FRAX can be minted and redeemed from the system for $1 of value, allowing arbitragers to balance the demand and supply of FRAX in the open market. At all times in order to mint new FRAX a user must place $1 worth of value into the system. If the market price is above the price target of $1, then there is an arbitrage opportunity to mint tokens by placing $1 of value into the system per FRAX and sell the minted FRAX for above $1 in the open market. The difference is simply the proportion of FXS and collateral comprising the $1 of value. When FRAX is in the 100% collateral phase, all of the value that is used to mint FRAX is collateral. As the protocol moves into the fractional state, some of the value that enters into the system during minting becomes FXS (which is then burned). For example, in a 96% collateral ratio, every FRAX minted requires $.96 of collateral and burning $.04 of FXS. In a 95% collateral ratio, every FRAX minted requires $.95 of collateral and burning $.05 of FXS, and so on.