As we continue to add new collateral to FiRM, our second entry in the stablecoin category, sFRAX, is exciting for multiple reasons.
Attractive fixed-rate borrowing opportunities: With sFRAX currently offering yields close to 14%, users can now enjoy a significant boost over the latest DAI DSR/sDAI APY of 8%. This presents a unique opportunity for those seeking the certainty of fixed-rate borrowing against a high-yield stablecoin.
Enhanced portfolio diversification: The introduction of sFRAX as a yield-bearing asset further diversifies our collateral portfolio, aligning with our strategy to provide a wide range of collateral options for our users.
Expanding partnership: Our collaboration with the Frax team around joint liquidity incentives has been ongoing, and we are excited to further strengthen things by adding sDOLA as collateral on Fraxlend. This proposal can be viewed here: https://gov.frax.finance/t/authorize-fraxlend-amo-for-a-new-pair-sdola-frax-variable-rate/3071
About sFRAX
sFRAX is an ERC4626 staking vault that distributes a portion of the Frax protocol revenue denominated in FRAX. This revenue is generated from governance-approved AMOs/strategies and/or real-world asset (RWA) strategies from off-chain sources. The sFRAX vault APY is based on a utilization function that can be set by the frxGov governance module.
sFRAX represents pro rata deposits within the vault and is always withdrawable for FRAX stablecoins at the pro rata rate. The sFRAX APY attempts to roughly track the interest on reserve balances (IORB) rate of the US Federal Reserve using the IORB oracle. The FRAX staking vault attempts, but does not guarantee in any way, to target this rate.
Security and Risk Management
The Risk Working Group (RWG) has conducted a comprehensive risk assessment to ensure the safety and reliability of the sFRAX market on FiRM, which can be found here. We also limit total collateral exposure for stablecoin assets to 25% of all borrows on FiRM.
Do Your Own Research
As always, it is crucial for users to conduct their own research (DYOR) before depositing sFRAX into FiRM. While we strive to provide secure and reliable borrowing options, it is essential to understand the risks associated with borrowing in DeFi.
We are excited about the possibilities for yield-bearing stablecoins on FiRM and even more excited at how sFRAX is poised to be part of a much larger collaboration between Inverse and the Frax community in 2024.
LGTM.
