Using Arbitrum as a comparison, if Fraxchain is able to

Question

Using Arbitrum as a comparison, if Fraxchain is able to

achieve similar size, then most likely 300-500,000 ETH would reside on the protocol’s L2, which is 1.5x more frxETH than the current supply right now. All of that ETH would not earn rewards and contribute to sfrxETH yield, to the effect of 15-25k ETH a year in rewards. The subsequent growth potential for frxETH is enormous as a result.

How does not staked frxeth increase yield of sfrxeth?

#cryptocurrency #english #frax

0

15.06.2023

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M K Автор вопроса

Sam Kazemian ¤⛓️¤
Because frxETH gets no yield by itself. It’s a sta...

Oh ok thanks Sam, so the more of frxeth is not staked (like in curve pool for example) the higher yield sfrxeth gets?

0

15.06.2023

Sam Kazemian ¤⛓️¤

M K
Oh ok thanks Sam, so the more of frxeth is not sta...

When you mint frxETH, you have to decide where to use it to get yield. The ETH used to mint frxETH mostly goes to validators. But 100% of the validator yield goes to sfrxETH. For example: let's say there's 10,000 frxETH total supply. That means there's 10,000 ETH backing all the frxETH. If 4,000 frxETH is used as gas on Fraxchain and 2,600 frxETH is staked in the Curve pool by users, then the remaining 3,400 frxETH that's staked as sfrxETH earns 100% of all the validator rewards. There's way more than 3,400 ETH in validators but only 3,400 frxETH are earning all of the rewards so the APR is ~3x higher than the next highest LSD.

0

15.06.2023

M K Автор вопроса

Sam Kazemian ¤⛓️¤
When you mint frxETH, you have to decide where to ...

That’s great, thank you very much for explaining it in a very accessible way😃🙏

0

15.06.2023

Sam Kazemian ¤⛓️¤ · Accepted Answer

Sam Kazemian ¤⛓️¤

Because frxETH gets no yield by itself. It’s a stablecoin. Only sfrxETH is the LSD and gets yield from validators.

0

15.06.2023

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Using Arbitrum as a comparison, if Fraxchain is able to

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