Frax Finance Unveils Plans For Its Ethereum L2

Frax Finance, creators of one of the most innovative decentralized stablecoins and DeFi-focused stablecoin infrastructure, has unveiled its plans to roll out an Ethereum Layer 2 blockchain, aptly named Fraxchain.

The objective is simple but ambitious: to cultivate a smart contract platform with an unwavering focus on decentralized finance.

Frax Protocol: A Trio of Stablecoins and Integrated Subprotocols

The Frax Protocol represents a pioneering development in the crypto world. At its core, it issues three distinct decentralized stablecoins: FRAX, a USD pegged asset; the Frax Price Index (FPI) stablecoin, which uniquely ties its value to a basket of consumer goods, creating a new unit of account independent of national currencies; and FraxEther (frxETH), a stablecoin pegged to ETH, designed to replace WETH in smart contracts.

Complementing these stablecoins, the protocol also houses three subprotocols: Fraxlend, Fraxswap, and Fraxferry. Fraxswap, the first Automated Market Maker (AMM) using time-weighted average market maker orders, helps in rebalancing collateral, minting/redemptions, adjusting stablecoin supply, and deploying protocol-owned liquidity on-chain. Fraxlend creates a lending market for Frax-based stablecoins, allowing the origination of debt, bespoke non-custodial loans, and the incorporation of collateral assets into the Frax Finance economy. Lastly, Fraxferry enables the transfer of Frax Protocol tokens across multiple blockchains.

Frax Share (FXS) serves as the primary governance token across the Frax ecosystem, accruing fees, revenue, and excess collateral value. An additional governance token, FPIS, is specific to the FPI and shares its value capture with FXS holders. A Gauge Rewards System allows the community to propose rewards for strategies that integrate Frax-based stablecoins.

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Author: Vince Dioquino

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