush to the exit during high volatility periods.

Assuming that the professional market makers will provide liquidity, the interest rates charged to traders will have to be quite high to cover their premiums. Since the market makers will be have to be forward looking for volatility, they have to assume much higher volatility scenarios since they won’t be able to adjust liquidity once its deployed. All of this will be passed back through in the form of interest rates paid by traders. It’s going to be extremely pricey comparatively versus other platforms, not including any of the trading fees. Especially for shitcoins… the fees should be extremely high to compensate for the risk LPs take.

How high the interest rates will get is a function of the utilization rate. A couple of questions we failed to ask during the interview was how fast they would respond. It’s all good if interest rates can go to infinity, but high volatility markets require a rapid shift upwards to ensure market participants remain incentivized to keep their deposits in the protocol.

So what’s a good interest rate to lend shitcoins at? Especially meme coins and other super high vol instruments? 1000%? 3000%? 10,000%? Remember, the risks are not just in the downside, when markets move higher rapidly, as the LP you’ve missed the opportunity to re-range upwards when your original position goes out of range. With a 1 week withdrawal time, shitcoins could 100x, as PEPE did. The lost opportunity of lending to Infinity Pools could be immense.

Traders will probably love the set and forget aspect of Infinity Pools. Liquidity providers probably are getting bad deal. As a result, the protocol might have trouble attracting TVL. Market makers are some of the most volatility sensitive actors in trading; by removing or taxing their ability to adjust spreads or redeploy assets, Infinity Pools is simply transferring costs and risks in a non-traditional way.

Benefits & Drawbacks to Traders 

Traders put up minimal collateral, based on leverage and utilization rate, to acquire the desired amount of leverage and interest payments.  Additionally, the trader gets to decide where they want to route their swap order, though many will opt for the default option, which is the 1inch router.  

The benefits are clear: low collateral, near-infinite leverage, and no liquidations.  But obviously there are tradeoffs. 

The risks are that the trader effectively gets TWAP’d out of their position over a 7-day period unless they continue to take out new loans at new interest rates.  For example, if a trader borrowed $900 for a leveraged long position and on every block $1.00 of the loan will expire, then to maintain their position size, Infinity Protocol will initiate a new loan of $1.00 on the trader’s behalf and the trader’s collateral will be deducted to pay for the interest.  This sounds troublesome but the protocol does all this under the hood so the only decision the trader needs to make is either to maintain or close the position.  

There will be a point in time, in which the trader will run out of collateral to pay the interest payments to originate new loans and at that point the trader’s position will get TWAP’d away.  Although the trader does not suffer liquidation due to market price action, the interest rate payments is a key risk to monitor. 

Conclusion

InfinityPools is a new DeFi primitive that combines an AMM with leveraged trading.  InfinityPools delivers five 10x improvements by providing: (1) more assets; (2) faster listing; and (3) near-infinite leverage as well as (4) protecting users from liquidations due to market price and (5) counterparty risk.

But there are clear risks to LPs who use InfinityPools. They will have to charge sufficient fees to compensate for their risks. However, Flywheel is excited for this new capital-P Primitive and can’t wait to test it.  

InfinityPools are launching their testnet soon. Follow them on Twitter for all the latest updates.

CAVEAT: This is a high-level overview of InfinityPools and its mechanics. The author based the analysis and explanation of InfinityPools on their independent research as well as the podcast interview with the founder of InfinityPools.  The examples and simulation used in this article is based on simplified scenarios and do not represent what may occur.  For further research and a deeper dive into the math, please refer to the project’s Discord (where the whitepaper is located).

“The Slow Bleed” – FraxCheck #42

https://flywheeldefi.com/p/the-slow-bleed-fraxcheck-42

TOP 3 TL;DR

  1. frxETH // ∆ -0.8% drop in marketshare

  2. FRAX // 0.9974 exchange rates

  3. FraxLend // ATH Collateral Value and Borrowed

Frax Supply & Peg

We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9974. As we’ve said, we do not like to see a 7 number at that rate. Things have been a slow bleed on this rate. Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

Flat across the board for the past 7 Frax Checks. Moving on.

FraxBP

Nothing much to report here out of the usual. FraxBP has been hovering around $500M for the past few weeks. However, the volume for June so far has been abysmal. Frax liquidity pools are now nearly 2.2x that of 3POOL. We are in a new regime in the Frax-Curve flywheel relationship.


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 116%. There are 1758 holders of IQ on Ethereum but only 180 are staked. There’s definite value in staking as the treasury is $116.3M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 235,026 frxETH supply, an 2.3% increase from last week — frankly one of the lowest growth rate we’ve seen.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9989, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9988, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape.

Competitive landscape

Speaking of landscape, let’s look at the LSD market.

We are DOWN!

This is the first time we actually lost market share. We were at 2.47% but now we’re at 2.45%. We saw strong growth over May but this is definitely a slow start to the month. The bad news continues as frxETH is in the middle of the pack this week in the yield arena. Here we witnessed one of the lower APYs at 4.7% — but still it’s that sweet native ETH yield. The yield is also particularly lowered since the validator queue is still quite long.

FPI

The FPI has remained quiet for some time now since the release of veFPIS. We saw a flat week this week so nothing to report.

Fraxlend

FraxLend had an amazing week, frankly the last couple of weeks. The collateral value and the borrowed amount are back up to levels before the USDC crisis. The Utilization rate is also climbing back to its usual high 70s, mid-80s level.

Another point is that the CRV and FXS pairs are popping off, offering great yields at 8 and 9% respectively. If one’s looking to lever up, the sfrxETH/FRAX pair is still quite cheap at 2% to borrow.

Fraxswap

Lastly, we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or knows about but it’s pushing out major volume relative to its size. There are only $63.8M TVL across all the pools. Though this has been one of the slower weeks since our usual FXS/FRAX pair normally facilitates $15M in volume but, this week we only processed $5M.


