FXS Staking Boost Calculator

Disclosure: Delphi Ventures is currently staking the FRAX/USDC pool. This is statement is intended to disclose any perceived conflict of interest and should not be misconstrued as a recommendation to purchase FRAX or FXS. This is not investment advice. 

Key Takeaways:

  • Frax Finance leverages a two-token model to create an algorithmic, partially-collateralized stablecoin. If successful, the market opportunity and potential for value accrual could be significant.
  • Theoretically, the design mechanics underpinning the protocol are sound but since its only been live for one month during a bull market, they have yet to be seriously battle tested.
  • FRAX maintains its price stability by offloading its volatility to FXS, which is the governance token that also partially collateralizes the system. As long as there is a buyer on the open market for FXS, FRAX should be able to maintain its peg.
  • While FXS should see a consistent decrease in total supply during FRAX expansions, it remains to be seen what FXS inflation will look like during FRAX contractions. For those who remember the MKR recapitalization event from March 2020, these types of situations can quickly undo supply burns.
  • With a fully diluted valuation of $1.75b already, we believe FXS may have entered overvalued territory. FXS price appreciation t

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