Frax Finance ¤
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  • Frax Ecosystem Overview
  • FXS & veFXS
    • Frax Shares (FXS)
    • veFXS
    • Gauges
    • FXS Distribution
    • FXS Smart Contract & Addresses
  • GOVERNANCE
    • Frax Governance Overview
    • How It Works
    • Advanced Concepts
    • Fraxtal Snapshot Voting
  • FRAX V1 - ORIGINAL
    • Original Design
    • Staking Contracts
    • FRAX ABI & Token Addresses
    • Frax V1 Pool ABI & Addresses
    • Core Frax Multisigs
  • FRAX V2 - Algorithmic Market Operations (AMO)
    • AMO Overview
    • AMO Minter
    • Collateral Investor
    • Curve
    • Uniswap v3
    • FRAX Lending
    • Decentralization Ratio (DR)
  • FRAX V3 - 100% CR AND MORE
    • Overview
    • Fraxtal
    • AMOs
    • RWAs
    • sFRAX
    • FXBs
    • sFRAX Token Addresses
    • sFRAX & FXB Multisigs
  • Bridging
    • Fraxferry
    • LayerZero x Stargate
    • Fraxtal Bridge
  • Frax Price Index
    • Overview (CPI Peg & Mechanics)
    • Frax Price Index Share (FPIS)
    • FPIS Distribution
    • CPI Tracker Oracle
    • FPI Controller Pool
    • veFPIS
    • FPIS Conversion / FPIS Locker
    • FPI and FPIS Token Addresses
    • FPI Multisigs
  • Fraxswap
    • Overview
    • Technical Specifications
    • Fraxswap Contract Addresses
  • Fraxlend
    • Fraxlend Overview
    • Key Concepts
    • Lending
    • Borrowing
    • Advanced Concepts
      • Position Health & Liquidations
      • Interest Rates
      • Vault Account
    • ABI & Code
    • Fraxlend Multisigs
  • Frax Ether
    • Overview
    • frxETH and sfrxETH
    • Technical Specifications
    • Redemption
    • frxETH V2
    • frxETH V2 Technical Details
    • frxETH Code & V2 Addresses
    • frxETH and sfrxETH Token Addresses
    • frxETH Multisigs
  • BAMM
    • Overview
  • Frax Oracle
    • Frax Oracle Overview
    • How It Works
    • Advanced Concepts
    • Fraxtal Merkle Proof Oracles
  • Guides & FAQ
    • FAQ
    • Staking
    • Uniswap Migration / Uniswap V3
    • Fraxswap / FPI
  • Miscellany
    • All Contract Addresses
    • Bug Bounty
    • Miscellaneous & Bot Addresses
    • API
  • Other
    • Audits
    • Media Kit / Logos
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  • Summary
  • Original Model (V1)
  • Current Model (V2 onwards)

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  1. FXS & veFXS

Frax Shares (FXS)

FXS is the staking and governance token of the entire Frax ecosystem. All utility is concentrated into FXS and its locked variant, veFXS.

PreviousFrax Ecosystem OverviewNextveFXS

Last updated 7 months ago

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Summary

The Frax Share token (FXS) is the non-stable, utility token in the protocol, as opposed to FRAX the stablecoin. It is meant to be volatile and hold rights to governance and all utility of the system. Parameters that are up for governance through FXS include adjusting various fees, allocating protocol assets, and enabling new lending pairs for Fraxlend. Surplus protocol income is also distributed to locked FXS () holders, and these veFXS holders can also earn farm weight boosts and other benefits. FXS supply is initially set to 100 million tokens at genesis (distribution ). As of 10/2/2024, the hard FXS supply cap is still 100 million tokens.

The FXS token has the potential of upside utility and downside utility of the system, where the delta changes in value are always stabilized away from the FRAX token itself and not affecting the peg.

Original Model (V1)

Current Model (V2 onwards)

In the original (V1) model of FRAX, FRAX minting required both FXS and another stablecoin, such as USDC. The percentage of each (e.g. 15% FXS, 85% USDC) varied according to market conditions. See for details.

The FXS token’s market capitalization would be calculated as the future expected net value creation from seigniorage of FRAX tokens in perpetuity, the cash flow from fees, and utilization of unused collateral. Additionally, as the market cap of FXS increases, so does the system’s ability to keep FRAX stable. Thus, the priority in the design is to accrue maximal value to the FXS token while maintaining FRAX as a stable currency. As Robert Sam’s described in the original Seigniorage Shares : “Share tokens are like the asset side of a central bank’s balance sheet. The market capitalization of shares at any point in time fixes the upper limit on how much the coin supply can be reduced.” Likewise, the Frax protocol takes inspiration from Sams’ proposal as Frax is a hybrid (fractional) seigniorage shares model. FXS would be largely deflationary in supply as long as FRAX demand grows.

In the current model, FXS is still used for governance, receives excess protocol income, and confers other miscellaneous benefits to holders (via ). However, FXS is no longer needed to mint FRAX. That functionality is delegated to .

Frax V1 Background
whitepaper
veFXS
AMOs
veFXS
here
FXS
Schematic of current utility of FXS (V1)