Frax Finance Integrates New Stablecoin to Promote Ecosystem

The Frax Finance community behind the stablecoin protocol has submitted a proposal to govern sFRAX "FIP-2XX". The initiative proposed by the Frax Finance core team aims to integrate Staked FRAX (sFRAX) into the Frax ecosystem. The main goal is to allow users to deposit FRAX stablecoins into a smart contract (according to the ERC-4626 standard) and receive interest in return, which will be denominated in FRAX stablecoins.

The introduction of sFRAX aims to bridge the gap in the FRAX yield curve by offering a low duration savings option that complies with the ERC-4626 token standard. This opens up opportunities for integration into various protocols, bridges, cross-chain applications, and more, allowing users to passively earn stablecoins. This innovation expands the stablecoin ecosystem, increases the liquidity of the protocol, and encourages user participation in earning rewards while stabilizing supply dynamics.

The sFRAX contract allows users to deposit their FRAX stablecoins, earning an annual interest rate on their assets from newly minted stablecoins. Users receive sFRAX tokens reflecting their proportional share of the pool, making trading and transfers easier. In addition, the Frax protocol ensures that profits generated are deposited into the sFRAX vault on a weekly basis, ensuring that the annual interest rate increases over time.

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