The value of the Frax Share collateral token has increased following the revelation that FXS Finance, the firm behind the token, will deliver its own Layer 2 Scaling Solution, provisionally termed Fraxchain, by the end of 2023.
The market for algorithmic stablecoins, such as the FXS cryptocurrency, took a hit after Terra’s demise. However, FXS’s supporters think it has the potential to usher in a new era of prosperity for the sector.
The Frax stablecoin is supported by the Frax Finance platform. The goal of FXS is to always be worth $1 USD, thus it needs backing if it’s going to get there. The FXS Share cryptocurrency is “minted,” or created, if FXS is worth more than $1, and is “burned,” or destroyed, whenever FXS is worth less than $1.
Frax Finance was formed in 2020 by programmer Sam Kazemian and former Trump aide Stephen Moore.
Mechanisms of Frax Share
Unlike competing stablecoins, $1 in Frax can be exchanged for less than one dollar. That arbitrage opportunities exist for Frax market participants is the theory.
Because the Frax Share acts as a collateral token,FXS can function as an algorithmic stablecoin. This makes it the same as other doomed USD stablecoins and Terra coins in terms of utility.
You can buy, sell, and trade FXS on markets like FXS, and its holders will have a say in how the network is improved through a voting system.
FXS Price Trends
FXS hit store shelves in late December 2020 for about $3.90. During the early 2021 crypto market boom, FXS performed well, reaching about $25 in January before falling and then returning to finish the year at $39.04.
After news spread that Terra will launch a cryptocurrency pool that would contain the FXS stablecoin, the price of LUNA soared, reaching a new all-time high of $42.67 on April 3, 2022.
FXS was left reeling by Terra’s downfall the following month, and its price dropped below $10 in May. With minimal activity for the rest of 2022, the token’s value dropped to $4.14 at year’s end, or about 90% of its inauguration price.
The value of Frax Share (FXS) has experienced fluctuations due to market conditions and the impact of Terra’s demise. However, the announcement of FXS Finance’s Layer 2 Scaling Solution has generated optimism and increased FXS value. As a collateral token, FXS plays a role in the stability of the FXS stablecoin. The future of FXS remains uncertain in the volatile cryptocurrency market.