Profitability

Revenue, Expenses, Profit

Show me the money! Well, here it is.

As mentioned, the Convex AMO paid the bribes on the 30th of May so in June we get to reap the rewards. One week into the month and we’re at $193k for the Convex AMO. On the FraxLend front, even though we didn’t increase the AMO, we generated $22k in revenue. Another important element is that the FRAX in FraxLend is at a 90% utilization rate. Unfortunately, we had one liquidation a few days ago but it was a small one with only $300 in fees.

Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiplying again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $202k — awesome. Lastly, we have the FPI which generated $8.8k in profit, that is after the requirement for the peg.

That is it for this week’s Frax Check #42! We hope you guys enjoyed this one and see you next week to welcome in the month of June!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“A Tease” – FraxCheck #41

https://flywheeldefi.com/p/a-tease-fraxcheck-41

TOP 3 TL;DR

  1. frxETH // ∆ +39% increase over the last 30 days

  2. FraxLend // $70M+ Borrowed

  3. Consolidated Profit // -$474k for May 2023

Frax Supply & Peg

This week things continue to be quiet in the $FRAX stablecoin realm. We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9977. As we’ve said, we do not like to see a 7 number in that rate. Let’s get this rate back above 0.9980 bls. Also, this rate has been decreasing for the past few weeks in a row. Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

Again, very calm on this front as well. The Collateralization Percent remains at its all-time-high of 94.8%, been this way for the past 6 Frax Checks. The Decentralization Percent also remained flat this week at 21.5%. We’ve previously been on a downtrend for nearly 8 weeks now so we’re glad to see this slight reversal.

FraxBP

For Frax’s liquidity-as-a-service in the form FraxBP, we have 500M TVL which experienced a little bump +0.4% over last week. The volume is at 45.5M so far for May, which is only a 9.1% utilization rate, fairly low when compared to what happened in March with the USDC fiasco. The LPers in the FraxBP and all the associated metapools are positioned to facilitate large swaps but we feel that idle capital could be put to use. If only Frax had something planned for this, oh wait, there is. It’s called BAMM — more info soon.

We are definitely in a new regime for Frax liquidity on Curve. This marks a significant milestone in the relationship between Frax and Curve as Frax pools are now the predominant stable coin pools on Curve.


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 122%. There are 1745 holders of IQ on Ethereum but only 179 are staked. There’s definite value in staking as the treasury is $15.6M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 229,773 frxETH supply, an 6.9% increase from last week. This has been a good month for frxETH. We were stalling a bit after Shapella but things are changing.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9998, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9989, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape.

Competitive landscape

Speaking of landscape, let’s look at the LSD market. Unlike last week, we are up small in market share this week. We’ve risen 2% to a 2.47% of the total ETH LSD market. We saw strong growth over the last 30 days of 39% and our 7-day change is at 7%. Though, we’re not alone. Rocketpool also had a great month so they’re climbing strong. Lido was previously shedding some market share but this month they’re clawing it back, up 10% for their 30-day change. The bad news continues as frxETH is in the middle of the pack this week in the yield arena. Here we witnessed one of the lower APYs at 4.87% — but still it’s that sweet native ETH yield.

FPI

The FPI has remained quiet for some time now since the release of veFPIS. We saw the a flat week this week so the supply remained at 82.6M but note that FPI is actually above the required peg by 37 basis points. The Treasury TVL is grew by $200k this week to $89.2M. We like to see the Treasury TVL increasing as well as the equity value increasing. The equity value is at $4.5M.

Fraxlend

One of the pillars of the DeFi Trinity is lending leg so here we have FraxLend. The TVL is at $260M but the borrowed amount is at $70M+. This is an all-time high in borrowed amount. The utilization rate is back to 71%, which is a 16% increase from last week. Let’s take a look at the FraxLend pairs. The sfrxETH/FRAX is still only putting out a 1.92% borrow rate with a staking yield of 4.8%. And of course, the ol’ reliable CRV/FRAX is putting out steady yields of 7%.

Fraxswap

Lastly, we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or knows about but it’s pushing out major volume relative to its size. There are only 64.4M TVL across all the pools yet it facilitates $43.3M in volume which is a 67.0% utilization rate. Though this has been one of the slower week since our usual FXS/FRAX pair normally facilitates $15M in volume but this week we only processed $3.7M.


Profitability

Revenue, Expenses, Profit

Show me the money! Well, here it is. We know this month is going to be an expensive month for the Convex AMO since the bribe epoch payment fell on the 1st and 30th of this month. We’re seeing a loss of $870k in the Convex AMO. But do not fret as the other AMOs and revenue streams are stepping up. For FraxLend, we’re pulling in about $16k per week so we’re at $65k for May. Fortunately, everyone is behaving responsibly so we do not have further liquidations this month so we remain at $15.5k.

Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiplying again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $195k — awesome. Lastly, we have the FPI which generated $118k in profit, that is after the requirement for the peg.

That is it for this week’s Frax Check #41! We hope you guys enjoyed this one and see you next week to welcome in the month of June!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“The Calm b4 The Storm” – FraxCheck #39

https://flywheeldefi.com/p/the-calm-b4-the-storm-fraxcheck-39

TOP 3 TL;DR

  1. frxETH // Supply 191,955 ∆ +5.5%

  2. frxETH // 9.2% APY

  3. FraxLend // Liquidations $15.5k

Frax Supply & Peg

This week things are quiet in the $FRAX realm. We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is above average. Not much to report here so let’s move onto the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

Again, very calm on this front as well. The Collateralization Percent remains at its all-time-high of 94.8%, been this way for the past 3 to 4 Frax Checks. The Decentralization Percent saw a drop of 1% this week down to 20.6%. We’ve been on a downtrend for nearly 8 weeks now.

