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Staked Frax USD (sfrxUSD) is an ERC-4626 yielding stablecoin that allows holders to earn yield on their frxUSD deposits while maintaining full redeemability at an increasing rate proportional to the yield mechanism.
Staked Frax USD (sfrxUSD) functions as the yield-bearing version of frxUSD within the Frax Finance ecosystem. Unlike traditional rebasing tokens, sfrxUSD maintains a constant token count while the redemption value against the underlying frxUSD increases over time as yield accrues. This design allows users to stake their frxUSD and earn competitive yields without having to manage multiple positions or constantly rebalance their portfolios. [1]
The token operates as a fully ERC4626-compliant vault, making it compatible with various DeFi protocols and applications. Users can redeem their sfrxUSD for the underlying frxUSD at any time without unstaking fees or price impact, providing both yield generation and liquidity. [2]
This adaptive allocation mechanism ensures that sfrxUSD holders consistently earn the highest risk-adjusted yield available in the market without having to manually move between different yield-generating stablecoins [3]
Unlike some yield-bearing tokens that implement a rebasing mechanism (where token balances change in wallets), sfrxUSD maintains a constant token count while the exchange rate between sfrxUSD and frxUSD increases over time. This design offers several advantages:
sfrxUSD plays an important role in the broader Frax Finance ecosystem by: