StakeWise excels at providing a simple, non-dilutive staking experience through its vault-based model. Users deposit ETH and receive a 1:1 representation token, sETH2, plus a separate yield-bearing token, rETH2. This separation allows for predictable, claimable rewards without impacting the principal token's peg. For example, its architecture has secured over 200,000 ETH in TVL by offering a straightforward path to yield for protocols and DAOs integrating liquid staking.
LABS
Comparisons
StakeWise vs Frax Ether: Vault-Based vs Dual-Token Staking
A technical analysis comparing StakeWise's v3 vault architecture for solo stakers against Frax Ether's two-token (frxETH/sfrxETH) system, focusing on design philosophy, yield separation, and capital efficiency for protocol architects and engineering leads.
Chainscore © 2026
introduction
THE ANALYSIS
Introduction: Divergent Paths to Staking Yield Separation
A technical breakdown of the vault-based and dual-token models for accessing Ethereum staking yield.
Frax Ether takes a different approach with its dual-token, algorithmic design. It combines over-collateralized staking with a fractional-algorithmic stablecoin mechanism. This results in a dynamic peg for its liquid staking token, frxETH, backed by sfrxETH which accrues all staking yield. The trade-off is increased complexity but enables deep integration within the Frax Finance ecosystem, including its AMM (Fraxswap) and lending markets, creating synergistic yield opportunities.
The key trade-off: If your priority is simplicity, a strong peg to ETH, and easy integration for DeFi composability, choose StakeWise. If you prioritize maximizing yield through a native DeFi ecosystem and are comfortable with a more complex, algorithmically-influenced model, choose Frax Ether.
tldr-summary
Vault-Based vs Dual-Token Staking
TL;DR: Core Differentiators at a Glance
Key architectural and economic trade-offs between StakeWise's single-asset vaults and Frax Ether's multi-token system.
01
StakeWise: Capital Efficiency
Single-token simplicity: Deposit ETH, receive sETH2 and rETH2. No need to manage a separate stablecoin or governance token. This matters for protocols and users who want pure ETH exposure and minimal operational overhead.
02
StakeWise: Protocol Control
Non-custodial vaults: StakeWise V3 uses audited, immutable smart contracts where users retain control of validator keys. This matters for institutions and DAOs with strict self-custody requirements and compliance needs.
03
Frax Ether: Liquidity & Composability
Dual-token flywheel: frxETH (stablecoin-pegged) provides deep Curve/Convex liquidity, while sfrxETH (yield-bearing) accrues rewards. This matters for DeFi power users seeking leveraged yield strategies across Aave, Convex, and Frax's own ecosystem.
04
Frax Ether: Integrated Stablecoin Utility
Native stablecoin pairing: frxETH is designed as a core collateral asset within the Frax Finance ecosystem (FRAX stablecoin, Fraxlend, FXS governance). This matters for protocols building on or integrating with the Frax monetary stack.
HEAD-TO-HEAD COMPARISON
StakeWise vs Frax Ether: Vault-Based vs Dual-Token Staking
Direct comparison of key architectural and economic metrics for liquid staking protocols.
| Metric | StakeWise V3 | Frax Ether (frxETH) |
|---|---|---|
Core Model | Vault-Based (Single Asset) | Dual-Token (frxETH/sfrxETH) |
Native Token Received | stETH (Rebasing) | frxETH (Non-Rebasing) |
Yield Accrual Mechanism | Direct to stETH Balance | Stake frxETH for sfrxETH |
Protocol Fee on Yield | 10% | 10% |
TVL (USD) | $350M+ | $1.8B+ |
Underlying Validator | Decentralized Operator Set | Frax DAO & Permissioned |
Direct Withdrawal Support |
pros-cons-a
Vault-Based vs Dual-Token Staking
StakeWise v3 vs Frax Ether
A technical breakdown of two leading liquid staking models, highlighting their core architectural trade-offs and ideal deployment scenarios.
01
StakeWise v3: Capital Efficiency
Vault-based architecture separates principal (sETH2) and rewards (rETH2), enabling direct trading of future yield. This matters for DeFi protocols like Aave or Compound that can use rETH2 as a yield-bearing collateral asset without principal risk.
2 Tokens
Asset Model
02
StakeWise v3: Governance & Upgradability
Fully decentralized, on-chain governance via SWISE token. Protocol upgrades and fee changes require a DAO vote. This matters for protocols prioritizing long-term censorship resistance and community control over their staking infrastructure.
DAO-Controlled
Governance
03
Frax Ether: Peg Stability & Composability
Dual-token model with algorithmic backing. frxETH (stablecoin peg) and sfrxETH (yield-bearing). The Frax Protocol's AMM (Fraxswap) and CPIs maintain the frxETH:ETH peg. This matters for stablecoin-focused DeFi ecosystems and users needing a highly liquid, peg-stable staking derivative.