FraxBP

For Frax’s liquidity-as-a-service in the form FraxBP, we have 501M TVL which experienced a 1.5% drop. The volume is at 20.2M so far for May, which is only a 4% utilization rate, fairly low when compared to what happened in March with the USDC fiasco.

% of 3 pool

We are definitely in a new regime for the % of 3Pool. This marks a significant milestone in the relationship between Frax and Curve as Frax pools are now the predominant stable coin pools on Curve.

Additionally, we have a new contender in the mix approaching from behind. FraxPP entered the scene with a whopping 112M TVL — not too shabby. We see that FraxBP is at 501M, 3Pool at 388M, and Frax3CRV at 284M.


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 126%. There are 1745 holders of IQ on Ethereum but only 178 are staked. There’s definite value in staking as the treasury is $15.8M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 191,955 frxETH supply, a 5.5% increase from last week. We’re tapering off a bit when compared to the initial pump in deposits right after Shapella upgrade but we’re doing good. Onward we march.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9993, a fairly strong rate, but we can’t just rely dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9992, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape.

Competitive landscape

Speaking of landscape, let’s look at the LSD market. Unfortunately, this week we are flat. We are at 2.14%, which was frankly the same as last week since Lido, Rocketpool and many others also experienced increase in their ethLSD supply. But you know the one department frxETH is dominating is in the yield arena. Here we witnessed one of the higher APY at 9.2% — that sweet native ETH yield.

FPI

The FPI has remained quiet for sometime now since the release of veFPIS. We saw the supply at 82.5M but note that FPI is actually above the required peg by 37 basis points. The Treasury TVL also increased by $100k to $89M. We like to see the Treasury TVL increasing as well as the equity value increasing.

Fraxlend

One of the pillars of the DeFi Trinity is the lending peg so here we have FraxLend. This week we have 217M in TVL with 56.8M borrowed. This represents a 61% utilization rate. We really want to see the utilization rate in the mid 70s to low 80s but as you can see in the collateral value graph, we’re far from where we were prior to the Circle conundrum. Though our borrowed value has pretty much recovered so you know folks are quite levered right now — and we have evidence of this later on this post.

Fraxswap

Lastly we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or know about but its pushing out major volume relative to its size. There are only 64.6M TVL across all the pools yet it facilitates 26.6M in volume which is a 41% utilization rate, and it’s only half the month so far!


Revenue, Expenses, Profit

Show me the money! Well here it is. We know this month is going to be an expensive month for the Convex AMO since the bribe epoch payment fell on the 1st of this month. We’re experiencing it now with a loss of $760k in the Convex AMO. But do not fret as the other AMO’s and revenue streams are stepping up. For FraxLend, we’re pulling in about $15.1k per week so we’re at $30k for May. As aforementioned, folks are quite levered on FraxLend so we have liquidations into the low six figures which gave us a $15.5k in liquidation revenue. We don’t want to see this but we’ll welcome the revenue. Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiply again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $163k — awesome. Lastly, we have the FPI which generated $106k in profit, that is after the requirement for the peg.

That is it for this week folks! See you next week.


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“It’s Quiet… Too Quiet” – FraxCheck #40

https://flywheeldefi.com/p/its-quiet-too-quiet-fraxcheck-40

TOP 3 TL;DR

  1. % of 3Pool // 130% — We’re sunsetting this metric as we’re now firmly in a new regime.

  2. frxETH // ∆ +11.9% and breaking 200k frxETH

  3. Aggregate Profitability // Net Loss of $160k so far in May

Frax Supply & Peg

This week things are quiet in the $FRAX realm. We have supply remaining flat, the peg range is tight, and the Curve swap exchange rate is at $0.9979. As we’ve said, we do not like to see a 7 number in that rate. Let’s get this rate back above 0.9980 bls. Aside from that, not much to report here so let’s move on to the Collateralization and Decentralization Percent.

Collateralization & Decentralization Ratios

Again, very calm on this front as well. The Collateralization Percent remains at its all-time-high of 94.8%, been this way for the past 5 Frax Checks. The Decentralization Percent jumped bigly up 4.4% this week to 21.5%. We’ve been on a downtrend for nearly 8 weeks now so we’re glad to see this slight reversal.

FraxBP

For Frax’s liquidity-as-a-service in the form FraxBP, we have 498M TVL which experienced a 0.6% drop. The volume is at 32.2M so far for May, which is only a 6.4% utilization rate, fairly low when compared to what happened in March with the USDC fiasco. The LPers in the FraxBP and all the associated metapools are positioned to facilitate large liquidity-required swaps but we feel that idle capital could be put to use. If only Frax had something planned for this, oh wait, there is. It’s called BAMM — more info soon.

% of 3 pool

We are definitely in a new regime for the % of 3Pool. This marks a significant milestone in the relationship between Frax and Curve as Frax pools are now the predominant stable coin pools on Curve. Given that we’re now in this new era, we believe it’s best to sunset this metric. So this would be the last time we see % of 3Pool in our Frax Checks! Say good bye!


IQ Staking

Did you know that BrainDAO was founded by Sam K before he founded Frax Finance? That’s right! BrainDAO’s flagship product is their IQ.wiki, which is the crypto encyclopedia. We have nearly all of our Flywheel guests wiki page on there so be sure to check that out!

Additionally, you can stake IQ today to earn a whopping 124%. There are 1745 holders of IQ on Ethereum but only 179 are staked. There’s definite value in staking as the treasury is $15.7M. There needs more governance power to secure and direct the treasury.

Be sure to go to the staking page today here.


