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Summary of Frax Share
Key Points
- Frax Protocol is the first fractional-algorithmic stablecoin system.
- It’s open-source, permissionless, and entirely on-chain, currently on Ethereum.
- The protocol incorporates fractional-algorithmic, decentralized, and governance-minimized concepts.
- FRAX is the stablecoin, and Frax Shares (FXS) is the governance token.
- FXS is hard-capped at 100 million tokens, with no inflation schedule.
- Over 60% of FXS is issued to liquidity providers and yield farmers.
- Frax Protocol is community-driven and decentralized, with on-chain governance.
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About Frax Share: A Decentralized, Algorithmic Stablecoin
Introducing the Frax Protocol (FRAX): A Pioneering DeFi Solution
The Frax Protocol pioneers the concept of a fractional-algorithmic stablecoin system, boasting an open-source, permissionless, and fully on-chain architecture, currently deployed on the Ethereum network with potential cross-chain implementations on the horizon. The ultimate objective of the Frax protocol is to introduce a highly scalable, decentralized, and algorithmic form of money, poised to supplant fixed-supply digital assets like Bitcoin.
Fractional-Algorithmic – Frax is a distinctive stablecoin that combines a collateral-backed component with an algorithmic element. The proportion of collateralized and algorithmic supply is dynamically adjusted based on the market’s valuation of the FRAX stablecoin. When FRAX trades above $1, the protocol reduces the collateral ratio, whereas when it trades below $1, the protocol increases the collateral ratio, ensuring a responsive and adaptive approach to maintaining stability.
Decentralized and Governance-Minimized – Embracing a community-driven ethos, our approach prioritizes autonomy and algorithmic decision-making, eschewing active management for a truly decentralized experience.
Fully on-chain oracles – Frax v1 leverages Uniswap (ETH, USDT, USDC time-weighted average prices) and Chainlink (USD price) oracles, ensuring seamless data integration.
Two Tokens – FRAX, a stablecoin designed to maintain a narrow fluctuation band around $1 per coin, and Frax Shares (FXS), the governance token that accrues fees, seigniorage revenue, and excess collateral value, thereby empowering holders with a stake in the ecosystem.
Prior to Frax, the stablecoin landscape was segmented into three distinct categories: fiat-collateralized, overcollateralized with cryptocurrency, and algorithmic with no collateral. Frax, however, has pioneered a novel approach, establishing itself as the inaugural decentralized stablecoin to embody a fractional-algorithmic model, thereby introducing a fourth and most distinctive category.
The Circulating Supply of FRAX and FXS Coins: A Closer Look
The supply of the FRAX stablecoin is dynamically adjusted to maintain a stable price of $1, courtesy of its innovative fractional-algorithmic monetary policy. In contrast, the supply of Frax Shares (FXS) tokens is capped at 100 million at genesis, with no provision for inflation in the protocol. As the governance token, FXS accrues the value of newly minted FRAX, fees, and excess collateral, serving as both an investment opportunity and a governance asset, while FRAX functions as the currency token.
Unveiling the Uniqueness of Frax
The Frax Protocol is a pioneering, community-driven stablecoin, boasting a unique design. Notably, over 60% of the FXS supply is allocated to liquidity providers and yield farmers over an extended period. As a truly decentralized protocol, governance is facilitated on-chain. Moreover, Frax Protocol made history as the first and only stablecoin to pioneer the innovative fractional-algorithmic hybrid design at its inception in November 2020.
The Visionary Founders Behind the Frax Protocol
The Frax Protocol is the brainchild of American software developer Sam Kazemian, who pioneered the concept of a fractional-algorithmic stablecoin in 2019, revolutionizing the digital currency landscape.
The founding team of Frax comprises esteemed engineers Travis Moore and Jason Huan. The concept was initially conceived by Sam Kazemian, who observed the rapid growth of stablecoins, yet noted the absence of a hybrid model that combined algorithmic monetary policy with collateralization. Notably, projects that relied solely on algorithmic monetary policy had either failed or ceased operations without gaining significant traction. In response, Frax was designed to gauge the market’s confidence in a stablecoin that strikes a balance between algorithmic and collateralized elements.
Acquiring FRAX and FXS: A Comprehensive Guide
FRAX, the pioneering stablecoin, is widely available on prominent exchanges and decentralized finance (DeFi) platforms, including Uniswap and decentralized exchanges (DEXes). Furthermore, Frax Shares (FXS) tokens boast impressive liquidity, mirroring that of the stablecoin. Investors seeking to capitalize on the upside and governance rights of the world’s inaugural fractional-algorithmic stablecoin are advised to acquire Frax Shares (FXS). Conversely, users prioritizing stability can opt for FRAX, the world’s sole fractional-algorithmic stablecoin.
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