Frax Finance plans to launch its own L2 by end of year

A key component of Fraxchain will be its decentralized sequencers

article-image

Satheesh Sankaran/Shutterstock modified by Blockworks

share

Frax Finance, known for creating decentralized stablecoins, announced the launch of its own layer-2 blockchain. The introduction of Fraxchain is scheduled to take place by the end of 2023.

The Frax team is most well known for frxETH, a loosely pegged algorithmic ETH stablecoin that is partially collateralized. 

According to Blockworks Research, frxETH has been the fastest-growing liquid staking product since its launch; it has grown from $0 to $378 million in less than eight months. 

It also has a unique staking model that is made possible through sfrxETH — an ERC-4626 vault that accrues staking yield for frxETH validators.

“One key differentiator in the protocol’s staking model is the frxETH and sfrxETH dynamic, where liquidity provider incentives for frxETH entice holders to forgo staking for sfrxETH,” Blockworks Research said. 

The launch of Fraxchain

Fraxchain will be Frax Finance’s very own EMV-compatible layer-2. It will likely launch the chain before year’s end, Frax Finance’s founder Sam Kazemian said on the Flywheel DeFi podcast

The solution will be a hybrid rollup consisting of both optimistic rollup architecture (used by Optimism and Arbitrum) and zero-knowledge proofs. It will also utilize frxETH as its gas token, giving the token more utility. 

This will enable faster transaction finality and decentralized sequencer capabilities, Blockworks Research noted. 

“The chain can elect to implement an EIP-1559 type mechanism where transaction fees can be burnt and this value can accrue to veFXS holders,” Blockworks Research said. 

VeFXS (Vote-EscroweD FXS) is a token designed to earn long-term token holders yield. Users can lock in FXS tokens for up to four years and earn four times the amount of veFXS. 

“VeFXS holders may also elect to introduce a bribe market for sequencers,” Blockworks Research said. “Frax is no stranger to bribe markets in DeFi and continues to hold the lion’s share of CRV and CVX, which enables the protocol to drive deep liquidity and incentives to its products.”


Get the news in your inbox. Explore Blockworks newsletters:

Tags

Upcoming Events

Old Billingsgate

Mon - Wed, October 13 - 15, 2025

Blockworks’ Digital Asset Summit (DAS) will feature conversations between the builders, allocators, and legislators who will shape the trajectory of the digital asset ecosystem in the US and abroad.

Industry City | Brooklyn, NY

TUES - THURS, JUNE 24 - 26, 2025

Permissionless IV serves as the definitive gathering for crypto’s technical founders, developers, and builders to come together and create the future.If you’re ready to shape the future of crypto, Permissionless IV is where it happens.

Brooklyn, NY

SUN - MON, JUN. 22 - 23, 2025

Blockworks and Cracked Labs are teaming up for the third installment of the Permissionless Hackathon, happening June 22–23, 2025 in Brooklyn, NY. This is a 36-hour IRL builder sprint where developers, designers, and creatives ship real projects solving real problems across […]

recent research

Unlocked by Template (7).png

Research

Union’s improvements upon Tendermint consensus through CometBLS, coupled with ZK proving through Galois, allow for a broadly scalable, cost efficient, and low latency IBC implementation that is feasibly scalable across every existing blockchain, virtual machine and runtime. The implementation offers modular crosschain interoperability without the need for trusted intermediaries.  

article-image

Kraken’s chief security officer Nick Percoco said the exchange turned the tables on a North Korean hacker

article-image

Or is it approximately the least cypherpunk thing we could do?

article-image

Over 20% of SOL-USD swap volume goes through SolFi

article-image

CEO Vlad Tenev calls expected clarity on listing crypto asset securities “a big opportunity”

article-image

Big Tech pulled US indexes back into the green Thursday, as investors waited for two more Mag 7 first-quarter reports after the bell

article-image

Charts and takeaways from Tuesday’s jobs report and Wednesday’s GDP print, as the economy digests the tariff war