Frax and PotatoSwap Team Up On OKX’s New L2 X Layer

Frax Finance, a stablecoin and DeFi protocol hosting $874 million in assets, announced a partnership with PotatoSwap that will bring its assets onto X Layer, the Ethereum Layer 2 from OKX.

Announced on April 25, the PotatoSwap decentralized exchange teased that it will support Frax’s FRAX stablecoin and liquid staking token frxETH, alongside other “financial instruments.” The integration will provide new opportunities for Frax asset holders to generate yield.

“Frax Assets coming soon to OKX’s new zk L2 XLayer with partner integrations on deck,” Frax tweeted. “FRAX will be on the ground floor powering DeFi & yields on day 1.”

X Layer Goes Live

OKX, the second largest centralized exchange by 24-hour trade volume, according to CoinGecko, launched X Layer on mainnet last week. The network was previously called X1.

The Ethereum layer-2 was built using Polygon’s Chain Development Kit (CDK), a toolkit allowing developers to build L2s secured by zero-knowledge proofs. X Layer hosted more than 200 DeFi protocols at launch, with the dApps having onboarded during its beta testnet that went live in November 2023.

According to data from DefiLama, X Layer hosts $5.49 million in total value locked (TVL) and has processed roughly 27.5 million transactions to date. OKB, an ERC-20 token launched by OKX in 2018, now functions as the network token for X Layer.

OKX likely drew inspiration from Base, the surging Layer 2 network from the top U.S. centralized exchange, Coinbase, in launching X Layer. Base went live on mainnet in August 2023, and has since attracted a TVL of $5.62 billion, according to L2beat, and generated more than $50 million in revenue, according to Dune Analytics.

Frax Finance embraces USDe

On April 5, Frax Finance’s community approved a proposal to partner with Ethena Labs to launch a liquidity pool allowing users to trade between FRAX and Ethena’s controversial USDe stablecoin on Curve. The pool features a $250M debt ceiling for USDe.

“Ethena has looked up to the FRAX team as some of the best builders in all of DeFi, and we are excited to work together in the coming months to grow the [on-chain] dollar economy,” Ethena Labs tweeted. “Frax… will create one of the deepest pools of dollar liquidity on-chain, and enable Frax to diversify their source of backing yield.”