Proposal to add sfrxETH

Proposal to add sfrxETH

Proposal to add sfrxETH as collateral to Interest Protocol.


ETH in the Frax ecosystem comes in two forms, frxETH (Frax Ether), and sfrxETH (Staked Frax Ether).

frxETH acts as a stablecoin pegged to ETH, so that 1 frxETH always represents 1 ETH and the amount of frxETH in circulation matches the amount of ETH in the Frax ETH system. When ETH is sent to the frxETHMinter, an equivalent amount of frxETH is minted. Holding frxETH on its own is not eligible for staking yield and should be thought of as analogous as holding ETH

sfrxETH is an ERC-4626 vault designed to accrue the staking yield of the Frax ETH validators. At any time, frxETH can be exchanged for sfrxETH by depositing it into the sfrxETH vault, which allows users to earn staking yield on their frxETH. Over time, as validators accrue staking yield, an equivalent amount of frxETH is minted and added to the vault, allowing users to redeem their sfrxETH for a greater amount of frxETH than they deposited.

The exhange rate of frxETH per sfrxETH increases over time as staking rewards are added to the vault. By holding sfrxETH you hold a % claim on an increasing amount of the vault’s frxETH, splitting staking rewards among sfrxETH holders proportional to their share of the total sfrxETH. This is similar to other auto-compounding tokens like Aave’s aUSDC and Compound’s cUSDC.


Token Address: 0xac3E018457B222d93114458476f3E3416Abbe38F

LTV: 75%

Liquidation incentive: 10%

Maximum Cap: 5,000 (~$7,500,000)

Primary oracle Address: 0xd2F0fa7f2E6a60EEcf4b78c5b6D81002b9789F2c

Primary oracle: SfrxEthFraxDualOracle (Chainlink + Curve EMA & UniV3 TWAP)

Secondary oracle: 0xa1f8a6807c402e4a15ef4eba36528a3fed24e577

Price deviation: Curve frxETH/ETH pool + sfrxETH ERC4626 share price


sfrxETH Market Cap: $72.8M

sfrxETH Volatility:

Screenshot 2023-02-13 at 5.16.34 PM

frxETH Market Cap: $143.7M

frxETH Curve Liquidity: $122.61M

frxETH Solidly Liquidity: $3.08M

frxETH Uniswap V3 Liquidity: $996.99K

frxETH Coingecko 7-day avg. volume: $676.6K

Notable Exchanges: Curve, Solidly, Uniswap V3

Technical Risks

Type of contract: ERC-4626 vault

Underlying asset: frxETH

Time: 73 days

Value: The original amount of frxETH deposited plus staking rewards accrued over the duration of the period the tokens were deposited.

Relevant References

Website: Frax Finance

Documentation: frxETH and sfrxETH - Frax Finance ¤

Analytics: Frax Facts

Ethereum contract address:

Audits: Code4Arena

Bug Bounty: 10% of the total possible exploit or $10m worth paid in FRAX+FXS (evenly split).



Generally quite supportive of this. Very happy a smaller protocol like IP is getting noticed.

We already have rETH, cbETH, so it makes sense to add sfrxETH as it has much less risk than onboarding longer tail assets. And as one of the first protocol to support sfrxETH, this will be great marketing for us.

However, I’d like to start with a lower cap ($1M - $5M). If this vault is popular, sfrxETH will easily become the largest vault in the protocol. And there is probably not enough USDC in the PSM to meet such a demand at the moment. (IP is much smaller than AAVE)

I would like to start w a lower cap, and there is interest, we can make another determination as to what the appropriate cap increase will be.


@nader.frax Would it be possible to get a brief rundown on the advantages of listing sfrxETH vs frxETH? A quick overview of the technical and economic differences would be helpful for those less familiar with how the frxETH yield is distributed.

Thanks, We can definitely start with a smaller cap. I believe $1 million to $5 million is reasonable, and we will leave the decision to the Interest Protocol core team.

1 Like

frxETH acts as a stablecoin loosely pegged to ETH, leveraging Frax’s winning playbook on stablecoins and onboarding ETH into the Frax ecosystem.

sfrxETH is the version of frxETH that accrues staking yield. All profit generated from Frax Ether validators is distributed to sfrxETH holders. By exchanging frxETH for sfrxETH, one becomes eligible for staking yield, which is redeemed upon converting sfrxETH back to frxETH.

So as collateral for borrowers, it makes more sense to use sfrxETH because not only does it help them to keep their ETH holding position, but also it captures the staking reward and pays the loan by itself (if the borrow interest rate < Staking Reward)

1 Like

Thanks for the detailed explanation. From what I’ve read, both the ETH deposited into frxETH and sfrxETH contracts are used for staking, and staking rewards are only paid out to sfrxETH holders. And that’s why sfrxETH has a boosted APR compared to competing LSDs. Is that correct?

And also, if this proposal passes and executes, will FRAX promote IP’s sfrxETH CDP vault to it’s respective social channels?


1 Like

Largely agree with the above; particularly about the promotion of the sfrxETH valult if this proposal executes. I think that if this is going to be added we keep the cap at the 3000-4000 ETH mark set by the rETH, cbETH, and wstETH proposals. Perhaps as the dev team gets time we could create a formal proposal for all three LSDs/wrappers to be added at once.


Just wanted to point out that rETH and cbETH are already collaterals supported by Interest Protocol. Raw stETH is as well (but not wstETH).


Almost Yes, ~90% of all deposited ETH for frxETH is being used for staking, and ~10% is being used for Curve Pool to keep the peg.

Yes, for sure.

1 Like

@PaperImperium How could we proceed with this proposal to voting?

1 Like

Find someone with enough IPT to push it to a vote (sorry, I don’t personally have enough). That amount is about to be reduced. Will tag @Getty and @IPTMan, but there will be others who might also be able.

Totally-optional-so-feel-free-to-decline: If you feel like coming on a community call, that could nudge some large holder into posting a proposal. There will be one this Friday at noon Central Standard Time. They’re usually about every other week.

1 Like