An algorithmic stablecoin protocol Frax Finance, billions of dollars to use as reserve collateral altcoin He said he was considering buying.
The protocol’s stablecoin, called FRAX, manages to peg its value at $1, partially citing USDC as collateral. In addition, the protocol supports this fixed price by buying and selling FRAX with another token called Frax Shares. This stablecoin was fully supported by USDC when it first launched, but as its volume expanded, it also created different algorithmic ways to maintain its stable price to the dollar.
“Stability Fund” May Be Launched Soon
However, it should be noted that the aim of the project to use other coins as collateral has been from the very beginning. When the documents of the project are examined, it is seen that with the system becoming more powerful, Bitcoin or Ethereum as unstable cryptocurrencies It can also be used as collateral. With this, the possibility of a “stability fund” consisting of other cryptocurrencies in a short time was voiced by the developers for the first time.
Sam Kazemian, founder of Frax Finance, said in a statement that he believes that with a multi-chain approach to collateral support, FRAX-denominated transactions will be encouraged to take place on these Blockchains.
Which Altcoins Can Frax Finance Buy?
This decision of the stablecoin protocol is similar to the decisions made by Terra, a DeFi-focused blockchain. Terra recently announced that he has created a stability fund by purchasing large amounts of Bitcoin to support his stablecoin UST. In the last statement, it was announced that AVAX would also be taken as collateral.
FRAX, on the other hand, wants to trade from the own tokens of all the Blockchains on which this stablecoin operates, rather than just buying Bitcoin.
Although FRAX runs mostly on Ethereum, it also operates on 12 other blockchains. Among these Blockchains Avalanche, BNB Chain, Phantom, Harmony, Polygon, Solana and Arbitrum is located.
*Not investment advice.