Frax Finance

Frax Finance began as the issuer of FRAX, a partly algorithmic dollar stablecoin, and has since become a family of tokens and contracts run by one DAO. Its current docs list three stablecoins (frxUSD, FPI and frxETH), a lending market (Fraxlend), an exchange (Fraxswap), a borrowing module built on it (BAMM), bond-like tokens (FXB) and Fraxtal, its own layer-2 chain.

Several tokens were renamed in 2025, which explains much of the confusion around the name. Under FIP-428, the North Star proposal, the original FRAX stablecoin became Legacy Frax Dollar (LFRAX), and the governance token FXS was renamed FRAX. Since 28 April 2025 holders can upgrade FXS to FRAX 1:1 by bridging to Fraxtal, where FRAX is the gas token. The current dollar stablecoin is frxUSD. In February 2026 FRAX holders passed FIP-441, which fixes the FRAX supply and makes frxUSD the ecosystem's main focus; the docs page that still describes an 8% tail emission predates that vote.

Control sits with FRAX holders who lock tokens as veFRAX and vote on Snapshot. Frax's governance docs describe an on-chain system in which team members can make optimistic proposals that pass unless holders vote them down, and they note that voting has run through Snapshot on Fraxtal while that system is migrated. Day-to-day issuer work for frxUSD was delegated in July 2025, under FIP-432, to Frax Inc, a public-benefit corporation formerly called FinresPBC, which is applying for a US payment stablecoin charter according to FIP-430. The docs we opened do not name the founders or core team members, and this page does not either.

Frax Ether is the ecosystem's liquid staking product and the part most often compared with other staking tokens. It uses two tokens. You send ETH to the frxETHMinter and receive frxETH one for one; Frax runs validators with that ETH. frxETH is meant to track ETH within a 1% band, from 0.99 to 1.01. It earns no yield, which the docs state plainly: holding frxETH should be thought of as holding ETH.

To earn, you deposit frxETH into sfrxETH, an ERC-4626 vault. Staking income is paid into the vault as new frxETH, so each sfrxETH can be redeemed for more frxETH over time. Under FIP-122, 90% of validator income goes to sfrxETH holders, 8% is a protocol fee and 2% goes to an insurance fund for slashing and other penalties. Because frxETH outside the vault earns nothing, its share of the rewards goes to sfrxETH holders, which lifts the sfrxETH yield. CoinGecko supply figures in October 2026 imply that about 61,000 frxETH exist and about 43,000 of them sit inside sfrxETH. DefiLlama showed sfrxETH yielding about 2.5% that month.

frxETH V2 lets outside validator operators borrow ETH from the system against escrowed exit messages: an anonymous pool can borrow 24 ETH per 32 ETH validator, and a whitelisted pool up to 31 ETH. If a pool's loan becomes unhealthy, an off-chain bot called the Beacon Oracle can trigger the exits. Frax also earns on idle ETH through AMOs, including pools on Curve. For how sfrxETH's yield and liquidity compare with other staking tokens, see how Frax Ether compares with other liquid staking providers.

frxUSD is Frax's dollar stablecoin and, after FIP-441, the center of its plans. Frax's docs describe it as fully backed one for one by cash-equivalent reserves, mainly tokenized US Treasury funds such as BlackRock's BUIDL, Superstate's USTB and WisdomTree's WTGXX. Each reserve sits behind an enshrined custodian contract with its own minting cap. Anyone can call those contracts, but the reserve tokens themselves may carry whitelists, and the docs warn that frxUSD is not guaranteed to be redeemable for any particular asset if one custodian's reserves run out. CoinGecko put frxUSD supply at about 100.6 million in October 2026. Frax says it publishes reserve reports on its transparency page; we did not find a named third-party attestation firm in the docs.

sfrxUSD is the yield-bearing version. Staked frxUSD is moved by governance-approved strategies among three sources: carry trades such as Ethena's USDe and Superstate's USCC, DeFi lending and liquidity on venues including Aave, Curve and Fraxlend, and Treasury bills. Frax states there is no lock-up and no fee to stake or unstake. The yield comes from those strategies, so it carries their risks, including counterparty risk at Ethena and smart contract risk at each venue.

