Frax Finance introduces a novel approach to stablecoin design, aiming to create a highly scalable, decentralized, and stable medium of exchange. The protocol operates on a dual-token system: the FRAX stablecoin, which is pegged to the USD, and the Frax Shares (FXS) token, which governs the fractional-algorithmic ratio and other protocol decisions. By adjusting the collateralization ratio based on market conditions, Frax ensures the stability of FRAX while maintaining the efficiency and flexibility of a decentralized currency.

Key Features:

Fractional-Algorithmic Stablecoin: Utilizes both collateralized assets and algorithmic mechanisms to maintain its peg to the USD.

Dual-Token System: Features FRAX, the stablecoin, and FXS, the governance token that also absorbs price volatility.

Decentralized Governance: FXS token holders can participate in governance decisions, influencing the protocol's direction and policies.