Overview

Frax is a comprehensive, modular DeFi ecosystem built around multiple stablecoins, a native L2 chain, lending infrastructure, algorithmic market operations, and a restakable commodity asset that serves as the base of its entire economy. The ecosystem issues three primary stablecoins, frxUSD, FPI, and frxETH, each designed to maintain stability using different mechanisms, whether pegged to USD, pegged to a consumer price index basket, or tied 1:1 to ETH. Frax integrates these stablecoins into subprotocols that uphold peg stability, enhance liquidity efficiency, and expand utility across lending, market operations, and synthetic assets. Key components include Fraxswap, a native AMM enhanced with TWAMM for large trustless trades; BAMM, an oracle-less lending module built on Fraxswap; and Fraxlend, a permissionless lending market enabling isolated ERC-20 lending pairs. The protocol also manages Protocol-Owned Liquidity (POL) through various AMOs that autonomously rebalance collateral and generate revenue. Frax's broader ecosystem extends into Fraxtal, a modular Optimism-based L2 that uses FRAX as its native gas token, and FXB zero-coupon bond tokens that introduce a trustless yield curve by allowing users to exchange discounted FXBs for full-value LFRAX at maturity. Additionally, Frax Ether expands the ecosystem into liquid ETH staking, distributing staking yield through sfrxETH while maintaining overcollateralization via insurance funds and protocol-level mechanisms. Frax's governance architecture grants ultimate authority to the Frax DAO, with certain issuer-level responsibilities delegated to Frax Inc, while user engagement is incentivized through systems like FXTL points and staking vaults such as sfrxUSD and sfrxETH. Altogether, Frax functions as a vertically integrated DeFi stack, combining stablecoin issuance, lending, staking, AMM infrastructure, algorithmic operations, and a native L2 into a unified financial ecosystem.

Whitepaper & Documents