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With Federal Reserve interest rates at their highest level in 22 years, FRAX announced the launch of sFRAX \u2014 a staking vault meant to tap the corresponding hike in Treasury yields.<\/p>\n
FRAX is in the process of deploying a raft of \u201cFrax v3\u201d products, and today is launching sFRAX, or \u201cstaked FRAX,\u201d alongside a bond product that converts to FRAX\u2019s stablecoin on maturity. Frax founder Sam Kazemian told Blockworks that starting Monday, users will be able to deposit sFRAX and receive 10% yield \u2014 which would then shrink to around 5.4%, the Fed\u2019s current IORB rate.<\/p>\n
Kazemian said once Federal Reserve interest rates started rising, he realized most stablecoins on the market were only built for low-rate environments \u2014 and Frax (FRAX<\/a>) needed to track interest rates to stay relevant.<\/p>\n \u201cOtherwise, no one will treat your stablecoin<\/a> as real dollars. They\u2019ll just think of them as play money, and then they\u2019ll sell them for real dollars, or real stablecoins or real T-bill projects,\u201d Kazemian said.\u00a0<\/p>\n sFRAX is partly the fruit of FRAX\u2019s August partnership<\/a> with FinresPBC, which connected FRAX with Kansas City-based Lead Bank to open a brokerage account and begin purchasing Treasury bills.<\/p>\n Frax\u2019s sFrax seems similar in motivation to MakerDAO\u2019s DAI Savings Rate<\/a> (DSR), a bear market success story that has helped Maker increase its revenue<\/a> for five straight months by giving DAI holders exposure to Treasury yields, per DeFiLlama.\u00a0<\/p>\n But Kazemian thinks Frax\u2019s design is ultimately more sustainable than Maker\u2019s.<\/p>\n DSR rates are akin to a \u201cmarketing spend to increase the profits of the DAO,\u201d Kazemian told Blockworks, arguing that Maker\u2019s rates don\u2019t track with the Fed\u2019s. Kazemian said FRAX is perfecting the Treasury-exposed stablecoin.<\/p>\n \u201cIt\u2019s not like, \u2018hey, let\u2019s just dump a bunch of yield into it and compete with DAI.\u2019 Our view is we want to complete this design,\u201d Kazemian said. \u201cIn order to complete a dollar-pegged stable coin, you need a way to bring the Fed<\/a> yield on-chain.\u201d<\/p>\n Don\u2019t miss the next big story \u2013 join our\u00a0free daily newsletter<\/a>.<\/strong><\/p>\n
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