Frax Finance ¤
English 🇰🇾
English 🇰🇾
  • Frax Ecosystem Overview
  • FXS & veFXS
    • Frax Shares (FXS)
    • veFXS
    • Gauges
    • FXS Distribution
    • FXS Smart Contract & Addresses
  • GOVERNANCE
    • Frax Governance Overview
    • How It Works
    • Advanced Concepts
    • Fraxtal Snapshot Voting
  • FRAX V1 - ORIGINAL
    • Original Design
    • Staking Contracts
    • FRAX ABI & Token Addresses
    • Frax V1 Pool ABI & Addresses
    • Core Frax Multisigs
  • FRAX V2 - Algorithmic Market Operations (AMO)
    • AMO Overview
    • AMO Minter
    • Collateral Investor
    • Curve
    • Uniswap v3
    • FRAX Lending
    • Decentralization Ratio (DR)
  • FRAX V3 - 100% CR AND MORE
    • Overview
    • Fraxtal
    • AMOs
    • RWAs
    • sFRAX
    • FXBs
    • sFRAX Token Addresses
    • sFRAX & FXB Multisigs
  • Bridging
    • Fraxferry
    • LayerZero x Stargate
    • Fraxtal Bridge
  • Frax Price Index
    • Overview (CPI Peg & Mechanics)
    • Frax Price Index Share (FPIS)
    • FPIS Distribution
    • CPI Tracker Oracle
    • FPI Controller Pool
    • veFPIS
    • FPIS Conversion / FPIS Locker
    • FPI and FPIS Token Addresses
    • FPI Multisigs
  • Fraxswap
    • Overview
    • Technical Specifications
    • Fraxswap Contract Addresses
  • Fraxlend
    • Fraxlend Overview
    • Key Concepts
    • Lending
    • Borrowing
    • Advanced Concepts
      • Position Health & Liquidations
      • Interest Rates
      • Vault Account
    • ABI & Code
    • Fraxlend Multisigs
  • Frax Ether
    • Overview
    • frxETH and sfrxETH
    • Technical Specifications
    • Redemption
    • frxETH V2
    • frxETH V2 Technical Details
    • frxETH Code & V2 Addresses
    • frxETH and sfrxETH Token Addresses
    • frxETH Multisigs
  • BAMM
    • Overview
  • Frax Oracle
    • Frax Oracle Overview
    • How It Works
    • Advanced Concepts
    • Fraxtal Merkle Proof Oracles
  • Guides & FAQ
    • FAQ
    • Staking
    • Uniswap Migration / Uniswap V3
    • Fraxswap / FPI
  • Miscellany
    • All Contract Addresses
    • Bug Bounty
    • Miscellaneous & Bot Addresses
    • API
  • Other
    • Audits
    • Media Kit / Logos
Powered by GitBook
On this page

Was this helpful?

Export as PDF
  1. Fraxlend

Lending

PreviousKey ConceptsNextBorrowing

Last updated 7 months ago

Was this helpful?

Lenders deposit Asset Tokens into the Pair and in return receive the corresponding number of Asset Shares (fTokens) depending on the current Share Price.

At any time a Lender can exchange their fTokens for the underlying Asset Tokens at the rate given by the current price. The fToken Share Price increases as more interest is accrued.

Accruing interest is the only operation which can change the Share Price. Because interest accrual is always positive, the number of Asset Tokens that each fToken is redeemable for cannot decrease.

A Lending Example

Alice has deposited 100 FRAX tokens to be lent out to borrowers, the initial fToken Share Price was 1.00 and she received 100 fTokens. Since her initial deposit, the pair has earned 10 FRAX of interest. So the Amount shows 110 (100 deposited FRAX + 10 FRAX earned as interest). The current fToken Share Price is 1.10 (110 FRAX / 100 fTokens)

Asset Vault Account
Total

Amount

110

Shares

100

Alice Share Balance (fToken)

100

Bob Share Balance (fToken)

0

If Bob now deposits 100 FRAX for lending we would see the following changes. First the Amount in the pair will increase by 100. The current Share Price for fTokens is 1.10. Therefore Bob will receive 90.91 (100 / 1.10) fTokens for his deposit. The Asset Vault Account now looks like this:

Asset Vault Account
Total

Amount

210

Shares

190.91

Alice Share Balance (fToken)

100

Bob Share Balance (fToken)

90.91

As interest accrues, the Amount increases. If an additional 20 FRAX are accrued as interest the Asset Vault Account looks like this:

Asset Vault Account
Total

Amount

230

Shares

190.91

Alice Share Balance (fToken)

100

Bob Share Balance (fToken)

90.91

The Share Price has now increased to 1.2048 (230 FRAX / 190.91 fToken). This means that Bob can redeem his 90.91 fTokens for 109.52 FRAX. Likewise, Alice can redeem her 100 fTokens for 120.48 FRAX.

Over time, as more interest accrues, Alice and Bob can redeem their fTokens for an ever-increasing amount of the underlying asset.