Frax Ether

Frax Ether, denoted as FRXETH, is a liquid ETH staking derivative within the Frax Finance ecosystem. It is engineered to enhance the Ethereum staking process, aiming to simplify and secure it while offering a decentralized finance (DeFi)-native method for earning interest on Ethereum (ETH) holdings. FRXETH acts as a stablecoin loosely pegged to ETH, operating within a defined range of the ETH exchange rate (between 1.01 to 0.9900 of ETH's value), thereby integrating Ethereum into the Frax ecosystem in a stable and controlled manner​​​​.

Frax Ether is a pivotal component of Frax Finance, a versatile DeFi protocol. This platform encompasses multiple facets, including a multi-chain stablecoin protocol (FRAX), liquid staking mechanisms on Ethereum (as exemplified by frxETH), as well as lending markets and liquidity systems such as decentralized exchanges (DEXs). Frax Finance utilizes a unique vetokenomics approach and leverages Frax Shares (FXS) for governance purposes. Here, participants can lock up FXS tokens in exchange for veFXS, which are then utilized for governance votes within the ecosystem​​​​.

FRXETH is primarily used for staking Ethereum in a way that is native to the DeFi environment. It offers users the opportunity to earn staking yield on their Ethereum investments. FRXETH can be exchanged for sfrxETH by depositing it into an ERC-4626 vault, which is specifically designed to accrue the staking yield of the Frax ETH validators. This exchange mechanism allows users to maximize their staking yield in a secure and efficient manner.