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

Decoding crypto and the markets. Daily, with Byron Gilliam.

Upcoming Events

Javits Center North | 445 11th Ave

Tues - Thurs, March 24 - 26, 2026

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.

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.

recent research

Unlocked by Template (1).jpg

Research

As AI supercharges surveillance, privacy becomes a prerequisite and the winning stack will combine confidentiality with selective disclosure. Zcash’s Tachyon, composable standards on Ethereum/Solana, and compliance-aware pools aim to make private rails the new norm.

article-image

Pineapple begins deploying its $100 million Injective Digital Asset Treasury, staking INJ to earn yield and fund onchain mortgage ambitions

by Blockworks /
article-image

Staking levels in the ether funds will depend on protocol unstaking queue times and anticipated redemption activity, firm says

article-image

ETF inflows, miner strength, and tightening supply drive Bitcoin past its prior peak amid renewed demand for scarce assets

by Blockworks /
article-image

The Guidestar team, led by Alex Nezlobin, will join Uniswap Labs to enhance automated market maker design and smart order routing

by Blockworks /
article-image

Zac Prince spearheads Galaxy’s push into consumer banking with high-yield cash, crypto, and stock trading features

by Blockworks /