# Staked Frax USD

> Staked Frax USD (sfrxUSD) is a yielding stablecoin in the Frax Finance ecosystem, offering competitive on-chain yields through a benchmark-rate strategy.

- Canonical URL: https://iq.wiki/wiki/staked-frax-usd
- Categories: Cryptoassets
- Created: 2025-04-07T20:00:20.599Z
- Last updated: 2025-06-03T02:28:39.250Z
- Source: IQ.wiki — the world's largest blockchain and crypto encyclopedia (https://iq.wiki)

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**Staked** **Frax** **USD (sfrxUSD)** is an [ERC-4626](https://iq.wiki/wiki/erc-4626) yielding [stablecoin](https://iq.wiki/wiki/stablecoin) that allows holders to earn yield on their [frxUSD](https://iq.wiki/wiki/frxusd) deposits while maintaining full redeemability at an increasing rate proportional to the yield mechanism.

## Overview

Staked Frax USD (sfrxUSD) functions as the yield-bearing version of [frxUSD](https://iq.wiki/wiki/frxusd) within the [Frax](https://iq.wiki/wiki/frax) Finance ecosystem. Unlike traditional rebasing tokens, sfrxUSD maintains a constant token count while the redemption value against the underlying [frxUSD](https://iq.wiki/wiki/frxusd) increases over time as yield accrues. This design allows users to stake their [frxUSD](https://iq.wiki/wiki/frxusd) and earn competitive yields without having to manage multiple positions or constantly rebalance their portfolios. [\[1\]](#cite-id-RuxAX7IWn6)

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](https://iq.wiki/wiki/frxusd) at any time without unstaking fees or price impact, providing both yield generation and liquidity. [\[2\]](#cite-id-P8SsXOcBTk)

## Key Features

### Benchmark Yield Strategy (BYS)

1. **Carry-trade strategies** - When carry-trade yields outperform other options, the protocol allocates funds accordingly
2. **Algorithmic Market Operations (AMOs)** - When [DeFi](https://iq.wiki/wiki/defi) yields are superior, funds are directed to various [DeFi](https://iq.wiki/wiki/defi) protocols through AMOs
3. **Interest on Reserve Balances/T-Bill (IORB) rate** - When traditional finance yields are highest, funds are allocated to [RWA](https://iq.wiki/wiki/real-world-assets-rwas) strategies holding short-dated (<90 days) United States Treasury Bills [\[2\]](#cite-id-P8SsXOcBTk)

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 [\[3\]](#cite-id-y8oaYxOKZV)

### Non-Rebasing Design

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](https://iq.wiki/wiki/frxusd) increases over time. This design offers several advantages:

* Simplified accounting for users and protocols
* Better compatibility with DeFi protocols that aren't designed to handle rebasing tokens
* Predictable behavior for smart contract interactions [\[1\]](#cite-id-RuxAX7IWn6)

## Role in the Frax Ecosystem

sfrxUSD plays an important role in the broader [Frax](https://iq.wiki/wiki/frax) Finance ecosystem by:

1. Providing a yield-bearing option for [frxUSD](https://iq.wiki/wiki/frxusd) holders
2. Enhancing the utility of [frxUSD](https://iq.wiki/wiki/frxusd) as a [stablecoin](https://iq.wiki/wiki/stablecoin)
3. Creating additional demand for [frxUSD](https://iq.wiki/wiki/frxusd) through yield opportunities
4. Supporting the overall stability and growth of the [Frax](https://iq.wiki/wiki/frax) ecosystem [\[3\]](#cite-id-y8oaYxOKZV)