As the decentralized finance protocol’s emerging high-yielding staking product attracts millions in investor capital, Frax’s governance token FXS is stagnant.Frax announced sFRAX early on Thursday, an ERC4626 staking vault that enables owners of the protocol’s partially collateralized fractional-algorithmic stablecoin FRAX to earn yields that are comparable to the U.S. Federal Reserve’s (Fed) interest rate on reserve balances (IORB), which is presently about 5.4%.
The program had an APY of 10% when it first launched, but it subsequently converged to the Fed’s IORB rate of 5.4%.According to Dune Analytics, more than 150 users have contributed more than $35 million so far to the vault.On Thursday, FXS’s price increased by 7% to $5.66; but, it has since declined to $5.49, representing a 24-hour gain of just 0.5%.With the market leaders bitcoin and ether continuing to trade in low-volume ranges, the price movement has remained stable.
The new offering is a methodology for financing.To take advantage of the high interest in the US, MakerDAO has an advantage as the first mover.Parsec Finance reports that since February 2022, MakerDAO has invested approximately $2 billion in short-term bonds using offchain structures, paying a 5% interest rate on DAI and buying back its MKR coin.MKR has increased by more than 168% year to date, much above bitcoin’s 62% increase.FXS, however, has only increased by 32% this year.Some members of the crypto community predict that FXS will overtake MKR.
“Impressive growth from sFRAX with $24.6M allocated to Frax Finance’s FinresPBC short-term U.S. Treasuries strategy currently yielding 10%. FXS set to make a MKR catch-up trade and reignite protocol revenue with the 5.25% risk-free rate,” McKenna, pseudonymous founder of Founder of Arete Research, said on X.