Understanding Frax: Today’s Price and the Revolutionary Stablecoin System
An Introduction to Frax Protocol
The Frax Protocol stands as a pioneering force in the world of stablecoins, introducing the first fractional algorithmic stablecoin system. This innovative protocol is open-source, permissionless, and fully on-chain, with its current implementation on the Ethereum network. The primary ambition of the Frax Protocol is to create a highly scalable, decentralized form of algorithmic money, envisioned as a modern alternative to fixed-supply digital assets like Bitcoin.
The Evolution of Stablecoins
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Before the advent of Frax, stablecoins were generally categorized into three distinct types: fiat-collateralized, over-collateralized using cryptocurrencies, and algorithmic with no collateral. Frax has revolutionized this landscape by being the first decentralized stablecoin to define itself as fractional-algorithmic, thus establishing a new, fourth category that is distinctly unique.
Community-Centric and Decentralized
Frax Protocol is not just another stablecoin; it’s a community-driven project with a unique operational style. More than 60% of the FXS token supply is strategically allocated to liquidity providers and yield farmers over several years, ensuring a wide distribution and engagement. This fully decentralized system operates under on-chain governance, setting a precedent as the first and only stablecoin to employ a fractional-algorithmic hybrid architecture since its launch in November 2020.
The Visionaries Behind Frax
The Frax Protocol was brought to life by American software developer Sam Kazemian, who first proposed the concept of a fractional-algorithmic stablecoin in 2019. Alongside him, original team members Travis Moore and Jason Huan contributed significantly to the engineering efforts of Frax. Kazemian’s vision stemmed from observing the rapid expansion of stablecoins, noting the absence of a model that combined algorithmic monetary policy with collateralization. Previous attempts at purely algorithmic monetary policies had failed, primarily due to insufficient market traction. Frax was developed to test market confidence in a stablecoin that is both partially algorithmic and partially collateralized.
Stay Informed with Frax Price Predictions
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Further Reading
If you found this article insightful, you might also want to read about the Franklin Fly Price in USD.
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