The Frax Finance community has voted to fully collateralize the protocol’s native stablecoin frax (FRX), with a total value locked of $2 billion. The proposal FIP-188, posted last week on Frax’s governance forum, suggested setting the target collateral ratio to 100% using protocol earnings to increase the stablecoin reserves. This move will provide more security and stability to the Frax Finance protocol, allowing users to trust the value of their frax tokens. The full collateralization of frax will also make it easier for users to use the token for trading and other DeFi applications. This vote is a major milestone for Frax Finance and will help the protocol to continue to grow and expand.
FRX, the fifth largest stablecoin with over $1 billion in market capitalization, has made a significant shift in its stabilizing mechanism. The new hybrid design eliminates the algorithmic element and is now 80% backed by crypto asset collateral. Frax Finance, the issuer of FRX, is managed by a decentralized autonomous organization that allows community proposals and votings. This shift in the stabilizing mechanism allows FRX to remain pegged to the U.S. dollar, providing users with a reliable and secure way to store their digital assets.
Frax Finance is proposing a new protocol to increase the collateral ratio of its token without creating additional FXS or inflating the token’s supply. The protocol will retain protocol revenues and authorize the purchase of up to $3 million of frxETH, the protocol’s liquid ether staking derivative, to prop up reserves. Co-founder Sam Kazemian believes this is the safest and most capital efficient design. The new protocol will ensure the token’s value is maintained and provide users with a secure and reliable platform for their investments.
Frax, a liquid staking protocol for Ethereum, recently held a vote on a proposal and the results were overwhelmingly in favor, with 98% of the voters in favor. This decision comes after multiple algorithmic stablecoins lost their price peg and eventually collapsed last year, causing a wider downfall in crypto markets. Frax has been the fastest-growing liquid staking protocol for ETH, with a 42% growth over the past 30 days. This vote is a sign of confidence in Frax and its ability to provide a secure and reliable platform for digital asset firms. With the majority of the vote in favor, Frax is well-positioned to become the go-to platform for digital asset firms looking for a secure and reliable platform.
