FRAX is the native stablecoin of Frax Finance — the first fractional-algorithmic stablecoin protocol, founded by Sam Kazemian and Travis Moore, that at launch (December 2020) introduced a novel hybrid design where FRAX is backed by a dynamically adjustable mix of USDC (collateral) and algorithmic FXS burning/minting (seigniorage), with the collateral ratio automatically decreasing when FRAX trades firmly above $1 (indicating market confidence, so less collateral is needed) and increasing when it trades below (rebalancing toward full collateralization), making FRAX a living experiment in the capital efficiency versus security tradeoff in stablecoin design — one that survived the May 2022 Terra/UST collapse that destroyed purely algorithmic stablecoins, and that subsequently pivoted toward full collateralization in V3 with yield-bearing, RWA-backed reserves.
| Stat | Value |
|---|---|
| Ticker | FRAX |
| Price | $1.00 |
| Market Cap | $274.61M |
| 24h Change | +0.1% |
| Circulating Supply | 275.94M FRAX |
| All-Time High | $1.14 |
| Contract (Ethereum) | 0x853d...b99e |
| Contract (Polygon Zkevm) | 0xff85...c44d |
| Contract (Moonbeam) | 0x322e...3bfb |
| Contract (Boba) | 0x7562...8cd9 |
| Contract (Aurora) | 0xe4b9...94b6 |
| Contract (Moonriver) | 0x1a93...197d |
| Contract (Fantom) | 0xdc30...e355 |
| Contract (Evmos) | 0xe034...8bd8 |
| Contract (Harmony Shard 0) | 0xfa71...3200 |
| Contract (Polygon Pos) | 0x45c3...ff89 |
| Contract (Binance Smart Chain) | 0x90c9...9f40 |
| Contract (Arbitrum One) | 0x17fc...bd6f |
| Contract (Optimistic Ethereum) | 0x2e3d...f475 |
| Contract (Avalanche) | 0xd24c...da64 |
How It Works
- Minting FRAX — To mint 1 FRAX, a user provides a mix of USDC (collateral) and FXS (burned). If the collateral ratio (CR) is 85%, minting $1 FRAX requires $0.85 USDC + $0.15 worth of FXS burned.
- Redeeming FRAX — Redeeming 1 FRAX returns $0.85 USDC + $0.15 worth of FXS minted to the redeemer (at CR=85%). This mechanism maintains FRAX’s peg: if FRAX drops below $1, arbitrageurs redeem for the $1 worth of mixed assets.
- Algorithmic controller — The protocol’s Proportional-Integral-Derivative (PID) controller automatically adjusts the CR: if FRAX consistently holds at $1, CR decreases gradually (more algorithmic, less capital needed); if FRAX trades below $1, CR increases (more collateral, less risk).
- AMO (Algorithmic Market Operations controllers) — AMOs are permissioned smart contract modules that deploy FRAX and protocol-owned collateral into DeFi strategies (Curve, Aave, Compound, Uniswap) to earn yield and actively manage the peg. AMOs replaced pure seigniorage mechanics as the primary peg defense.
- frxETH — Frax Finance’s liquid staking token for ETH. Users stake ETH to receive frxETH, which is deployable in DeFi. sfrxETH (staked frxETH) accrues ETH staking rewards.
- sFRAX — A savings account version of FRAX earning yield from RWA (Real World Assets) via protocol-owned US Treasury holdings, similar to MakerDAO’s DAI Savings Rate concept.
- FRAX V3 — Post-2022 Terra collapse, Frax moved to 100% “exogenous collateral” backing (requiring USDC or equivalent rather than algorithmics), abandoning the fractional model for pure safety.
Tokenomics
| Parameter | Value |
|---|---|
| Ticker | FRAX |
| Type | Stablecoin (USD-pegged) |
| Ethereum contract | 0x853d955aCEf822Db058eb8505911ED77F175b99e |
| Backing | USDC + protocol-owned assets (V3: 100% collateral) |
| Governance token | FXS (Frax Share) |
| Peak circulating supply | ~$2.9 billion (2022) |
| Current supply | Variable (redeemable on demand) |
Use Cases
- Stable store of value — Use FRAX as a USD-pegged stablecoin for DeFi trading, lending, and liquidity provision.
