Frax is a fractional-algorithm stablecoin protocol, which is partially backed by collateral and partially stabilized algorithmically. Frax's collateral ratio starts at 100%, and is dynamically adjusted hourly according to the FRAX market price. When the price is higher than $1, the collateral ratio is lowered, and vice versa. The protocol includes the stablecoin Frax (FRAX) and the governance token Frax Share (FXS). The target price of FXS is $1. This allows arbitragers to balance the demand and supply of FRAX in the open market. FXS is the governance token which accrues fees, seigniorage revenue, and excess collateral value.
Frax is a fractional-algorithm stablecoin protocol, which is partially backed by collateral and partially stabilized algorithmically. Frax's collateral ratio starts at 100%, and is dynamically adjusted hourly according to the FRAX market price. When the price is higher than $1, the collateral ratio is lowered, and vice versa. The protocol includes the stablecoin Frax (FRAX) and the governance token Frax Share (FXS). The target price of FXS is $1. This allows arbitragers to balance the demand and supply of FRAX in the open market. FXS is the governance token which accrues fees, seigniorage revenue, and excess collateral value.
