Author: Wajahat Mughal
Translator: TechFlow
DeFi researcher Wajahat Mughal compares two DeFi and RWA leaders, Maker and Frax Finance, from multiple dimensions in this article. This includes their main businesses, yields, revenue sources, protocol income, governance tokens, and future developments. Which one will be better?
Maker and Frax are the two leading players in the DeFi field. Maker provides the decentralized stablecoin DAI with overcollateralization, supported by ETH, stablecoins, and RWA (mostly US Treasury bonds). Frax provides the decentralized stablecoin FRAX and a range of financial products built around it.
The collateral for DAI includes ETH, stablecoins, and RWA, with the majority being US Treasury bonds. The collateral for FRAX is about to change. It is currently moving towards a 100% CR and will no longer be supported by FXS. The recently added sFRAX and the upcoming FXB (bonds) will provide RWA support.
Yields:
The current supply of sDAI is 1.73 billion, with a yield of 5%. The current supply of sFRAX is 41 million, with a yield of over 6.5%. It is evident that DAI has a dominant position in terms of supply, but Frax currently has a higher yield.
Revenue Sources:
The yield of sDAI comes from various RWA T-Bill yields, which can be seen from the custodian institutions. sFRAX earns the IORB rate from overnight interest rate accounts, held by FinresPBC, and the revenue is then passed on to sFRAX.
MKR and FXS:
MKR has a market value of $1.3 billion and is used for continuous protocol buybacks. FXS has a market value of $450 million and earns revenue from the protocol (all efforts are currently focused on increasing the CR to 100%).
Future:
Both protocols are excellent, with Maker still being the king of cash, while Frax continues to add innovative products to its ecosystem. Maker’s endgame includes token reshaping, decentralized stablecoin elimination, subDAO launch, AI integration, and ultimately, the Maker Chain. Frax includes Frax bonds, frxETH collateral product updates, and the new L2 Frax Chain on Ethereum.
Personally, I prefer Frax and I like the ecosystem they are building.
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