Recapitulation of FRAX FINANCE PROJECT AMA event held at AMA LOVERS CLUB.
Date: Tuesday, 13th April, 2021
Time: 12:00 UTC
The FRAX FINANCE PROJECT team was represented by @Walidaly and @Justnow09 who judiciously shared with us detailed knowledge and information about FRAX FINANCE PROJECT.
1st Segment: INTRODUCTION
Q1: Can you please introduce yourself and your background, also introduce the team working on Frax Finance?
ANS: I'm Stan, a physicist by background. I got into crypto in 2016 and I have worked with many projects. I joined Frax in 2020 as the community manager. Before our core team started Frax in 2019, they co-founded Everipedia which has raised over $30m and is the largest dapp on EOS (and currently building on other chains like ETH L2s and Binance Smart Chain).
You can read more about our team here https://everipedia.org/wiki/lang_en/frax-finance
I'm Walid Aly, I’m an architect , I have been in Crypto Space for 6 years now, I joined Frax Team last August, Im community manager at Frax and i also do some Content Writing on Medium.
Q2: Can you introduce Frax Finance, what critical problems does it solve that existing solutions are not solving and what's the competitive advantage?
ANS: Sure, we are here to share many information
Frax is the first fractional-algorithmic stablecoin protocol. Frax is open-source, permissionless, and entirely on-chain — currently implemented on Ethereum and Binance smart chain (with possible implementations on more chains in the future).
The end goal of the Frax protocol is to provide a highly scalable, decentralized, algorithmic money in place of fixed-supply digital assets like BTC.
Frax was started about 2 years ago because we thought that a more capital efficient and partially collateralized stablecoin would be the next generation of innovation in the stablecoin space.
Right now, we can confidently say that FRAX is the only stablecoin that is partly algorithmic that has never broken its $1 peg. We are growing very fast and love to work together with other projects. If you are a project that wants to incentivize a FRAX LP pool and work with us, please reach out. We will take care of you more than any other stablecoin project.
Q3: I was going through the white paper and the word frictional-algorithm keep popping up
Can you explain in a layman term what this means
I believe not everybody can relate and ofcourse it’s the most important aspect of the project.
ANS: Fractional-Algorithmic means that FRAX is Partially backed by Collateral and FXS (the Governance Token), depending on the Collateral Ratio.
Q4: Can you briefly describe the top milestones you have achieved and your target milestones with timelines, also share your roadmap?
ANS: our biggest milestone was to keep FRAX price stable at 1.00$ while lowering the Collateral Ratio when FRAX is minted.
at the moment Collateral Ratio is around 86.25% and FRAX price is pretty stable
we also have in mind the importance of exchange listing , right now FXS our Governance Token is on Binance and there are plans to expand to more exchanges in the future.
now we have FRAX V2 in the Developing Process which is a big milestone for us
we introduce Algorithmic Market Operations (AMOs)
An AMO controller is an autonomous contract that enacts arbitrary FRAX monetary policy so long as it does not lower the collateral ratio and change the FRAX price.
This means that AMO controllers can perform open market operations algorithmically, but they cannot simply mint FRAX out of thin air and break the peg.
This keeps FRAX’s base layer stability mechanism pure and untouched which has been the core of what makes our protocol special and has inspired other smaller projects.
It also keeps AMO controllers economically disciplined knowing that there is a ceiling for the amount of FRAX that can be unbacked which stops the protocol from unrestrained money printing of classical central banks.
we have several AMOs Proposals, right now 3 AMO controllers are up and Running :
Collateral Investor AMO : which uses some of the the USDC in the treasury to Farm on Aave/Comound/Yearn Finance, the generated profits are used to buy FXS and burn it .
we also have Curve AMO Controller : that uses USDC collateral or new FRAX to its own Curve pool to create even more liquidity and tighten the FRAX peg while earning revenue.
and CREAM AMO that allows anyone to borrow FRAX by paying interest.
we are also proposing a special function that will go in every AMO called FXS1559() which means that any profit generated by the AMO is instantly used to buyback and burn FXS at all times. Not when the team wants to or every few weeks, but in a continuous fashion if gas cost permits.
Q5: Can you briefly describe your PARTNERSHIPS so far?
ANS: Partnership and collaboration is essential for any project's success. So we have been constantly engaging with many projects for collaboration and almost every day FRAX has a new collaboration and partnership with important defi protocols.
We are the stablecoin of choice for many projects such as Avalanche, Matic, Curve.fi and Quickswap.exchange in place of DAI. We are also integrated into Binance Smart Chain. Frax is new in the space but many platforms are already adopting Frax as their favorite stablecoin. More updates on partnerships and collaboration will be released in future.
Q6: Can you give an overview of your Tokenomics, and the UTILITY of the $FRAX Token?