FrxETH supply and distribution

Now onto the crowd favorite, le frxETH. We rocking strong here with 214,804 frxETH supply, a 11.9% increase from last week(!!). We were tapering off a little after Shapella going down to a WoW growth of 4-6% but this previous week we blew off the top again. Resume the rocket ship.

FrxETH peg

Reminder, frxETH is still a stablecoin, just a stablecoin pegged to ETH instead of the dollar. So we must check the peg. Here the dashboard shows 0.9992, a fairly strong rate, but we can’t just rely on dashboards. In the markets, we swapped 3.5k frxETH for ETH via Curve and received an exchange rate of 0.9991, which is also a very strong exchange rate. Arguably, one of the best rates in the LSD landscape.

Competitive landscape

Speaking of landscape, let’s look at the LSD market. Unlike last week, we are up in our marketshare this week. We’ve risen 13% to a 2.42% of the total ETH LSD market. We saw strong growth over the last 30 days of 39% and our 7-day change is at 13%. Though, we’re not alone. Rocketpool also had a great week and month so they’re climbing strong. Lido lead is sliding from where they started which was around the 75% mark, now down to 72.9%. But you know the one department frxETH is dominating is in the yield arena. Here we witnessed one of the higher APY at 6% — that sweet native ETH yield.

FPI

The FPI has remained quiet for some time now since the release of veFPIS. We saw the supply increase slightly by $100k, which brings it to 82.6M but note that FPI is actually above the required peg by 37 basis points. The Treasury TVL is flat this week at $89M. We like to see the Treasury TVL increasing as well as the equity value increasing. The equity value is at $4.5M.

Fraxlend

One of the pillars of the DeFi Trinity is lending leg so here we have FraxLend. Unfortunately this week there’s a technical issue with the FraxFacts dashboard for the FraxLend page so we were unable to pull the metrics. Though we were able to look at the pairs and we saw some interesting things. We have a new pair AAVE/FRAX added to the mix. On the other hand, the sfrxETH/FRAX is still only putting out 1.92% borrow rate with a staking yield of 6%. And of course, the ol’ reliable CRV/FRAX is putting out steady yields of 7%.

Fraxswap

Lastly, we have the final leg of the DeFi Trinity with FraxSwap. We like to call this the Dex that no one talks or knows about but it’s pushing out major volume relative to its size. There are only 65.5M TVL across all the pools yet it facilitates $37M in volume which is a 56.5% utilization rate, and the month is not over!


Revenue, Expenses, Profit

Show me the money! Well, here it is. We know this month is going to be an expensive month for the Convex AMO since the bribe epoch payment fell on the 1st and 30th of this month. We’re experiencing it now with a loss of $520k in the Convex AMO. But do not fret as the other AMOs and revenue streams are stepping up. For FraxLend, we’re pulling in about $15.1k per week so we’re at $45k for May. Fortunately, everyone is behaving responsibly so we do not have further liquidations this month so we remain at $15.5k. Following we have the frxETH revenue which we calculated by taking the quantity of frxETH multiplying it by 7% for the staking yield then multiply again by 8% to get Frax’s fee share then a final multiplication with the price of ETH and finally dividing that by 12 to get the monthly figure, which is $182k — awesome. Lastly, we have the FPI which generated $116k in profit, that is after the requirement for the peg.


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“Flat But Sad” – FraxCheck #38

https://flywheeloutput.com/p/flat-but-sad-fraxcheck-38

TOP 3 TL;DR

  1. % of 3Pool 128% // New ATH

  2. FraxPP // $115M TVL

  3. frxETH Monthly Revenue $157k // Assuming 7% APR and 189k frxETH

Frax Supply & Peg

The peg remained flat week over week. No change here.

Collateralization & Decentralization Ratios

The collateralization and decentralization percentages remained flat week over week. No changes here.

FraxBP

The TVL for FraxBP remained flat week over week. No change here.

% of 3 pool

Finally! We have some movement with an ATH in the 3Pool ratio. Big W. We see that Frax is completely integrated with Curve with the FraxBP, Frax3CRV, and FraxPP comprising more than 2x of 3Pool.


IQ Staking

Here we have a new segment of our show where we take a look at IQ aka BrainDAO! Thanks to a recent grant passed by the BrainDAO community we will be covering their staking for at least the next 3 months. But before we dive into the staking portion, let’s get some fast facts. There’s a highly flexible locking system that ranges from as low as 1 week to 4 years. Similar to Curve, if the lock is for 4 years, the voting power is quadrupled. Though there is a linear decay in voting power!

The staking page for BrainDAO can be found here. The current APR is 127%, which is down 70 bps from last week, for single-sided IQ staking. There are only 177 stakers (an increase of 1 more staker!) so far on Ethereum but there are over 1700 holders. Come stake some IQ y’all!

Aside from the high APR, the main reason to stake IQ is to control the treasury, which is at $15.0M, down nearly 4% week-over-week. The largest holding is sfrxETH at $5.3M, 36% of the treasury. We love to see another DAO holding large portions of frxETH and FRAX on their balance sheets.


FrxETH supply and distribution

Another roaring week for frxETH, up 7.6% to a whopping 181,965! 62% of these frxETH is in sfrxETH, 27% is in Curve LP, and the remaining 11% is floating around earning yield across all of DeFi. Go check out Sam’s post on where all the floating frxETH is hanging out here.

FrxETH peg

More good news! We have a strong peg for the frxETH to ETH pair. The dashboard shows an exchange rate of 0.9999. When we go Curve we have an exchange rate of 0.9992. This may just be the best we’ve seen.

Competitive landscape

We’re holding onto the 2.0% with an increase to 2.11%! May is off to a great start with 7.8% growth so far. Though we weren’t the only ones, Rocket Pool also got some love and also increased by 31% in April then 4% so far in May, while we see that cbETH continue to bleed.

