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No New Minting of $FXS
With nearly unanimous assent from $FXS governance token holders, the Frax Finance community has voted to remove the algorithmic underpinnings from the $FRAX stablecoin and move to a fully collateralized model over time.
Near unanimous vote to move $frax to 100% CR over time.
— 0xChaos (@0xCha0s) February 23, 2023
Seems like @fraxfinance serious about making it clear it’s a stable worth holding with no incentive and completely backed with exogenous collateral.
Will be interesting to see it scale$fxs https://t.co/fSQXpmsge3
“The time has come for Frax to gradually remove the algorithmic backing of the protocol. The Frax protocol has grown and evolved dramatically since the protocol launched in December 2020,” according to the governance proposal.
Specifically, the proposal calls for increasing the target collateral ratio of $FRAX to 100% in the long term, with no additional minting of $FXS. Buybacks of $FX will be paused, while $veFXS yield will remain the same. Up to $3 million per month in $frxETH purchases will be authorized to increase the collateral ratio.
What is FRAX
FRAX is an open-source, permissionless, and entirely on-chain protocol. They carry the vision of providing highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets like BTC.
FRAX is the first and only stablecoin partly backed by collateral and partly by algorithm. The stablecoin (FRAX) is named after the “fractional-algorithmic” stability mechanism. The collateral to algorithm-backing ratio depends on the market’s pricing of the FRAX stablecoin. If FRAX trades above $1, the protocol decreases the collateral ratio. On the other hand, If FRAX is trading under $1, the protocol increases the collateral ratio.
Find information about Frax Finance here:
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