There is 100m FRAX in circulation with $86m of collateral value across the protocol at an 86% CR. The system is in equilibrium with FRAX trading at $1.00. Collateral is deployed through multiple AMOs, such as the Collateral Investor AMO and Curve AMO. The various market operations of the protocol earn yield, transaction fees, and interest. Each day there is $20,000 worth of revenue earned from various AMOs. This would increase the CR by .023% each day since it is a surplus of $20,000 of collateral value. After t = 24 hours, the CR is now 86.023% which is higher than the 86% target. Given that the CR is 86%, the protocol can rebalance to the CR in two ways. It can use the $20,000 worth of collateral profit to purchase FXS from AMMs. However, a more efficient and advantageous method is to mint 20,000/(.86) = 23,255.814 FRAX
It then takes the newly minted 23,255.814 FRAX and purchases FXS from the most liquid onchain market(s) (currently the FRAX-FXS Uniswap pair). The FXS is then immediately burned. This second method has the distinct advantage of expanding the FRAX supply, accruing value to the FXS token holders, as well as rebalancing the protocol to the CR.
Essentially, FXS1559 is an in-protocol rule for every AMO to formally channel excess value above the current target collateral ratio to FXS holders.