We’ve fallen off the top seat in the yield department. Ankr is leading the way at 7.4% and frxETH is in the middle of the pack at 6.4%. Though Lido and Rocketpool is on our heels at 6.2% and 5.7% respectively.

FPI

Here comes our producer Sam’s favorite: FPI! Though there isn’t much movement in the supply and the cap except for a small 20 bps change this week over last week. It’s important to track the equity of the FPI. Here we dropped by $200k to $4.3M in equity, which means there’s an excess of Assets when compared to the Liabilities on the balance sheet. If FPI were to fold tomorrow, then that $4.3M is distributed across all the FPIS (or veFPIS).

Fraxlend

Again, not much as changed this week on Fraxlend. We see the collateral value is still much lower than where we were before the USDC depeg. The utilization rate has also been hovering around the 60s; we want to see this in the high 70s to 80s. Though the borrowed value has recovered, the collateral value is still quite far off.

AMOs

AMO is at $817.2M, up 10 bps from last week — so pretty much flat. The change came from the Liquidity and Investor AMO gaining $900k and losing $600k, respectively. No changes to the Curve and Lending AMOs.

Revenue, Expenses, Profit

This is the beginning of May so it’s expected that we will be in the red. So we’re hopeful for May that we get to see another green month!

In the Fraxlend AMO, we increased 2.0M FRAX across the Fraxlend pairs. We’ve generated $15k in revenue for May so far. This is about $15k on avg per week. We also had no liquidation so far, and frankly, we want this number to be near zero so good job everyone for staying safe out there.

FPI’s May revenue is at $44k. That’s all that needs to be said.

The aggregate profit net income for May so far is a loss of $153k.

And that’s it for this week’s Frax Check! See you next week!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“On The Edge” – Frax Check #37

https://flywheeldefi.substack.com/p/on-the-edge-fraxcheck-37

TOP 3 TL;DR

  1. 1.00B FRAX // Stablecoin Supply (∆ -3.3%)

  2. 124% of 3Pool // FraxBP TVL (∆ +2.0%)

  3. $393k Profit for April // Aggregated Net Income Across All AMOs

Frax Supply & Peg

We are on the edge of the billion-supply cliff. We are $40M away from losing our third comma. Out of all the metrics we track here at Frax Check, this is the utmost important one. Every effort and initiative is to increase this metric. We have work to do.

Thanks for reading Flywheel DeFi! Subscribe for free to receive new posts and support my work.

Collateralization & Decentralization Ratios

Though some bright news is that the peg remained quite tight on the dashboard, showing a range of $1.001 to $0.998 — this is the norm. In the markets, we swapped 100M FRAX for USDC and received an exchange rate of 0.9987. These are tight ranges and fair exchange rates.

The Collateralization Percent hit a new all-time-high of 94.8%! We are inching our way to 100. On the Decentralization Percent side, we’re not doing too well. We’ve been slowly bleeding down to 20.8% this week, a decrease of 50 bps from last week.

FraxBP

Let’s counterbalance some bad news with good news here. FraxBP printed a solid 2% gain this week to $509M in TVL. For April, FraxBP facilitated $55M in volume, equating to about 11% utilization rate. Not too bad but markedly lower than that of March’s which was $210M.

% of 3 pool

More good news! We hit an all-time high of 124%. We are firmly in a new regime now. With FraxBP as the dominating base pool and FraxPP in the wings, Frax is truly integrating well with the Curve ecosystem from the governance down to the product level. FraxBP is at $509M, 3Pool is at $412M, and FRAX3CRV is at $291M.


IQ Staking

Here we have a new segment of our show where we take a look at IQ aka BrainDAO! Thanks to a recent grant passed by the BrainDAO community we will be covering their ecosystem for at least the next 3 months. But before we dive into the staking portion, let’s get some fast facts. There’s a highly flexible locking system that ranges from as low as 1 week to 4 years. Similar to Curve, if the lock is for 4 years, the voting power is quadrupled. Though there is a linear decay in voting power!

The staking page for BrainDAO can be found here. The current APR is 128% for single-sided IQ staking. There are only 176 stakers so far on Ethereum but there are over 1700 holders. Come stake some IQ y’all!

Aside from the high APR, the main reason to stake IQ is to control the treasury, which is at $15.6M. The largest holding is sfrxETH at $5.3M, 34% of the treasury. We love to see another DAO holding large portions of frxETH and FRAX on their balance sheets.


FrxETH supply and distribution

Up only! We have 169,146 frxETH, an increase of 6.3% from last week. 60% of these frxETH is in sfrxETH, 31% is in Curve LP, and the remaining 9% is floating around earning yield across all of DeFi. Go check out Sam’s post on where all the floating frxETH is hanging out here.

FrxETH peg

Strong peg. The dashboard peg shows a 0.9991 exchange rate and the curve swap exchange rate is just a hair under at 0.9990. We like to see this.

Competitive landscape

Congrats to frxETH for breaking into the 2.00% club! We are making our way up the charts. We grew at a fairly quick pace for April with about a 32% change. Though we weren’t the only ones, Rocket Pool also got some love and also increased by 31% in April, while we see that cbETH has its first monthly decline of 0.69%.

We reclaimed the top of the yield table. FrxETH is earning 6.55% whereas the closest competitor Ankr is earning 5.74%, with Lido and Rocketpool in the bottom at 4.6% and 4.9%, respectively.

FPI

Here comes the FPI! Though there aren’t much movement in the supply and the cap. It’s important to track the equity of the FPI. Here we have $4.5M in equity, which means there’s an excess of Assets when compared to the Liabilities on the balance sheet. If FPI were to fold tomorrow, then that $4.5M is distributed across all the FPIS (or veFPIS).

