Full version of legacy Frax Protocol docs are currently available on docs.frax.finance (opens in a new tab)

Crosschain Strategy for Frax Assets

Overview

The Omnichain Fungible Token (OFT) (opens in a new tab) Standard allows fungible tokens to be transferred across multiple blockchains without asset wrapping, middlechains, or liquidity pools.

Frax assets are represented as OFTs on chains other than Fraxtal, and Ethereum. An OFT operates the exact same as an ERC20 with the additional function of bridge-ability through the LayerZero protocol.

All OFTs and lockboxes are audited (opens in a new tab) and managed by a 3/5 multisig on each respective chain.

Available Frax OFTs

• frxUSD
• sfrxUSD
• frxETH
• sfrxETH
• WFRAX (prev. FXS)
• FPI

Lockbox Design

Frax operates a dual-lockbox design where users can exit their OFT token into the native Frax-asset token on both Ethereum and Fraxtal. Utilizing a dual-lockbox design is a novel solution to bridging as liquidity is unlocked from more than one location.

NOTE: FRAX is a single-lockbox design, with liquidity hosted on Fraxtal. Users bridging FRAX to Ethereum will receive the WFRAX OFT if using LayerZero. Using the native Optimism bridge from Fraxtal will return FXS on Ethereum.

Mesh and Hub Design

Frax OFTs are wired together in one of two ways:

1. Hub: A single, central connection to Fraxtal. Bridging from Chain A to B can be seen as A => Fraxtal => B.
2. Mesh: A direct connection to other chains, as well as both the Fraxtal and Ethereum lockbox. Bridging from Chain A to B can be seen as A => B.

When a new chain is added, it is first connected via the Hub model. If the chain has sufficient demand, it can be upgraded to a Mesh model.

The following graphic illustrates the Hub and Mesh design, where zkSync and Abstract are connected via the Hub model, while the other destinations are connected via the Mesh model:

WFRAX vs. FRAX

FRAX is the native gas token on Fraxtal. WFRAX is the wrapped version of FRAX that is used on LayerZero-powered chains, represented as an OFT.

WFRAX vs. FXS on Ethereum

There are two versions of FRAX on Ethereum: WFRAX and FXS. WFRAX is the LayerZero-powered OFT version of FRAX. FXS is the legacy version of FRAX that is not connected to the LayerZero Protocol. FXS is the original version of FRAX that was launched on Ethereum in 2020.

Users only have one option to convert their FXS into FRAX: through the native Optimism bridge.

In order to convert WFRAX to FXS, users must first either:

• If on Fraxtal: unwrap their WFRAX to FRAX.
• If on a LZ-powered chain: bridge WFRAX to Fraxtal to receive FRAX.

From there, users can convert FRAX to FXS on Ethereum through the native Optimism bridge.

Ethereum WFRAX OFT is also connected via the hub model. This means that bridging WFRAX from chain X to Ethereum will be X => Fraxtal => Ethereum. Bridging FXS to chain X will first require the user to bridge FXS to Fraxtal through the native Optimism bridge, converting their FXS to FRAX.

Current Wires

• Hub
  • zkSync
  • Abstract
  • Linea
  • Aptos
  • Movement
  • Worldchain
  • Ethereum WFRAX
• Mesh
  • Mode
  • Sei
  • X-Layer
  • Ink
  • Sonic
  • Arbitrum
  • Optimism
  • Polygon
  • Avalanche
  • BSC
  • Polygon zkEVM
  • Berachain
  • Blast
  • Base

Process

• Bridge through the FUI (link (opens in a new tab))
• Bridge through the Stargate UI (link (opens in a new tab))
• Bridge programatically (see #Code section)

Security Considerations

Layer Zero OFT Frax Assets are not a liability of the Frax Protocol. They do not appear on the balance sheet on Frax Facts (opens in a new tab). They are not redeemable for protocol owned assets. They are only redeemable for the Frax Asset in the Layer Zero "lockbox" contract that is part of the Layer Zero Protocol.

Layer Zero OFT Frax Assets are settled by Layer Zero Decentralized Verification Networks (DVNs) that are not operated by the Frax Protocol, Frax Core Developers, or any associated entity of Frax. Therefore, the risk of OFT Frax Assets are borne by their holders. This is similar to holding "USDC tokens" on a network that its issuer, Circle, does not support minting/redeeming on. Such "USDC tokens" do not appear on Circle's balance sheet as a liability nor are they redeemable from its issuer. They are only redeemable for the underlying USDC token in the bridge (ie 'lockbox') contract.

In the future, the Frax Protocol can work with Layer Zero to upgrade certain OFT Frax Assets on select networks to allow the Frax Protocol to have direct oversight in the settlement process similar to the Frax Ferry system. After this, the OFT Frax Assets for those select networks will be reported on the associated balance sheet of those Frax Assets. When this occurs, the Frax Protocol will consider such tokens at that time as its liability that are backed directly by the assets it holds on its respective balance sheets. At this time, no Frax OFT tokens are native liabilities of the protocol.