Frax: Fractional Stablecoin Protocol
A new category of decentralized stablecoin with a novel mechanism
Frax is the first fractional stablecoin protocol. Frax is open-source, permissionless, and entirely on-chain – currently implemented on Ethereum and 12 other chains. The end goal of the Frax protocol is to provide a highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets like BTC. The Frax ecosystem has 2 stablecoins: FRAX (pegged to the US dollar) & FPI (pegged to the US Consumer Price Index). The Frax Finance economy is composed primarily of the two stablecoins, a native AMM (Fraxswap), and a lending facility (Fraxlend).
Core concepts to understand the unified Frax Finance ecosystem include:
  • Fractional – Frax is the first and only stablecoin with parts of its supply backed by collateral and parts of the supply algorithmically stabilized. The stablecoin (FRAX) is named after this hybrid fractional-reserve system.
  • Fraxswap, a native AMM – Fraxswap is the first AMM with time weighted average market maker orders used by the Frax Protocol for rebalancing collateral, mints/redemptions, expanding/contracting FRAX supply, and deploying protocol owned liquidity onchain.
  • Fraxlend, permissionless lending markets – Fraxlend is the lending facility for the FRAX & FPI stablecoins allowing debt origination, customized non-custodial loans, and onboarding collateral assets to the Frax Finance economy.
  • Crypto Native CPI Stablecoin – Frax's end vision is to build the most important decentralized stablecoins in the world. The Frax Price Index (FPI) stablecoin is the first stablecoin pegged to a basket of consumer goods creating its own unit of account separate from any nation state denominated money.
  • Four Tokens – FRAX is the stablecoin targeting a tight band around $1/coin. Frax Share (FXS) is the governance token of the entire Frax ecosystem of smart contracts which accrues fees, seigniorage revenue, and excess collateral value. FPI is the inflation resistant, CPI pegged stablecoin. FPIS is the governance token of the Frax Price Index and splits its value capture with FXS holders.
  • Gauge Rewards System – The community can propose new gauge rewards for strategies that integrate FRAX stablecoins. FXS emissions are fixed, halve each year, and entirely flow to different gauges based on the votes of veFXS stakers.
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