Fraxlend

TVL is slowly growing on Fraxlend. We see that the collateral value is still much lower than where we were before the USDC depeg. The utilization rate has also been hovering around the 60s; we want to see this in the high 70s to 80s. Though, the borrowed value has nearly recovered.

AMOs

AMO is at $816M, down 50 bps from last week. The change came from the Liquidity and Investor AMO each shedding $3.9M and $1.7M, respectively. No changes to the Curve and Lending AMOs.

Revenue, Expenses, Profit

We believe this is the first time we’ve seen the Convex AMO in the green since “No-Profit-November” last year. Here we have $130k in profits for April. Though, this is quite a fortuitous month as the bribe payment fell on May 1st so we didn’t have to bear the cost in April.

In the Fraxlend AMO, we increased 4.5M FRAX across the Fraxlend pairs. We’ve generated $81k in revenue for April. This is about $21.4k on avg per week. We also had a small $121 profit from liquidations, and frankly, we want this number to be near zero so good job everyone for staying safe out there.

FPI’s April revenue hit $182k. That’s all that needs to be said.

The aggregate profit net income for April is $393k. Mic drop.

And that’s it for this week’s Frax Check! See you next week!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

Thanks for reading Flywheel DeFi! Subscribe for free to receive new posts and support my work.

“We’re Content” – Frax Check #34

https://flywheeldefi.substack.com/p/were-content-frax-check-34

TOP 3 TL;DR

  1. FraxBP up, 3Pool & Frax3CRV remained flat — TVL $500M, 114% of 3POOL

  2. FPI “equity” value hits $5M

  3. FraxLend generating ~$50k/ month

Frax Supply & Peg

There has been no changes to the FRAX stablecoin supply this week. The peg is finally regaining its ground, currently between 0.998 and 1.002. The Curve swap rate is at 0.9989 — things are content.

Collateralization & Decentralization Ratios

The collateralization percentage increased by 80bps this week to 93.3%. This is within the highest range for this metric so we’re on our way to that 100% mark. Next is the decentralization percentage, which decreased by 2% to 22.5%. Though we’re still within the normal range.

FraxBP

FraxBP hit a nice round $500M in TVL this week. However, we should taper our expectations on the volume this week. For April, the volume is at $19.5M which is only a 3.9% utilization rate. FraxBP is 114% of 3Pool. We’ve been holding this ratio for the past 5 weeks now. This may be a regime change — don’t jinx it. Though what is notable is the fact that FraxBP’s TVL grew while 3Pool’s and Frax3CRV’s TVL remained flat.

FrxETH supply and distribution

FrxETH saw another up-only week. It increased by 2.4% to 131,376 frxETH — love to see it. Though we would like to see the growth rate in the 5%s and above range!

FrxETH peg

This peg is literally as near-perfect as it could be and when we check the Curve markets, we received an exchange rate of 0.9983. It’s good to not to see any 7s in this exchange rate.

Competitive landscape

FrxETH is currently in fourth place with 1.64% market share. The 30D change shows that FrxETH is still the fastest growing LSD at nearly 15%. We need 3.5x our count to catch up to Rocket Pool, that’s a long way ahead but we’re here for it.

FPI

FPI saw a good week with its treasury increasing a little more than $200k. The current supply is 82.3M with indexed inflation at 6%. The treasury is able to generate excess yields above the required amount which resulted in about $5M in “equity” value to the veFPIS holders.

Fraxlend

Up next we have FraxLend. We see TVL at $170M and the supplied FRAX value at about $65M. The supplied value is closely approaching its levels before the USDC fiasco. For those supplied FRAX, users can lend them out to many pairs. Ignore the top row as the v2 sfrxETH/FRAX pair is deprecated. We see the usual suspect of CRV printing a solid 9%, and this rate has been pretty much ranging between 7 to 9%. On the other hand, if you have sfrxETH, now is a chance to borrow some FRAX at a lower rate. There’s currently $5M available to be borrowed.

Fraxswap

Now the last leg of the DeFi Trinity: the DEX. FraxSwap holds an TVL of $71M — up small from the last week. Though we can see that the monthly volume will be lower this month than in the first quarter of 2023. The top volume pair is still the FXS/FRAX pair with $16M in 7D volume.

AMOs

The AMOs also had an okay week, up 10bps. The Curve, Lending, and Investor AMO pretty much remained flat this week. The gain for this week came from the Liquidity AMO for a total of $923.2M across all the AMOs.

Revenue, Expenses, Profit

For the month of April, we’re doing alright. The Convex AMO is currently at a $160k loss but we have revenue of $670k and expenses of $830k. The Fraxlend AMO is printing about $14k per week so we’ve acquired nearly $30k so far. Also fortunately everyone’s being safe out there so we didn’t have any liquidations. Lastly, we have the FPI printing a solid $25k with unclaimed rewards of nearly $55k.

Well, that is it for this week’s Frax Check! Tune in next week to see where we are along our Frax journey.


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“On The Edge” – FraxCheck #37

https://flywheeloutput.com/p/on-the-edge-fraxcheck-37

TOP 3 TL;DR

  1. 1.00B FRAX // Stablecoin Supply (∆ -3.3%)

  2. 124% of 3Pool // FraxBP TVL (∆ +2.0%)

  3. $393k Profit for April // Aggregated Net Income Across All AMOs

Frax Supply & Peg

We are on the edge of the billion-supply cliff. We are $40M away from losing our third comma. Out of all the metrics we track here at Frax Check, this is the utmost important one. Every effort and initiative is to increase this metric. We have work to do.

Thanks for reading Flywheel DeFi! Subscribe for free to receive new posts and support my work.

Collateralization & Decentralization Ratios

Though some bright news is that the peg remained quite tight on the dashboard, showing a range of $1.001 to $0.998 — this is the norm. In the markets, we swapped 100M FRAX for USDC and received an exchange rate of 0.9987. These are tight ranges and fair exchange rates.

