Within two weeks, decentralized stablecoin issuer Frax Finance will make its liquid staking technology on Ethereum publicly accessible.
The launch will enable users to stake ether (ETH) and get Frax Ether (frxETH), a liquid derivative token designed to unleash the value of staked tokens. The derivative will reflect ether’s price and will be freely transferable on other DeFi protocols.
“Everything will be completely open to the public within two weeks, barring any unexpected circumstances,” Frax core developer Jack Corddry told The Block. “However, the whole system is presently online and proposing blocks.”
Frax has completed a security assessment of its liquid staking token in preparation for its mainnet launch. The project has also completed the installation of a Curve pool, allowing frxETH to be exchanged for ETH with little or no slippage.
Frax Finance’s stablecoin depends on collateral and algorithmic techniques to maintain a 1:1 peg with the U.S. dollar. Dollar. Its stablecoin is partially supported by hard collateral, notably USD Coin (USDC), and partially by FXS, Frax Finance’s native governance token.
Frax’s decentralized liquid staking product will compete with protocols like Lido Finance and RocketPool.
Additionally, Frax Finance operates the decentralized exchange Fraxswap and the financing platform Fraxlend.
First, customers stake their ETH using Frax ETH Minter, a function that mints the liquid derivative related to the deposited ETH’s underlying value.
Frax will leverage its customers’ ETH to create and distribute a staking income via spinning Ethereum validators. By enabling individuals to delegate their assets to the protocol, this method aims to simplify the process of establishing validators.
Users must swap the first derivative token (frxETH) for Staked Frax Ether (sfrxETH), a second token that will accumulate staking yield from Frax’s Ethereum validators.
This second token will earn interest and rise in value over time relative to ether. The interest may be collected by the conversion of sfrxETH to frxETH.
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