What is f(x)?

f(x) splits ETH into a mix of low-volatility “floating stablecoins” called fETH and high-volatility “leveraged ETH” tokens called xETH. Users can supply ETH or stETH to mint either one (pure ETH is zapped into stETH before deposit).

The most fundamental equation in this protocol:

$$n_{eth}p_{eth}=n_fp_f+n_xp_x,$$

where $n_{eth}$is the number of ETH collateral, $p_{eth}$is ETH’s price in USD, $n_f$is the total supply of fETH, $p_f$is NAV of fETH, $n_x$is the total supply of xETH, $p_x$is NAV of xETH.