Mechanics

Deposit

Users deposit ETH and specify how long they are willing to commit to locking it out of circulation.

For example, here someone deposits 100 ETH for 2 Years.

Freezer Yield Token

They receive 1 freezer ETH (frETH) per ETH per Year. Here, 100 ETH locked out of circulation on January 20th, 2022 for 2 years (until January 20th 2024) mints 200 frETH.

Freezer NFT

The user also receives a Certicate of Deposit represented by the Freezer NFT. This NFT is a fully on-chain ERC721 NFT with no reliance on external file storage for the image or metadata. This NFT is tradeable on any NFT marketplace and is a 1 to 1 representation of ETH locked in True Freeze.

Redemption

Anyone holding a Freezer NFT can redeem the NFT to withdraw the corresponding ETH in True Freeze with 0 fees after the Maturity Date.

Note: Redemption prior to the maturity date, charges 2 fees: a 0.25% ETH penalty and a frETH fee. (possibly more than minted!)

On the lock date, an immediate withdrawal requires a fee of 20% more frETH than minted. So on the 100 ETH NFT example, withdrawal on Jan 20, 2022 would require 1.2 * 200 = 240 frETH, in addition to a 0.0025 * 100 = 0.25 ETH penalty. The fee falls every day, falling more in the final 3rd of the lock duration, until you can withdraw on or after the maturity date for no frETH fees and no ETH penalty.

Freezer Revenue Token

50% of frETH fees above the original amount minted (rest burned) and 100% of ETH penalties go to stakers of the Freezer Revenue Token (FRZ). To incentivize continual use of the True Freeze ecosystem, the FRZ token supply is inflationary. In the first year, the FRZ supply will inflate by 10%. The next year 9%. Each year the inflation rate falls until the 10 year. After year 10 and forever after it will inflate at 2% per year.

This 10 year Accumulation Phase of high inflation bootstraps use of the protocol so that continued active use of the ecosystem is rewarded more than simply receiving the airdrop and not using the primitive.

FRZ is primarily earned by burning frETH. Forever after, new FRZ minted each year is shared proportionally among everyone who has burned frETH in the history of the protocol. This creates a competitive mechanism for protocols to integrate True Freeze into their yield strategies and continuously earn & burn frETH, receive FRZ, and stake it for frETH fees and ETH penalties.