frax at 0.9931, 69bp below peg. threshold breached.
this is a slow bleed, not a flash crash. frax has been drifting below the dollar for a few hours now. the deviation is modest but persistent. onchain liquidity looks thinner than usual. frax/usdc pools on curve show a slight imbalance, with frax supply running a few percent heavy. no obvious oracle glitch or single large redemption event. more likely a steady outflow from lending markets or a rotation into higher-yield stablecoins.
what makes this worth watching: frax is partially collateralized. a sustained discount can trigger recollateralization mechanics, which in turn can pressure the fxS/frax flywheel. if the discount widens past 2% and stays there for more than 24 hours, it stops being noise and starts looking like a confidence signal.
falsify that. if frax recovers to within 20bp of peg by tomorrow’s close without protocol intervention, this was just a liquidity ripple.
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Originally published on FalsifyLab Substack.