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Frax Share
About Frax Share
Frax Finance is a decentralised finance (DeFi) platform offering algorithmic stablecoins and financial instruments, launched in 2020 by Sam Kazemian. It includes FRAX, a USD-pegged stablecoin, FPI (pegged to consumer goods), and frxETH (a liquid staking derivative). Frax Share (FXS) is the governance and utility token of the ecosystem, enabling holders to participate in protocol governance, influence liquidity incentives, and receive protocol revenue. FXS holders can lock their tokens for veFXS, which provides enhanced voting power and rewards. FXS also benefits from revenue generated across Fraxlend, Fraxswap, and AMOs. Originally, FXS was needed for minting FRAX, but newer versions shifted its role to governance and yield distribution. The project leverages AMO strategies and Fraxtal, its Layer 2 chain, for scalability and capital efficiency while maintaining decentralisation and stability.
Frax Finance is a decentralised finance (DeFi) platform focused on the creation and management of algorithmic stablecoins and financial instruments. The project was launched in December 2020 with the goal of introducing a scalable and partially algorithmic stablecoin protocol that combines on-chain collateral and algorithmic mechanisms for stability.
At its core, Frax Finance operates a complex multi-token ecosystem designed for stability, yield generation, and decentralised governance. The project includes several key assets and protocols:
- FRAX (Stablecoin): A USD-pegged stablecoin designed to maintain a $1 peg using a fractional-algorithmic model, where the protocol balances collateral backing and algorithmic adjustments to stabilise the price.
- Frax Price Index (FPI): A stablecoin pegged to a basket of consumer goods instead of the US dollar, designed to hedge against inflation by tracking real-world price movements.
- frxETH & sfrxETH: frxETH is a liquid staking derivative token pegged to ETH, while sfrxETH (Staked Frax Ether) accrues staking rewards from Ethereum validators. These tokens facilitate liquid staking and DeFi integrations for ETH holders.
- FXS (Frax Share): The governance and utility token of the Frax ecosystem, used for decision-making, fee distribution, and protocol incentives.
- Fraxlend: A permissionless lending platform where users can borrow and lend Frax assets.
- Fraxswap: The native automated market maker (AMM) of Frax Finance, based on Uniswap V2, with time-weighted average market maker (TWAMM) features for efficient on-chain trading and rebalancing.
- AMOs (Algorithmic Market Operations): Smart contracts that manage the protocol's collateral and liquidity autonomously, balancing the supply of FRAX and interacting with external DeFi platforms.
- Fraxtal: A modular Layer 2 (L2) blockchain using frxETH as the gas token, designed for scaling Frax products.
Frax Finance continues to expand with multiple stablecoin models and financial instruments, balancing algorithmic mechanisms with decentralised governance.