ANS: So I learnt $FRAX is the stable coin
And this $FXS which is not stable
yes our Protocol is a 2-token protocol FRAX is the stablecoin which is pegged to 1$
and Frax share (FXS) which is the governance token
Our Tokenonmics favor the Community, FXS supply at genesis is 100 million.
60% of the supply is for farming rewards over several years.
5% for Grants/Paternerships/Project Treasury.
20% goes for the team vested for 2 years.
3% for advisors.
12% for investors .
you can get more info about it here: https://docs.frax.finance/token-distribution/frax-share-fxs-distribution
for the second part of the question
The goal for FRAX is to be purely on chain and with minimal governance. Frax.finance Protocol as i just mentioned has dual token model, FRAX the stablecoin and FRAX Share (FXS) the governance token
Frax Share is designed to accrues all the values in the system and it's like an investment asset which can go up or down in price.
FRAX is fully decentralized and capital efficient, You can mint More FRAX than USDT or DAI without needing collateral if the price of FRAX stays exactly $1.
This will make FRAX able to grow much faster than any other stablecoin while FXS accrues more value whenever more FRAX is minted.
This is the main advantage of algorithmic stablecoins.
Once they stay stable for a long enough period of time, there is no competing with them, they will grow faster than any other type of stablecoin due to capital efficiency.
2nd Segment: LIVE Questions
Q1: Liquidity providers can lock their LP token for up to 3years as stated in the whitepaper. How do providers go about the locking? Is there any special rewards for those who lock in their LP tokens?
ANS: Yes! Liquidity providers can lock their LP token for up to 3years for boosted rewards but if the liquidity provider wants, they can still decide not to lock their LP if they don't want a boosted reward, they will be able to withdraw anytime they want. To provide liquidity, you'll need to visit our staking portal and choose any pool of your choice and enjoy our amazing APR https://app.frax.finance/staking
Those who provide liquidity will receive FXS as reward.
Q2: Frax Finance have 39 Security Audit. Why 18 security audit issue didn't solved yet?
When Frax Finance going to solve the 18 security audit issue?
ANS: all Security issues have been solved and patched, we actually had a bug bounty and several security experts from the Dev Community looked at our code.
Q3: Recently they did a quarter million dollar burn of $FXS , this buyback burn for what purpose is done?
Can you explain how a permissionless stablecoin can be stable on #Defi #Blockchain to generate wealth and at the same time have control when a market is unstable and leverage it to be arbitrage use?
ANS: Yes! We have buyback and burn. And anyone can call the buyback function, any Frx bought in the buyback will be burned permanently. Fxs is deflationary, If CR goes down more FXS are burnt through the buybacks and the minting process.
FXS works like BNB where the protocol auto burns the FXS token with revenue from the system and it is all automated and decentralized. We are also introducing FXS-1559, which will help to start burning FXS much faster and regularly.
You can read more about the buyback here https://docs.frax.finance/fxs-buybacks-and-recollateralization.
Q4: Is there a crypto project that the creators of the FRAX project have done before? Does your team consist of professional members with experience in the field of crypto?
ANS: yes the team has worked and are still working on Everipedia which is an Encyclopedia on chain , https://everipedia.org/ its token is IQ and it is listed also on BINANCE, Sam Kazemian / Jason Huan / Travis Moore you can check their experience here https://everipedia.org/wiki/lang_en/frax-finance.
Q5: How is $FRAX kept stable? How does $FRAX enter into circulation?
ANS: Frax is kept stable by Arbitraging it through minting and selling in the market if the price is above 1$ OR buying and redeeming it if the pirce is under 1$ , frax enters in circulation by minting it, you use USDC+ FXS to mint frax.
Q6: Why was Frax Liquidity Ventures (FLV) created? What is your goal to contribute to the DeFi world?
ANS: Good question! As we all know that currently, there are many projects that are paying for DAI or Tether’s usage in their LP programs in their farms because that’s what they are used to doing. DAI and Tether don’t do anything for their project, they won’t help or collaborate. In fact, DAI, Tether, and USDC are very hands off and think that users need them rather than they need users. Our plan is to change this dymanic and be the stablecoin that helps any DeFi project.
With FLV we take the opposite approach, we are interested in helping any DeFi project that needs to incorporate a stablecoin. We will channel rewards to your FRAX pool proportionally to how much your own protocol puts in. We will also help your community grow and do a lot of joint ventures together.
Now that FRAX has demonstrated deep liquidity and high stability projects should heavily consider building with our stablecoin so that we can help them in both liquidity, expansion, and joint collaboration. So if you’re a DeFi project on Ethereum, any L2, or Binance Smart Chain, make sure to reach out to us!
I will urge your awesome community to join Frax community and they should make FRAX their stablecoin of choice 🙂
Here are our Official Links :
Website : https://frax.finance/
Docs : https://docs.frax.finance/
Twitter : https://twitter.com/fraxfinance
Telegram Discussion Group : https://t.me/fraxfinance
Telegram News Channel : https://t.me/fraxfinancenews
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