Thread by @TokenInsight

The @ethereum Shanghai Upgrade is heating up,
Frax Ether as one the hottest projects in Liquid Staking Derivative narrative, is now under the spotlight.

Our rating for Frax Ether's current performance is BB, with a positive outlook.
👇🧵our rating breakdown.
#CryptoRatings

In this thread, we'll cover👇

• What is it
• Rating Breakdown
• Technology & Security
• Tokenomics
• Performance
• Ecosystem
• Conclusion

1.1/ What is it
Frax Ether (frxETH) is a liquid staking derivative issued through @fraxfinance's new liquid staking product, pegged 1:1 to $ETH.

1.2/
With the completion of the Ethereum mainnet Merge, it has officially transformed from a PoW to PoS. Staking in PoS (Proof of Staking) is the process of locking the blockchain-native assets for a certain period of time in order to receive the corresponding rewards.

1.3/
Traditionally, the $ETH staked is locked in a smart contract that lacks other usages. By staking $ETH on the liquid staking platforms, users can receive 1:1 $ETH-pegged derivatives (frxETH) corresponding to the staked $ETH as proof of participation as well as other purposes

2/ Rating Breakdown

- Technology & Security 64.55%
- Roadmap & Progress 65.33%
- Tokenomics 81.33%
- Performance 38%
- Ecosystem 39.25%
- Team, Partners & Investors 65.4%

3/ Tech & Security
• Publicly disclosed codes on Github✅
• Audit report shows no security issues✅
• Bug bounty program✅
• No major crisis✅

4.1/ Tokenomics
Like other liquid staking platforms, users staking $ETH will receive an equivalent amount of frxETH as a certificate.
But, frxETH holders cannot receive any staking rewards directly but to further stake it.

4.2/
The most obvious difference between Frax's liquid staking and competitors is that frxETH has a relatively higher staking yield.
From the chart below, frxETH's APR is well ahead of all protocols and has a significant advantage.

5/ Performance
The current trading volume of frxETH is relatively low, it's mainly traded via Curve Finance.
The price has been relatively stable lately as well.
frxETH is only held by a small group of people mostly because holders alone can't earn any staking rewards.

6/ Ecosystem
frxETH is a late starter for the liquidity staking narrative. Its LSD frxETH was launched on Oct 21, 2022.
Despite that, it's performing quite well so far. According to Dune Analytics, Frax ranks 1st among the following projects in terms of $ETH staking growth.

7/ Conclusion
Its unique model makes frxETH stand out from competitors. It will attract more users if its liquidity pool does not fluctuates drastically.

Illiquidity is the biggest vulnerability, it can't help users to unleash liquidity if the usage is limited to Curve.

8/
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Read the full article at: tokeninsight.com/en/research/an…

The author: @Cinder0372