FXS to Fiat Converter

The Frax Protocol is a fractional-algorithmic stablecoin system designed to be open-source, permissionless, and fully on-chain. Initially deployed on Ethereum, it aims to provide a scalable, decentralized alternative to fixed-supply digital assets. The protocol operates on the following principles:

Fractional-Algorithmic Design – Frax combines collateral-backed and algorithmic mechanisms to stabilize its value. The collateral ratio adjusts dynamically based on market conditions: if FRAX trades above $1, the protocol reduces collateral backing; if it trades below $1, the ratio increases.

Decentralized & Governance-Minimized – The system prioritizes autonomy, relying on algorithmic processes rather than active management, while remaining community-governed.

On-Chain Oracles – Frax v1 utilizes Uniswap (for ETH, USDT, and USDC time-weighted average prices) and Chainlink (for USD price feeds) to maintain price stability.

Dual-Token Model –
- FRAX: A stablecoin pegged to $1.
- FXS: The governance token that captures fees, seigniorage revenue, and excess collateral value.

Frax introduces a novel fractional-algorithmic approach, distinguishing itself from traditional stablecoin models (fiat-collateralized, crypto-overcollateralized, and uncollateralized algorithmic). This innovation establishes a fourth category in decentralized stablecoin design.