Depositor guide: putting assets to work in Frax

Last reviewed 3 June 2026 · about an 8-minute read

"Depositing" in Frax can mean two quite different things: parking a dollar stablecoin to earn protocol yield, or staking ETH exposure to earn Ethereum rewards. They work differently and carry different risks, so this guide treats them separately. This page explains the mechanics; it is not advice, and it does not ask you to connect a wallet.

Option 1: stablecoin savings with sFRAX

sFRAX is a staking vault that follows the ERC-4626 standard. You deposit the dollar stablecoin and receive sFRAX in return. The vault distributes part of the protocol's yield to depositors, so over time your sFRAX is redeemable for more of the underlying stablecoin than you put in. You are not locked in — you can redeem back to the stablecoin.

The rate is not fixed. It tracks the protocol's actual earnings, which are influenced by prevailing short-term interest rates and the performance of AMO strategies. When you see an APY quoted anywhere, read it as a live figure that can change, and confirm the current number in the official documentation.

Option 2: earning ETH staking yield with frxETH and sfrxETH

This is the part people most often get wrong, so it is worth being precise. There are two tokens, and they do different jobs:

• frxETH tracks the price of ETH roughly one-to-one. Holding it on its own does not earn staking rewards.
• sfrxETH is the staked version. It is an ERC-4626 vault that collects the rewards earned by Frax's validators.

To earn, you convert frxETH into sfrxETH. As the validators earn rewards, more frxETH is added to the vault, so each sfrxETH becomes redeemable for a growing amount of frxETH. The exchange rate rises over time. When you convert sfrxETH back to frxETH, you realize the rewards that accrued while you held it. Because all of the staking reward is shared among sfrxETH holders rather than spread across everyone holding frxETH, the staked token tends to carry a higher effective yield.

1. Understand what you are holding

   frxETH is the liquid ETH-tracking token; sfrxETH is the yield-bearing staked token. If your goal is yield, you want sfrxETH.

2. Convert to the staked token

   Move frxETH into the sfrxETH vault. Your balance of sfrxETH represents a share of the vault's growing frxETH.

3. Let the exchange rate work

   You do not claim rewards manually. The frxETH-per-sfrxETH rate simply increases as validators earn.

4. Redeem when you want out

   Convert sfrxETH back to frxETH to capture the accrued yield, then to ETH if you wish.

What the yield depends on

For sFRAX, the driver is the protocol's revenue and short-term rates. For sfrxETH, the driver is Ethereum's validator rewards, which depend on network-wide staking levels and transaction activity. Neither is a fixed promise. A higher advertised yield often reflects higher risk or temporary incentives, so be skeptical of anything that looks unusually large.

Once your assets are deposited, you may also want a say in how the protocol is run. That is what the staking and governance page covers.