Why sfrxeth apy is lower than lido's steth? Isnt suppose

Question

Frax Finance

Kore

Why sfrxeth apy is lower than lido's steth? Isnt suppose

to be higher since a portion of frxeth wasnt staked?

#cryptocurrency #english #frax

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17.11.2022

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Justin Moore · Accepted Answer

sfrxETH yield comes from consensus income (Beacon chain), tips, and MEV. As we are in a big growth phase, we're seeing our validator count increase rapidly week-over-week. For example, in the last 7 days we increased our validator count by over 23%. It takes time for validators to activate and start earning rewards, but the increase in sfrxETH happens right away which temporarily reduces the APR. The earnings from the next 7 days will be applied to the sfrxETH growth rate next cycle, starting 7 days from now and ending 14 days from now. It should be smoother once frxETH matures more and grows at a lower rate, because the amount of underlying validators to be activated will be reduced compared to the existing validators already earning from the start of the cycle. To help offset this, people could unstake their frxETH from sfrxETH and instead provide LP on Curve. That would decrease the amount of sfrxETH supply while keeping the sfrxETH rewards the same, increasing the sfrxETH APR at the same time. Prior to the recent Votium round, the frxETH/ETH Curve APR was not high enough to attract people to move over from sfrxETH.

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