AMM-Backed
Peg Mechanism
04
Frax Ether: Integrated DeFi Yield Stack
Native integration with the Frax Finance ecosystem. sfrxETH yield is amplified through Fraxlend lending and FPI (Frax Price Index) strategies. This matters for users seeking automated yield optimization beyond base staking rewards within a single protocol suite.
Multi-Layer
Yield Source
05
StakeWise v3: For Protocol Architects
Choose StakeWise v3 if your protocol requires modular, yield-separable assets for innovative DeFi products, or if on-chain, permissionless governance is a non-negotiable dependency for your stack.
06
Frax Ether: For Yield Aggregators
Choose Frax Ether if your strategy hinges on deep stablecoin liquidity, algorithmic peg mechanisms, and accessing a vertically integrated yield stack (staking + lending + stablecoins) from a single provider.
pros-cons-b
StakeWise vs Frax Ether
Frax Ether: Pros and Cons
Key strengths and trade-offs between vault-based and dual-token staking models at a glance.
01
StakeWise: Predictable Vault Yields
Direct fee transparency: StakeWise V3 vaults charge a 10% fee on consensus layer rewards only, not on execution layer MEV/tips. This creates predictable, high-yield APRs (e.g., 4.5%+) for users who prioritize consistent returns over complex tokenomics. Ideal for institutions and long-term holders seeking straightforward exposure.
10%
Fee on CL Rewards
04
Frax Ether: Dual-Token Yield Amplification
Dual-yield token model: Holders earn staking yield via rebasing sfrxETH, while frxETH remains stable for DeFi liquidity. The sfrxETH vault consistently offers a premium yield (e.g., 5-7%+) by capturing fees from frxETH minters, optimized for yield-aggregators and sophisticated farmers.
5-7%+
sfrxETH Yield
CHOOSE YOUR PRIORITY
Decision Framework: When to Choose Which
StakeWise for DeFi
Verdict: The superior choice for composability and yield optimization. Strengths: StakeWise's single-token swETH (StakeWise Wrapped Ether) is a canonical ERC-20, making it a seamless, non-rebasing asset for DeFi primitives. It integrates natively with Aave, Balancer, and Curve, enabling leveraged staking strategies. The V3 Obol-based distributed validator infrastructure (DVT) offers robust decentralization, appealing to protocols prioritizing censorship resistance. Its on-chain oracle provides transparent, verifiable rewards data.
Frax Ether for DeFi
Verdict: Ideal for protocols seeking deep liquidity and multi-chain utility. Strengths: The dual-token model (sfrxETH as the yield-bearing vault and frxETH as the liquid stable) creates a native yield curve within the Frax ecosystem. frxETH is deeply integrated into Curve's frxETH/ETH pool and the Frax Lending Market (Frax Finance), offering high capital efficiency. Its deployment on Ethereum, Arbitrum, and Optimism provides cross-chain staking exposure, beneficial for multi-chain DeFi strategies.
verdict
THE ANALYSIS
Final Verdict and Strategic Recommendation
Choosing between StakeWise's vault-based model and Frax Ether's dual-token system is a strategic decision between composability and capital efficiency.
StakeWise V3 excels at providing a highly composable, non-rebasing staking primitive because it issues a 1:1 osETH receipt token for staked ETH. This design, similar to Lido's stETH, makes it a seamless building block for DeFi protocols. For example, osETH can be natively integrated as collateral on lending platforms like Aave or MakerDAO without the accounting complexities of rebasing tokens, a key reason for its adoption in structured products and yield strategies.
Frax Ether (frxETH) takes a different approach with its dual-token model (frxETH + sfrxETH). This strategy separates the liquid staking token from the yield-bearing token, resulting in superior capital efficiency for yield aggregation. Users stake frxETH into sfrxETH to accrue rewards, while base frxETH remains a stable, non-rebasing asset ideal for stablecoin collateral in Frax's own ecosystem and other AMM pools, minimizing impermanent loss.
The key trade-off: If your priority is maximizing DeFi composability and protocol integration with a simple, widely recognized token model, choose StakeWise. If you prioritize deep capital efficiency within a specific ecosystem (like Frax Finance) and prefer a stable-value asset for trading and collateral, choose Frax Ether. The decision hinges on whether you value broad interoperability or optimized utility within a vertically integrated DeFi stack.
ENQUIRY
Get In Touch
today.
Our experts will offer a free quote and a 30min call to discuss your project.
NDA Protected
Confidentiality24h Response
Time to ValueDirectly to Engineering Team
No Sales Fluff10+
Protocols Shipped
$20M+
TVL Overall