The Collateralization Percent hit a new all-time-high of 94.8%! We are inching our way to 100. On the Decentralization Percent side, we’re not doing too well. We’ve been slowly bleeding down to 20.8% this week, a decrease of 50 bps from last week.

FraxBP

Let’s counterbalance some bad news with good news here. FraxBP printed a solid 2% gain this week to $509M in TVL. For April, FraxBP facilitated $55M in volume, equating to about 11% utilization rate. Not too bad but markedly lower than that of March’s which was $210M.

% of 3 pool

More good news! We hit an all-time high of 124%. We are firmly in a new regime now. With FraxBP as the dominating base pool and FraxPP in the wings, Frax is truly integrating well with the Curve ecosystem from the governance down to the product level. FraxBP is at $509M, 3Pool is at $412M, and FRAX3CRV is at $291M.


IQ Staking

Here we have a new segment of our show where we take a look at IQ aka BrainDAO! But before we dive into the staking portion, let’s get some fast facts. There’s a highly flexible locking system that ranges from as low as 1 week to 4 years. Similar to Curve, if the lock is for 4 years, the voting power is quadrupled. Though there is a linear decay in voting power!

The staking page for BrainDAO can be found here. The current APR is 128% for single-sided IQ staking. There are only 176 stakers so far on Ethereum but there are over 1700 holders. Come stake some IQ y’all!

Aside from the high APR, the main reason to stake IQ is to control the treasury, which is at $15.6M. The largest holding is sfrxETH at $5.3M, 34% of the treasury. We love to see another DAO holding large portions of frxETH and FRAX on their balance sheets.


FrxETH supply and distribution

Up only! We have 169,146 frxETH, an increase of 6.3% from last week. 60% of these frxETH is in sfrxETH, 31% is in Curve LP, and the remaining 9% is floating around earning yield across all of DeFi. Go check out Sam’s post on where all the floating frxETH is hanging out here.

FrxETH peg

Strong peg. The dashboard peg shows a 0.9991 exchange rate and the curve swap exchange rate is just a hair under at 0.9990. We like to see this.

Competitive landscape

Congrats to frxETH for breaking into the 2.00% club! We are making our way up the charts. We grew at a fairly quick pace for April with about a 32% change. Though we weren’t the only ones, Rocket Pool also got some love and also increased by 31% in April, while we see that cbETH has its first monthly decline of 0.69%.

We reclaimed the top of the yield table. FrxETH is earning 6.55% whereas the closest competitor Ankr is earning 5.74%, with Lido and Rocketpool in the bottom at 4.6% and 4.9%, respectively.

FPI

Here comes the FPI! Though there aren’t much movement in the supply and the cap. It’s important to track the equity of the FPI. Here we have $4.5M in equity, which means there’s an excess of Assets when compared to the Liabilities on the balance sheet. If FPI were to fold tomorrow, then that $4.5M is distributed across all the FPIS (or veFPIS).

Fraxlend

TVL is slowly growing on Fraxlend. We see that the collateral value is still much lower than where we were before the USDC depeg. The utilization rate has also been hovering around the 60s; we want to see this in the high 70s to 80s. Though, the borrowed value has nearly recovered.

AMOs

AMO is at $816M, down 50 bps from last week. The change came from the Liquidity and Investor AMO each shedding $3.9M and $1.7M, respectively. No changes to the Curve and Lending AMOs.

Revenue, Expenses, Profit

We believe this is the first time we’ve seen the Convex AMO in the green since “No-Profit-November” last year. Here we have $130k in profits for April. Though, this is quite a fortuitous month as the bribe payment fell on May 1st so we didn’t have to bear the cost in April.

In the Fraxlend AMO, we increased 4.5M FRAX across the Fraxlend pairs. We’ve generated $81k in revenue for April. This is about $21.4k on avg per week. We also had a small $121 profit from liquidations, and frankly, we want this number to be near zero so good job everyone for staying safe out there.

FPI’s April revenue hit $182k. That’s all that needs to be said.

The aggregate profit net income for April is $393k. Mic drop.

And that’s it for this week’s Frax Check! See you next week!


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

Thanks for reading Flywheel DeFi! Subscribe for free to receive new posts and support my work.

“Win Some, Lose Some” – FraxCheck #36

https://flywheeloutput.com/p/win-some-lose-some-fraxcheck-36

TOP 3 TL;DR

  1. FraxBP // 122% of 3Pool

  2. frxETH // 12% WoW Growth, 158,987 frxETH supply

  3. Profitability // Net Profit of $123k

Frax Supply & Peg

Finally the FRAX stablecoin supply finally moved, except in the opposite direction that we wanted. It’s down 60bps from last week. The peg had a bit of a range this week going from the low of 0.996 to a high of 1.001. Curve exchange rate for 100M FRAX came in at 0.9988, a pretty solid rate.

Collateralization & Decentralization Ratios

A new ATH in the Collateralization Ratio! We printed 94.3%, up 50bps from last week. Though to balance out the good news, we also saw a decline of 6.6% in the Decentralization Ratio to 20.9%.

FraxBP

FraxBP increased by $1M in TVL over the week — so unchanged. The volume for April is markedly lower than that of March’s. So Curve revenue is expected to be lower this month as well.

% of 3 pool

From the far left field, we saw the “% of 3Pool” ratio flew to new heights at 122%. We’re in the ratio discovery stage. This increase actually came from 3Pool decreasing nearly 10%, while the FraxBP remained unchanged. We also saw a drop of $100M in TVL for the Frax3CRV. Though, it is possible that the liquidity migrated over to FraxPP, the new FRAX+USDP base pool.

