Frax protocol was the first fractional algorithm stablecoin system. Frax is open source, permissionless, and entirely on-chain -- currently implemented on Ethereum (and potentially cross-chain in the future). The ultimate goal of the Frax protocol is to provide a highly scalable, decentralized, algorithmic currency to replace fixed-supply digital assets like BTC. The protocol contains the following concepts:
Fractional algorithm -- Frax is a unique stablecoin whose partial supply is supported by collateral and partial supply algorithms. The ratio of collateral to the algorithm depends on the market pricing of FRAX stablecoins. If FRAX trades above $1, the agreement will lower the collateral ratio. If FRAX trades below $1, the agreement increases the collateral ratio.
Decentralization and governance minimization -- Community governance and an algorithmic approach that emphasizes a high degree of autonomy, without active management.
Full on-chain predictor - Frax V1 uses Uniswap (ETH, USDT, USDC time weighted average price) and Chainlink (US dollar price) predictor.
Two tokens -- FRAX is a stablecoin that targets a narrow band around the $1 / coin. Frax Shares (FXS) are governance tokens that generate fees, seigniorage income, and excess collateral values.
Prior to Frax, staboins were divided into three categories: fiat collateral, cryptocurrency overcollateral, and unsecured algorithms. Frax, the first decentralized staboin to classify itself as a fractional algorithm, enters the fourth and most unique category.
The supply of
FRAX stablecoins is dynamic and constantly changes due to its fractional algorithm monetary policy to keep the price at $1. The supply of Frax Shares (FXS) tokens was strictly limited to 100 million from the beginning, and there was no timeline for inflation in the agreement. FXS tokens are governance tokens that accumulate all the value of newly minted FRAX, fees, and excess collateral. FXS is an investment and governance asset, while FRAX is a currency token.
Frax protocol is a community-driven and uniquely designed stablecoin. Over 60% of the SUPPLY of FXS is issued to liquidity providers and yield farmers over many years. It is a completely decentralized protocol, governed on the chain. It was also the first and only staboin to adopt a fractional algorithm hybrid design when it was launched in November 2020.
The Frax protocol is the brainchild of American software developer Sam Kazemian, who came up with the first idea for fractional algorithm stablecoins in 2019.
The founding team of Frax Engineers includes Travis Moore and Jason Huan. Sam Kazemian originally came up with the idea when he noticed that stablecoins were growing rapidly but without any mixture of algorithmatic monetary policy and collateral. Projects that use purely algorithmic monetary policy fail or close without any significant traction. Frax is designed to measure the market's confidence in a partially algorithmized and partially collateralized stabocoin.
Staboin FRAX is available on many major exchanges and DeFi platforms such as Uniswap and DEXes. FRAX Shares (FXS) tokens are also available and liquid as stablecoin. Investors looking to buy upside and governance rights to the world's first fractional algorithm staboin should buy Frax Shares (FXS). Users who want stability by using the world's only fractional algorithm stablecoin should purchase FRAX.