Frax (FRAX)

Frax (FRAX) is a US dollar pegged stablecoin issued by the Frax Finance protocol. Launched in 2020, it was originally designed as a “fractional algorithmic” stablecoin, partly backed by USDC collateral and partly stabilized through the protocol’s FXS governance token, with the collateral ratio adjusting automatically based on market demand for the peg. FRAX circulates mainly on Ethereum, with smaller balances on other EVM chains such as Arbitrum, BNB Chain, and Optimism.

The protocol later moved FRAX toward full collateralization, using AMO (Algorithmic Market Operations) smart contracts and reserve assets managed by Frax Finance rather than relying solely on external fiat holders. Following the project’s “North Star” hardfork, the original FRAX token was renamed Legacy Frax Dollar and superseded as the protocol’s primary stablecoin by frxUSD, a fiat redeemable token minted and redeemed 1:1 by governance approved custodians holding cash equivalent reserves. Legacy FRAX still trades close to its dollar peg, with its backing overseen by FXS token holders through Frax Finance governance.