Frax Share (FXS)

What is Frax Share (FXS)?

Frax Share (FXS) is the non-stable, utility token in the Frax protocol, designed to hold governance rights and play a crucial role in the system's utility. Emphasizing a governance-minimized approach, FXS grants its community the power to make significant decisions related to the protocol, such as adding or adjusting collateral pools, modifying fees, and refreshing the collateral ratio. However, active management of collateral and other human-modifiable parameters is not possible, ensuring a trustless and stable approach similar to Bitcoin's ethos.

Who created Frax Share (FXS)?

Frax Share (FXS) was created by a founding team led by Sam Kazemian, Travis Moore, and Jason Huan, who are the co-founders of the Frax protocol.

What is $FXS used for?

The FXS token serves as the utility and governance token of the Frax protocol. Holders of FXS have governance rights, enabling them to influence critical parameters in the system, while avoiding the complexity of active management found in some other decentralized autonomous organizations (DAOs). These governance rights include adjusting collateral pools, fees, and the collateral ratio. As the supply of FXS is expected to be deflationary with growing FRAX demand, it offers upside utility and downside utility for the protocol. The FXS token's market capitalization is calculated based on the expected net value creation from FRAX seigniorage in perpetuity, minting and redemption fees, and the utilization of unused collateral. As the market cap of FXS increases, so does the protocol's ability to maintain FRAX's stability. The primary objective of the design is to maximize the value of FXS while ensuring FRAX remains a stable currency, following a hybrid (fractional) seigniorage shares model.