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Frax Finance

Frax is a fractional-algorithmic stablecoin protocol created by Frax Finance. Frax is open source, permissionless, and entirely on-chain – currently implemented on Ethereum and other chains. The end goal of the Frax protocol is to provide a highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets like BTC.


Sam Kazemian created Frax in 2019 with former Federal Reserve Board nominee Stephen Moore. [1]


Frax consists of two tokens, Frax the stable coin and FXS the governance token. Frax main points of interest: Fractional-Algorithmic, Decentralized & Governance-minimized, Fully on-chain oracles, Two Tokens, Crypto Native CPI.


Frax is a stablecoin with parts of its supply backed by collateral and parts of the supply algorithmic. This means FRAX have parts of its supply floating/unbacked. The stablecoin (FRAX) is named after the "fractional-algorithmic" stability mechanism. The ratio of collateralized and algorithmic depends on the market's pricing of the FRAX stablecoin. If FRAX is trading at above $1, the protocol decreases the collateral ratio. If FRAX is trading at under $1, the protocol increases the collateral ratio.

Decentralized & Governance-minimized

Community governed and emphasizing a highly autonomous, algorithmic approach with no active management.

Fully on-chain oracles

Frax v1 uses Uniswap (ETH, USDT, USDC time-weighted average prices) and Chainlink (USD price) oracles.

Two Tokens

FRAX is the stablecoin targeting a tight band around $1/coin. Frax Shares (FXS) is the governance token which accrues fees, seigniorage revenue, and excess collateral value.

Crypto Native CPI

Frax's end vision is to build the first crypto native version of the CPI called the Frax Price Index (FPI) governed by FXS holders (and other protocol tokens). FRAX is currently pegged to USD but aspires to become the first decentralized, permissionless native unit of account which holds standard of living stable.

External Links

How does Frax work:

Sam Kazemian on Bankless show:

A Note on Cryptocurrency Stabilisation: Seigniorage Share - Robert Sams: