According to CoinDesk, decentralized finance protocol Frax has introduced sFRAX, an ERC4626 staking vault that allows holders of its partially collateralized fractional-algorithmic stablecoin FRAX to earn yields matching the U.S. Federal Reserve's interest rate on reserve balances (IORB), currently around 5.4%. The product debuted with an annual percentage yield (APY) of 10%, which will eventually converge with the Fed's 5.4% IORB rate. So far, over 150 users have invested more than $35 million in the vault, as per Dune Analytics.

Frax's governance token FXS saw a 7% price increase to $5.66 on Thursday, but has since pulled back to $5.49, indicating a 0.5% gain on a 24-hour basis. This steady price action is consistent with the continued low-volume range play among market leaders bitcoin and ether. The introduction of sFRAX comes as lending protocol MakerDAO capitalizes on high interest in the U.S., having invested over $2 billion in short-term bonds via offchain structures since February 2022, according to Parsec Finance. MakerDAO offers a 5% savings rate on DAI and buys back its MKR token.

Year-to-date, MKR has gained over 168%, significantly outperforming bitcoin's 62% rise and FXS's 32% gain. Some in the crypto community expect FXS to catch up with MKR. McKenna, the pseudonymous founder of Arete Research, commented on the impressive growth of sFRAX, stating that FXS is set to make an MKR catch-up trade and reignite protocol revenue with the 5.25% risk-free rate.