© Reuters.
In a strategic response to the highest Federal Reserve interest rates seen in 22 years, FRAX has unveiled sFRAX, a staking vault aimed at capitalizing on the surge in Treasury yields. The initiative, announced on Tuesday, is part of the ongoing deployment of FRAX’s “Frax v3” product suite, which includes a unique bond product that transitions into the company’s stablecoin upon maturity.
The launch of sFRAX allows users to deposit their stakes and initially receive a 10% yield. However, this rate will adapt over time to reflect the Fed’s Interest on Reserve Balances (IORB) rate, which currently stands around 5.4%, according to FRAX founder Sam Kazemian. He revealed this information in an interview with Blockworks on Monday.
A crucial partnership with FinresPBC and an association with Kansas City-based Lead Bank have been instrumental in FRAX’s ability to acquire Treasury Bills. This move is part of FRAX’s strategy to develop a treasury-exposed, dollar-pegged stablecoin designed to bring Federal yield on-chain and treated as real dollars.
Kazemian expressed his belief that FRAX’s approach is more sustainable in the long run compared to MakerDAO’s DAI Savings Rate (DSR), which has been considered a bear market success story. By harnessing the power of high federal interest rates and leveraging strategic partnerships, FRAX aims to create a more viable financial ecosystem for its users.
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