Fraxtal is an EVM-compatible layer 2 rollup chain for Frax Finance. Fraxtal reduces congestion on Ethereum using roll-up technology. Rollups bundle transactions off-chain, compressing data before sending it back to Ethereum. ^[2]

Overview

In a January 2024 interview, Sam Kazemian announced the launch of Fraxtal, Frax Finance's layer 2 blockchain. The release was scheduled for the first week of February, with Etherscan providing support on day one through Fraxscan. Kazemian expressed confidence that the launch, coupled with several projects debuting shortly afterward, will mark one of the most significant rollup releases of the year.^[3]

Fraxtal is a modular rollup blockchain (L2) with a "fractal scaling" roadmap. Fraxtal has a number of familiar and novel features:

1. Fraxtal is an EVM equivalent rollup utilizing the OP stack as its smart contract platform and execution environment. Deploying applications is as fast, secure, and cheap as leading Ethereum rollups like Optimism & Base.
2. Fraxtal is a modular rollup. It has multiple components and middleware for other chains and networks to use, connect to, deploy L3s, and build on top of. It uses a separate data availability module developed by the Frax Core Team.
3. Fraxtal has blockspace incentives (called Flox) that reward users and developers for spending gas and interacting with any smart contract on the network. Every epoch, users who spend gas and developers that deploy contracts where gas is spent earn FXTL points that can later be converted into tokens. For the first time, users are able to earn more rewards than gas they spend and developers can earn more than the gas their dapps use.
4. The native gas token is Frax Ether (frxETH) issued by Frax Finance.

Fraxtal is set to leverage rollups technology, a layer 2 scaling solution. This approach involves executing transactions off the Ethereum mainnet, batching data, compressing it, and then sending it back to the mainnet. The adoption of rollups is a strategic move to address scalability issues and enhance transaction speeds. ^[6]

Fraxtal Launch

On February 8, 2024, Frax Finance officially released its Ethereum Layer 2 network, Fraxtal. Fraxtal operates as an Ethereum-compatible optimistic rollup developed using the OP Stack. ^[8]

FrxETH & FRAX as Gas Token

Fraxtal leverages Frax Ether (frxETH) as the designated gas token, allowing users to utilize frxETH to pay for blockspace. Users have two primary methods to obtain frxETH within Fraxtal through the native L2 bridge. They can bridge either ETH (the gas token on the Ethereum mainnet) or frxETH (an ERC20 token on the Ethereum mainnet). Bridging either ETH or frxETH through the native L2 bridge results in receiving the native gas token frxETH on Fraxtal. Users bridging back frxETH from Fraxtal receive ERC20 frxETH on Ethereum mainnet. Bridging Wrapped ETH (WETH) through the native L2 bridge results in receiving WETH on Fraxtal. Keep in mind that WETH cannot be unwrapped into ETH on Fraxtal since ETH itself is replaced with frxETH.^[5]

frxETH V2

frxETH V2 went live on January 11, 2025, with V2 further boosting yield while decentralizing validators. ^[13]

"$sfrxETH is the highest-yielding major liquid staked ETH, with hundreds of millions in TVL earning significantly more than competitors." - the team tweeted

"Our mission is to become the decentralized central bank of crypto. To do that, we need everyone to participate, both on the supply and demand side. We built V2 completely from scratch to allow any ETH validator to join permissionlessly"

frxETH V2 allows the possibility for anonymous / external validators to enter the frxETH system. All of their ETH staking rewards will flow directly to a ValidatorPool smart contract under their control and thus no frxETH will be minted for them. They will however receive credit which can be used to borrow ETH that entered through the V1 mint mechanism. The collateral for this borrowing is an escrowed exit message, which can be executed by the frxETH protocol if their borrow position becomes unhealthy. The exited funds only go to the ValidatorPool and become "trapped" their until all loans are paid off. ^[14]

Fraxtal Point System (FXTL)

The Fraxtal Point System introduces FXTL, a unique ticker representing points within the Fraxtal ecosystem. It plays a crucial role in rewarding and incentivizing participants in the ecosystem including creating and interacting with smart contracts, utilizing new protocols deployed to the chain, and holding specific types of assets/tokens.

