Frax Price Index Share (FPIS)
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⚠️ FPIS is set to be by March 22, 2028 and convertible thereafter to FXS ⚠️ The Frax Price Index Share (FPIS) is the governance token of the Frax Price Index (FPI) stablecoin. FPIS is interconnected to the Frax Share (FXS) token thus it is referred to as a "linked governance token." The FXS & FPIS are economically linked programmatically in a similar way that a layer 1 token is connected to a dapp token on its network. FXS is the base token of the Frax Ecosystem thus FXS will always accrue value as both FRAX & FPI stablecoins grow no matter what. FXS accrues value proportional to the aggregate growth of the entire Frax economy as a whole similar to how ETH captures value from the sum total of all dapp economic activity that pays gas for access to Ethereum blockspace. FPIS tracks FPI growth specifically similar to a specific ERC20 token tracks growth of its own protocol rather than the entire L1 economy. If you think the Frax economy is undervalued as a whole, you should want to own more FXS. If you think people are undervaluing FPI growth specifically, you should increase more exposure to FPIS. It's the exact same dynamic of whether you would invest in a specific project or you invest in ETH instead. If you think the ETH economy as a whole is undervalued, you'd buy more ETH. But if you think a specific project will grow faster than the sum total of the economy, you'll want to own that specific token rather than the L1 token.* The Frax Collateral Ratio (FCR) is the ratio of FRAX stablecoins directly backing FPI tokens. The FCR is directly calculated before value distribution to FPIS & veFPIS token holders. The FCR specifically is used for FXS value capture of the system.
Whenever excess FPI balance sheet value is distributed back to FPIS token holders it will pass through an "FCR contract" or function call that calculates how much "FRAX collateral FPI uses."
Essentially, any economic productivity above the inflation rate goes to FPIS holders. Since the FPI is pegged to a basket of consumer items, it represents a claim on the value of the basket. The value the protocol generates in excess beyond that basket is captured by FPIS holders.
FPIS supply is initially set to 100 million tokens at genesis (distribution ) but is expected to decrease to around ~41M that are actually eligible for 2.5 : 1 conversion to FXS in March 22, 2028.
*No discussion of value capture in this documentation is investment advice. Governance token mechanics are merely meant to describe how the Frax/FPI system functions.