The cryptocurrency market is never boring. FXS, a governance token of Frax, a lesser-known fractional-algorithmic stablecoin protocol, has, on the other hand, increased by 80 percent in a week.
According to CoinMarketCap, the token has earned nearly twice as much as bitcoin this month. In addition, the current token price is $12.87 USD, with a 24-hour trading volume of $10,206,559 USD.
Frax, an Ethereum-based stablecoin, is backed up in part by both assets and cryptographic techniques. The Frax (FRAX) stablecoin and the Frax Shares (FXS) governance and utility token are used in the system.
FXS Is Connected to FRAX Demand
A user may contribute USDC stablecoin and FXS tokens as collateral in amounts determined by the Frax collateral ratio (CR). Assuming a 50% collateral ratio, one FRAX could be obtained by contributing $0.50 USDC and $0.50 FXS. The user receives $0.50 USDC and $0.50 FXS for each FRAX stablecoin delivered. As a result, investor demand for FXS is linked to demand for FRAX.
Tokemak has launched an FXS-specific token reactor, where FXS holders can deposit coins in exchange for TOKE or tFXS tokens. Furthermore, TFS Tokens represent a user’s claim on deposited assets and can be redeemed at any time.
According to Tokemac’s website, the current annual percentage rate on FXS deposits is 47 percent. That outperforms bitcoin’s cash and carry arbitrage’s recent annualized return of 13%. (Purchase spot and sell three-month futures contracts.) Furthermore, the anticipation of Frax V3, which protocol creator Sam Kazemian compares to ETH 2.0, must be propelling the FXS token higher.