The vast majority of crypto projects are in the red this week after a market-wide price dip on Tuesday and Wednesday, but one decentralized finance (DeFi) altcoin is bucking the trend.
Frax Shares (FXS) is one of the two tokens employed by Frax Finance, a stablecoin system where cryptocurrency is partially stabilized algorithmically and partially backed by collateral.
The FXS token, the 65th-ranked crypto asset by market cap, is used as a store of value and in the governance of the Frax protocol. FXS is trading at $33.01 at time of writing, up more than 47% in the past seven days.
The Block reported this week that the project is considering building reserve collateral made up of billions of dollars worth of other major layer-1 (L1) cryptocurrencies.
Explains Frax Finance founder Sam Kazemian,
“Keep in mind, this strategy means every L1 chain (including BTC/lightning) will have an incentive to have FRAX stablecoins flowing through their economy as that creates a central bank-size market demand for their L1 token.”
Frax wouldn’t be the first project to build up such a reserve.
Stablecoin issuer Terra (LUNA) is moving forward with plans to accumulate a massive $10 billion trove of Bitcoin (BTC) reserves, according to Do Kwon, Terra founder and CEO.
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