- Curve warfare — FRAX’s integration into Curve Finance’s 3pool-equivalent (FRAX3CRV) makes it a Curve Wars participant, earning gauge emissions.
- sFRAX savings — Earn RWA yield on held FRAX via the sFRAX product.
- Frax ecosystem — Use FRAX across frxETH liquid staking, Fraxlend (isolated lending), and Frax AMO strategies.
History
- 2020-06 — Sam Kazemian (founder of Wikipedia’s Everipedia) and Travis Moore design the fractional-algorithmic stablecoin concept. The core insight: most capital-efficient stablecoins are algorithmic (but fragile); most stable ones are fully collateralized (but capital-inefficient). FRAX bridges the gap.
- 2020-12-20 — FRAX launches on Ethereum with a 100% collateral ratio (fully backed by USDC at start). The plan: as confidence builds, the CR decreases algorithmically. FXS simultaneously launches as the governance/seigniorage token.
- 2021 — FRAX grows rapidly. The collateral ratio drops toward 80–85% as algorithmic market operations prove the peg stable. FRAX integrates into Curve Finance, Aave, and other major DeFi protocols. AMO modules launch, deploying protocol-owned FRAX into Curve for yield.
- 2021-2022 — FRAX participates in Curve Wars. The Frax team purchases veCRV and CVX to earn gauge emissions for the FRAX3CRV Curve pool, attracting billions in FRAX liquidity. At peak, FRAX reaches $2.9 billion circulating supply.
- 2022-05 — Terra/UST collapses, destroying $18 billion in algorithmic stablecoins. FRAX’s fractional model (still partially algorithmic) comes under scrutiny. Sam Kazemian publicly notes that FRAX’s AMO mechanism and partial collateral is structurally different from UST’s purely algorithmic design — a claim validated by FRAX’s survival.
- 2022-Q3 — Sam Kazemian announces FRAX V3: moving toward 100% exogenous collateral (USDC, RWA), effectively ending the fractional-algorithmic model in favor of pure safety. The decision reflects lessons from the Terra collapse.
- 2023 — FRAX V3 and sFRAX launch. Frax Finance deploys RWA collateral (US Treasuries) into sFRAX. frxETH/sfrxETH grows as a significant ETH liquid staking product competing with Lido and Rocket Pool.
- 2024 — Frax Finance continues as a multi-product DeFi protocol: FRAX (stablecoin), frxETH (LST), FXS (governance), Fraxlend (lending), Frax AMMs. The ecosystem is mature and established despite pivoting away from the original fractional-algorithmic model.
Common Misconceptions
“FRAX is just like TerraUSD (UST).”
FRAX and UST were fundamentally different. UST was 100% algorithmic: its peg relied entirely on LUNA minting/burning with no external collateral. FRAX always had significant USDC collateral (80%+ at its most “algorithmic” phase) and has AMO modules actively managing the peg. FRAX survived the May 2022 crypto crash; UST did not.
“FRAX is still fractional-algorithmic.”
FRAX V3 targets 100% exogenous collateral backing. The protocol effectively retired the fractional model after the Terra collapse. FRAX is now a fully collateralized stablecoin with yield-bearing RWA reserves, though historical references to the “fractional-algorithmic” label persist.
Social Media Sentiment
FRAX is highly regarded in DeFi stablecoin research circles as a sophisticated, adaptable protocol. Sam Kazemian is an active communicator on social media, regularly discussing FRAX design philosophy. The protocol’s survival of the Terra/UST collapse — despite being partially algorithmic — reinforced trust in its design. The pivot to full collateralization in V3 is viewed as prudent but also as an admission that the fractional-algorithmic model carries inherent risks even with thoughtful implementation.
Last updated: 2026-04