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Staking and governance

Last reviewed · about a 6-minute read

"Staking" gets used loosely in DeFi. In Frax it can mean three different things: earning yield in a savings vault, securing and using the Fraxtal network, or locking the governance token to gain a vote. This page is about the last one — how holders steer the protocol — and how it connects to the others.

Locking for voting power: veFXS, becoming veFRAX

Governance power in Frax does not come from simply holding the governance token. It comes from locking it. When you lock FXS you receive veFXS (vote-escrowed FXS), a non-transferable balance that represents your voting weight. The longer you commit to lock, the more weight you get, which is meant to reward people who are aligned with the protocol's long-term health rather than its next week. As the token is renamed, veFXS becomes veFRAX.

Locking is a genuine commitment: your tokens are not liquid for the lock period. In exchange, veFXS holders get a say in decisions and a claim on the value the protocol generates. It is the mechanism that ties governance power to long-term skin in the game.

How a decision actually gets made

Frax changes through a structured process built around the Frax Improvement Proposal (FIP). It generally moves in stages:

  1. Discussion

    An idea is posted and debated on the governance forum, where it is refined before any vote.

  2. Formal proposal

    The idea is written up as a numbered FIP with specific, votable parameters.

  3. Vote

    veFXS/veFRAX holders vote, historically on Snapshot. Voting weight reflects locked balances.

  4. Execution

    An approved proposal is carried out on-chain. Frax has moved toward on-chain governance execution so that approved changes are enforced by code.

The North Star rebrand itself went through this process — it was introduced as a proposal, revised through community feedback into a second version, and voted on. That is worth remembering when you read about big changes: they are decisions the token holders made, not edicts.

Staking on Fraxtal

Separately from governance, the renamed FRAX token takes on a staking and gas role on the Fraxtal network. The network also runs Flox, a blockspace incentive program that rewards users and developers for spending gas and interacting with contracts. This is a different activity from locking for veFRAX, even though both involve the same token. The ecosystem page covers Fraxtal in more detail.

If you only remember one thing

Holding the governance token is not the same as governing. You vote by locking it for veFRAX, and the longer the lock, the louder your voice. Voting is also a responsibility — read proposals before you sign anything.

New to the tokens involved? The token map sorts out which is which. Want to earn rather than vote? The depositor guide covers the savings and staking vaults.