FrxETH supply and distribution

Another hot week for frxETH with an increase of 12% to 158,987 frxETH supply. Nearly 60% of the supply is staked in the sfrxETH vault earning the sweet native ETH yield, whereas 29% is hanging out in the Curve LP with the remaining 11% chilling in the ether.

FrxETH peg

Alas, frxETH is still a stablecoin so we must check the peg. Here we see that the peg is 0.9992 and the exchange rate on Curve is 0.9991. This is the closest I’ve seen the delta between the dashboard’s exchange rate and Curve’s.

Competitive landscape

FrxETH put up big numbers this week on the growth charts as we experienced a big jump of 9% to hit a new market share of 1.92%. Rocketpool also experienced a nice bump but we’re neck-to-neck. However bad news must follow good news; and frxETH is no longer the top in the yield department.

FPI

FPI stats remained pretty unchanged across the board except there were some funds being moved around. During the March Circle crisis, the team moved FRAX and FPI from the multi-sig into the Convex pool during that period of time. Now, the team moved those funds back into the multi-sig. Additionally, we saw a decrease of nearly $500k from the equity portion of the FPI balance sheet.

Fraxlend

On FraxLend, we’re not quite back to where we were prior to the March Circle crisis. Though the supply value has fully recovered, the collateral value is still very much subpar. Users are still hesitant to provide their collateral into FraxLend. But there are plenty of reasons to borrow on FraxLend since the rate for sfrxETH is still only 2%.

Fraxswap

The bad news continues with the final leg of the DeFi trinity. FraxSwap experienced a decline of nearly 7%. On the bright side, the FXS/FRAX pair is steadily facilitating nearly $15M of volume every week.


AMOs

As mentioned previously, the Frax3CRV saw a drop of nearly $100M in TVL and we see that here in the Curve AMO. But note that this liquidity could’ve been migrated over to the FraxPP, FRAX+USDP base pool. We also saw a decline in both the Liquidity and Investor AMO of $6M and $4M, respectively.

Revenue, Expenses, Profit

But of course, we must end with some good news. This is a big win for the team as we are net profitable so far in April. Since the month is wrapping up by next week and the next Votium bribe expense won’t be until May, it’s highly likely that we get a green month.


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.

“It’s Good” – FraxCheck #35

https://flywheeloutput.com/p/its-good-fraxcheck-35

QUICK ANNOUNCEMENT

The Frax Educational Incentives Kick-Off!

From written articles to dashboards, earn rewards for spreading awareness of Frax far and wide. The program will run for three months and at the end of every month term, up to $10k worth of $FXS will be rewarded to eligible participants.

Check out how to earn it here


TOP 3 TL;DR

  1. % of 3Pool // Maintain 113% for 6 Weeks

  2. frxETH // 8% Week-over-Week Growth

  3. frxETH // 0.9995 frxETH to ETH exchange rate

Frax Supply & Peg

The FRAX stablecoin supply has been flat for the past 6 weeks. But on Curve, we see a steady rise in the exchange rate back to $0.9989 when we swap 100M of FRAX for USDC.

Collateralization & Decentralization Ratios

The collateralization ratio hit a new high at 93.8%. The decentralization percentage dropped small by 40 bps to 22.4%.

FraxBP

FraxBP is still chilling at around $500M TVL but the monthly volume for April is markedly lower than March’s. But overall quite good for FraxBP with steady TVL and volume going back to the norms.

% of 3 pool

We’ve been steadily holding above 113%. This could be a new regime in the Curve ecosystem with FraxBP being the go-to liquidity spot.

FrxETH supply and distribution

After Shapella we saw some amazing momentum on frxETH with a weekly growth of 8% this week! We’ve been hanging around the low single digits growth for the past few weeks leading up to Shapella but now we know it was all that pent-up demand finally unleashing!

FrxETH peg

More great news on the frxETH front with a strong peg of 0.9996 on the dashboard and a 0.9995 on Curve. This just may be the best exchange rate for frxETH to ETH we’ve seen.

Competitive landscape

Take a look at that! frxETH has the best 30D change. What’s even better is that frxETH’s 7D change is better than all the other competitors’ 30D change. frxETH saw an increase of 7% in its market share, up to 1.76%. On the yield front, frxETH is still at the top of the charts with 5% APY this week — even after the fees, frxETH is still the top.

FPI

FPI did some amazing stuff this week by increasing its equity up to $5.3M. Recall that equity in this case is the excess above what’s needed to maintain the peg. Additionally, the FPI treasury TVL is at $88.6M to generate that excess.

Fraxlend

FraxLend’s supply value pretty much fully recovered from the Circle incident. But we’re still seeing a lag in the collateral value. Some more good news, we see that the utilization rate increased by nearly 5% this week. Let’s take a look at the loan pairs. The FXS/FRAX pair is printing it this week with 14% APY. Next up, the CRV/FRAX has been printing it with a consistent 8-9% for the past few weeks now. Also, note that the sfrxETH/FRAX pair only costs 2% APY so effectively the borrower is getting paid to borrow.

Fraxswap

The last leg of the DeFi Trinity: the FraxSwap. We see that the TVL is inching up to the high of $72M. On the individual pair front, we see that FRAX/FXS is still facilitating $15M per week.

AMOs

The AMO experienced a nice 1.1% bump this week, leading us to $933.2M. The Curve and Lending AMO remained flat. The Liquidity and Investor AMO saw an increase of about $5M each.

Revenue, Expenses, Profit

The aggregate profit for April so far is a loss of $459M. Convex AMO racked up the largest loss so far but keep in mind that we had just paid for the Votium epoch. On the FraxLend front, the AMO is generating about $15k per week so we’re at $45k in April. FPI putting up great numbers at $126k profit.


ACCESS TO SLIDES: Here

Not financial or tax advice. This article is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This post is not tax advice. Talk to your accountant. Do your own research.