The accumulation of these points is tracked and managed through the main FraxtalPoints contract, which serves as the ledger for all FXTL-related transactions and balances. Users can access and review accrued FXTL points via this contract. FXTL points will be tokenized no later than 12 months after Fraxtal chain genesis. Whether FXTL points will be tokenized as a separate staking token for the chain (FXTL) or convert to FXS tokens at a specified ratio (or a combination of both) will be revealed in the future. ^[9]

Fraxtal Incentives Delegation

Incentives are allocated based on the activity of an address. Some addresses, like smart contracts, can't interact with the allocated incentives without implementing the interaction upon their deployment. One of the major issues with this is that the team is yet to announce how the FXTL points will be claimed and that adding additional functionality to the smart contracts increases their size.

Delegating the earned incentives using the DelegationRegistry allows for earned incentives to be allocated to an address that can interact with the claim process, be that an externally owned account, smart account, or a multi-signature wallet.

The delegations for externally owned accounts can be done directly in the DelegationRegistry.

Fraxtal blockspace incentives (Flox)

The Fraxtal Blockspace Incentives system (Flox) rewards users and smart contract developers on Fraxtal. Gas spenders and gas-using smart contracts receive FXTL points based on the Flox Algorithm every epoch (initially 7 days).

The Flox system offers higher incentives for gas usage compared to previous attempts. It rewards both users and contracts, calculates transaction traces, and ranks contract importance based on various criteria.

Flox program uses FXTL as incentive currency to distribute value to users and developers. It goes beyond early transaction fee-sharing models and aligns with sustainable revenue sharing.

Example 1: A swap from USDC to FRAX through a Curve pool using 1inch. Incentives are distributed to 1-inch router contract, Curve pool contract, USDC contract, and FRAX contract.

Example 2: Borrowing FRAX from a Fraxlend pair against WBTC. Incentives go to Fraxlend Pair contract, WBTC contract, FRAX contract, and Chainlink oracle contract. ^[10]

veFXS

veFXS is the staked version of Frax Share (FXS) the governance and utility token of the entire Frax universe. veFXS has various utility and votes in all governance decisions throughout the Frax ecosystem of protocols. Users stake their FXS tokens for a self-selected period of between 1 week to 208 weeks (4 years). A user’s veFXS balance is non-transferrable (it is not a separate token) and is linearly correlated with the amount of FXS they staked multiplied by their lock time. For every 1 FXS token staked for 4 years, a user’s veFXS balance goes up by 4. A user’s veFXS balance decays slowly as a user’s unlock time approaches. ^[11]

Prior to Fraxtal genesis, veFXS could only be staked on Ethereum mainnet. Users can now stake veFXS natively on Fraxtal through an improved staking contract in addition to Ethereum mainnet. ^[11]

Frax Name Service (FNS)

The Frax Name Service (FNS) is a fork of the Ethereum Name Service (ENS), tailored to meet the specific needs of the Frax ecosystem. While FNS retains the core functionalities and underlying architecture of ENS, the primary enhancement introduced by FNS is its improved payment mechanism. ^[12]

The Ethereum Name Service (ENS) is a decentralized, open, and extensible naming system built on the Ethereum blockchain. It enables the mapping of human-readable names like 'alice.eth' to machine-readable identifiers such as Ethereum addresses, other cryptocurrency addresses, content hashes, and more. ENS also supports reverse resolution, allowing users to associate additional metadata with Ethereum addresses, such as primary names and interface descriptions. ^[12]

Similarly, FNS maintains this foundational capability, allowing for the registration and management of Frax-specific names, with enhancements designed to better align with Frax’s economic model. This includes modifications to the payment methods used for name registration and renewal, leveraging Frax’s native assets to provide a more integrated user experience within the Frax ecosystem. ^[12]

Curve Partnership

The decentralized stablecoin-focused exchange, Curve Finance, has shown its interest in Fraxtal. Curve intends to deploy its exchange functionalities on the new layer 2 blockchain, further solidifying the project's collaborations.^[1]