Most Frax products take their fee from yield rather than charging users directly.

Gas on Fraxtal is paid in FRAX. FraxNet's fiat on-ramp runs through Bridge.xyz and Coinbase Pay, whose own fees apply; Frax's docs do not list a FraxNet fee.

Frax publishes a long audit list. Trail of Bits reviewed the core contracts in 2021 and 2022, Fraxlend and Fraxferry in 2022, governance in 2023 and the frxETH redemption queue in October 2023. Code4rena reviewed frxETH in September 2022, Certora reviewed BAMM in 2024, Zellic reviewed frxUSD and its custodian contracts in July 2025, and ChainSecurity reviewed the FRAX, FXB and sfrxUSD upgrade the same month. Several 2024 and 2025 reviews, including frxETH V2 and the North Star hardfork, were done by the Frax Security Cartel, which the audit page does not identify as an outside firm. The bug bounty pays 10% of an exploit, up to $10 million, for working proofs of theft or permanent freezing of funds.

Frax's main risks come from its size and history:

• Complexity: many contracts, AMOs and cross-chain deployments mean more code that can fail, and AMOs move protocol funds into third-party protocols.
• frxETH misunderstanding: holding frxETH without staking it earns nothing. Its peg also rests on liquidity and the redemption queue, not a fixed exchange.
• Custodian dependence: frxUSD relies on tokenized fund issuers and their whitelists, and on Frax Inc to manage them.
• Governance: optimistic proposals by the team pass unless holders vote them down; holders can vote them down only if a proposal reaches quorum.
• Bridges: Frax lost the backing for its Harmony tokens in the 2022 Horizon Bridge hack and later retired them rather than repay holders.

The app at frax.com connects to a self-custody wallet. To stake ETH, mint frxETH and deposit it into sfrxETH, or buy either token on a DEX. To use frxUSD, mint it 1:1 from USDC or tokenized Treasury funds on Ethereum, swap for it on a DEX, or use FraxNet, which needs email verification and Persona KYC before its bank transfer services work. FraxNet's fiat rails support USD by ACH or wire and EUR by SEPA, with GBP, MXN and BRL listed as coming soon.

To exit sfrxETH, redeem it for frxETH, then either sell frxETH on a DEX or join the redemption queue. The queue issues an NFT that marks your place, and after the wait you claim exactly one ETH per frxETH with no fee. To exit frxUSD, redeem through the mint contracts or FraxNet for USDC on Ethereum, or sell on a DEX. sfrxUSD can be unstaked at any time.

Frax's docs list X (@fraxfinance), Discord, two Telegram channels, a Medium blog, the governance forum at gov.frax.finance and Snapshot voting under frax.eth. Support is community-based through Discord and the docs; FraxNet users manage verification under Settings in their account. Frax's token renames make look-alike scams easy, so check contract addresses against docs.frax.com before buying FRAX, frxUSD or frxETH.

The dates below come from Frax's audit list, governance forum and Snapshot.

• November 2020: CertiK audit of the original Frax contracts.
• June 2022: the Harmony Horizon Bridge hack strands canFRAX and canFXS on Harmony.
• September 2022: frxETH is reviewed by Code4rena ahead of launch.
• January 2024: Trail of Bits audits Fraxtal.
• March 2024: FIP-340 proposes retiring the Harmony tokens.
• March to April 2025: FIP-428 (North Star) renames FXS to FRAX and the old stablecoin to Legacy Frax Dollar; FXS-to-FRAX upgrades open on 28 April 2025.
• April 2025: FIP-430 separates the frxUSD and Legacy Frax Dollar balance sheets to prepare for US stablecoin rules.
• July 2025: FIP-432 hands frxUSD compliance and collateral management to Frax Inc.
• February 2026: FIP-441 passes, fixing the FRAX supply.
• June 2026: FIP-448 passes, winding down the FPI stablecoin.