The Frax protocol is built around two tokens: the Frax stablecoin (FRAX) and the Frax Shares governance token (FXS). FRAX is a stablecoin that uses a fractional algorithmic approach-its stability is supported partly by collateral and partly by algorithms. There are two FRAX tokens managed under a stable-price policy. Frax Shares (FXS) functions as a governance token, with commissions, seigniorage earnings, and any surplus collateral value allocated to holders.

The Frax protocol was created by American software developer Sam Kazemian, who initially developed the idea of a fractional-algorithm stablecoin in 2019. The Frax development team includes Travis Moore and Jason Huang.

The FRAX market price influences the protocol’s collateral-versus-algorithm ratio. When FRAX is trading above $1, the protocol lowers the collateral ratio. When FRAX is trading below $1, the protocol raises the collateral ratio.

How Frax Share works

FXS is an ERC-20 FRAX management token and supports the following functions:

At launch, FRAX is fully backed by collateral-so creating FRAX only requires a deposit in the mining contract. During the fractional stage, minting FRAX depends on setting an appropriate collateral ratio and burning the corresponding FXS portion.

Frax Share mining

FRAX stablecoins can be mined by supplying the system with the right amount of the protocol’s components. At the time of creation, FRAX is 100% collateral-backed, meaning minting FRAX requires only a deposit into the mining contract. In the fractional phase, FRAX mining additionally requires establishing a suitable collateral ratio and burning the Frax Shares ratio (FXS). While the protocol can theoretically work with any cryptocurrency as collateral, this Frax implementation generally uses stablecoins to reduce collateral volatility, helping FRAX shift smoothly toward more algorithmic settings. As the system’s operation speeds up, it becomes more practical and safer to add more volatile assets like ETH and wrapped BTC into future managed pools.

How to buy Frax Share

FRAX, the stablecoin, is listed on many major exchanges and DeFi platforms, including Uniswap and DEX. Frax Shares (FXS) tokens are also available and are reportedly just as liquid as stablecoins. Investors seeking growth potential and the ability to manage a stablecoin system that uses a fractional algorithm should consider buying Frax Shares (FXS). Users looking for stability via that fractional algorithm stablecoin should purchase FRAX.

FXS is registered on multiple cryptocurrency exchanges. Frax Share can be acquired on decentralized exchanges only by trading another cryptocurrency. To buy Free Share, you first need to purchase Ethereum (ETH), Bitcoin (BTC) and BUSD FXS Coin-where FXS is traded-then use those assets to buy Frax Share. This process typically requires a self-custody wallet. Such swaps are often done via Binance, one of the largest cryptocurrency trading platforms. Frequently, these transactions are carried out through Binance, the world’s largest cryptocurrency trading platform.