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So am I right in thinking Frax takes POL and

gives it to Finres who will sell this for TBills.
Yield gets passed over back to the frax protocol & they issue FXBs which then mature yearly.

But part of the treasury yield also goes into minting new FRAX for sFRAX holders to earn. (I don’t understand how this can be minimum 5% considering some of the TBill yield is going to be going to bonds no?)

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Short dated tbills right now yield 5.3% actually. So sFRAX basically could be matched with near overnight bonds/RRPs/short dated tbills. Recall that sFRAX tries to target close to the IORB of the Fed which is the overnight lending rate (another way to describe it is a 1 day bond/lending to the Fed for 1 day).

0xMughal-Soldier Автор вопроса
Sam Kazemian ¤⛓️¤
Short dated tbills right now yield 5.3% actually. ...

I thought the TBill yield was going towards the FXBs, how will yield be directed to both FXBs & sFRAX?

0xMughal Soldier
I thought the TBill yield was going towards the FX...

Because they both can exist at the same time. Think of sFRAX as the 0 duration part of the yield curve and FXBs as farther out. For example: 100m 1 year FXBs sold for 95m FRAX means that FinresPBC can take 95m FRAX-->95m USDC-->$95m 1 year tbill purchase. Now at the same time, if 40m FRAX is staked in sFRAX, then that FRAX can go through the same flow 40m FRAX-->40m USDC-->$40m short dated tbills/RRPs close to the IORB rate.

0xMughal Soldier
I thought the TBill yield was going towards the FX...

Overnight interest accounts are the equivalent of sFrax yields basically

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