Fraxswap is the first constant product automated market maker with an embedded time-weighted average market maker (TWAMM) for conducting large trades over long periods of time trustlessly. It is fully permissionless and the core AMM is based on Uniswap V2. This new AMM helps traders execute large orders efficiently and will be heavily used by the Frax Protocol to increase the stability of the pegs for the FRAX & FPI stablecoins as well as return protocol excess profits to FXS holders through TWAMM purchases.
The motivation for building Fraxswap was to create a unique AMM with specialized features for algorithmic stablecoin monetary policy, forward guidance, and large sustained market orders to stabilize the price of one asset by contracting its supply or acquiring a specific collateral over a prolonged period. Specifically, Frax Protocol will use Fraxswap for: buying back and burning FXS with AMO profits, minting new FXS to buy back and burn FRAX stablecoins to stabilize the price peg, minting FRAX to purchase hard assets through seigniorage, and many more market operations in development.