What Is FRAX-SHARE (FXS)?
FRAX is the first stablecoin protocol that was developed on a fractional algorithm. The platform is a permissionless, open-source, and completely on-chain cryptocurrency developed on Ethereum and other blockchains. The FRAX protocol's ultimate purpose is to create a highly expandable, decentralized, algorithmic currency that substitutes fixed-supply digital assets such as BTC. The stablecoin (FRAX) derives from the "fractional-algorithmic" stability mechanism.
According to the whitepaper, FRAX is the stablecoin with portions of its supply guaranteed by collateral and parts of its supply determined automatically. The platform is community-governed, emphasizing a fully automated, algorithmic approach that does not require active supervision.
The FRAX protocol is a two-token system that includes FRAX (FXS), a stablecoin, and FRAX Shares, a governance token (FXS). The Uniswap pair price and the ETH USD Chainlink oracle are used to determine the prices of FRAX, FXS, and collateral. Chainlink is a decentralized oracle network which connects blockchain-based smart contracts to real-time data. If FRAX is trading above $1, the protocol reduces the collateral ratio. If the price of FRAX falls below $1, the protocol raises the collateral ratio.
FXS is the standard token for the FRAX system. FXS is the governance tokens that generate fees, taxation revenue, and excess collateral value. The protocol is designed so that FXS supply can be primarily deflating as long as FRAX demand rises. Furthermore, when the valuation of FXS rises, the system's capacity to make FRAX stable rises as well. As a result, the demand for FRAX determines the FXS token's value. From the total tokens available, 60 percent of all FXS coins are allocated to different yield farms, liquidity rewards, exclusive and governance initiatives, with the balance shared among the staff and investors.
The FRAX redemption procedure is smooth, simple, and cost-effective. It is very straightforward during the 100 percent phase. During the fractional-algorithmic phase, when the FRAX is minted, FXS is burned, and when FRAX is redeemed, FXS is minted. Minting means creating and validating new information and recording it into the blockchain. Coin burning is a procedure of reducing coins or tokens from circulation.
FRAX's long-term goal is to create the first crypto-native version of the CPI, known as the FRAX Price Index (FPI), managed by FXS holders.
History of FRAX-SHARE (FXS)
The FRAX protocol was designed in late 2018, and the process started in early 2019. The maximum supply of FRAX is 100,000,000 FXS tokens.
