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If we want mainstream DeFi adoption, we need a stablecoin that is permissionless, scaleable and STABLE. @fraxfinance is a 3 week old project that seems to have tackled this issue
@fraxfinance uses an innovative dual token model. Volatility is extracted from the FRAX stablecoin and isolated into the FXS governance token
All issued FRAX is backed by Collateral (USDC) and the FXS governance token. The ratio between Collateral and FXS is the "Collateral Ratio"
This Collateral Ratio is dynamic and determined by the users of FRAX:
Ultimately, FXS holders are the backstop for FRAX. FXS holders provide a valuable service to people who want to use FRAX, a truely permissionless and scaleable STABLEcoin
In return for providing this service, FXS has strong value capture IF FRAX is adopted. FXS receives all excess collateral as FRAX users gradually get comfortable with partial collateralization
Adoption is bootstrapped through reflexive tokenomics:
FRAX issuance
FXS burn & reduction collateralization ratio FXS appreciates higher farming yields & improved peg more FRAX issuance. A very reflexive loop!
FRAX issuance
FXS burn & reduction collateralization ratio FXS appreciates higher farming yields & improved peg more FRAX issuance. A very reflexive loop!
Although the system has been live for just three weeks, FRAX stability is encouraging. Only a truely STABLE stablecoin is suitable for borrowing and lending
Despite its young age, FRAX is increasingly being adopted
The (big brain!) community is already very active, integrating with other DeFi protocols ao. Lending platform CREAM is already implementing FRAX after having obtained governance approval
The total addressable market is VERY large
FXS Valuation seems modest @ USD18m compared with peers, while aiming to offer a product with superior stability. $FRAX has a lot of room for growth. IF it does $FXS holders will be handsomely rewarded
A relatively low-risk way to participate is in the USDCFRAX pool (60% yield! 
). It doesnt have impermanent loss (stable coins!) and FRAX is backstopped by FXS token holders https://vfat.tools/frax/
). It doesnt have impermanent loss (stable coins!) and FRAX is backstopped by FXS token holders https://vfat.tools/frax/
Want to learn more and join us? Check our research report with much more background and links
https://siasky.net/fAB9EEtN4sDD9uKjRdR_JqkfJ7xr3QEJ94FweKwSyE16vw
https://siasky.net/fAB9EEtN4sDD9uKjRdR_JqkfJ7xr3QEJ94FweKwSyE16vw
DISCLAIMER: The author has not received any compensation for writing this article. The author does hold FXS tokens (honestly farmed / open market purchases). No investment advice. No liability whatsoever is accepted. Please Do Your Own Research
