Frax Finance will create a reserve crypto fund by analogy with Terra

The Frax Finance algorithmic stabiblcoin platform plans to purchase “billions of dollars” tokens to create a reserve support fund of algorithmic stablecoin Frax. About this the founder of the project Sam Kadzemyan told The Block.

Frax stabilcoin is provided with a native token of the Frax Shares (FXS) project and a centralized “stable coin” of USDC. The platform uses a partial reservation system, the parameters of which depend on the ratio of liquidity of FXS and the aggregate proposal of Frax.

When Frax is traded above $ 1, the system reduces the security ratio, lower. At the same time, arbitrators can buy or release Frax, contributing to its binding to the target mark of $ 1.

Initially, Frax was fully provided by USDC, but as the project develops, the algorithmic component began to play a more noticeable role.

The idea to use the range of cryptocurrencies and synthetic assets to maintain stability is present in the technical documentation Frax Finance. However, according to Kazemyan, only now they began to discuss it as an “inevitable option”.

This approach is similar to the initiative of the non -profit organization Luna Foundation Guard. She invested in Bitcoin and Avalanche (AVAX) to create backup and increase the stablecin stableco -stable Ust from Terra.

Kazemyan said that the platform plans to purchase tokens of all networks in which Frax circulates. Most of the Steabelcoin proposal is presented in Ethereum, however, it also turns to 12 other blockchains, including Avalanche, BNB Chain, Fantom and Solana.

Kazemyan explained that Frax Finance will acquire native tokens in proportion to the demand for stablecoin in a particular blockchain. Reserve fund balance will reflect the share of Frax proposal in each network.

“This strategy means that any network of the first level (including bitcoin) will be interested in the fact that the Frax stablecoins pass through its economy, as this creates a huge market demand for their native tokens,” he said.

According to the founder of the project, part of the lord will save for these purposes for these purposes. However, the details of the plan have not yet been specified – first the Frax Finance management should vote on this issue.

Frax’s aggregate proposal exceeded 2.69 billion. Over the past six months, the indicator has increased by 250%.

Recall that in March 2022, Fantom project announced the launch of its https://gagarin.news/news/depositphotos-has-launched-an-nft-collection-in-support-of-ukraine/ own USDB stabelcoin with high -profit liquidity pools as security.

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