What is FRAX? Project and Token Analysis

Coin: Frax
Ticker: FRAX
Date Deployed: Wed Sept 15, 2021

Origin of the Project

FRAX is a unique dollar-pegged stablecoin that maintains its stability through innovative mechanisms, including AMO smart contracts and a combination of permissionless, non-custodial subprotocols. Among these internal subprotocols are Fraxlend, a decentralized lending market, and Fraxswap, an automated market maker (AMM) with specialized features. Additionally, Curve serves as an external subprotocol contributing to FRAX’s stability. The protocol’s governance allows for the seamless integration of additional subprotocols and AMOs, enabling FRAX to incorporate new stability mechanisms as they are developed.

Launched in May 2019, FRAX was originally known as Decentral Bank and was founded by Sam Kazemian, Travis Moore, and Jason Huan. Since its inception, FRAX has utilized a unique model where its supply is partially backed by collateral, with the remaining supply floating. The specific proportion of the supply that is collateral-backed is determined by the protocol’s collateral ratio, allowing FRAX to dynamically adjust its stability mechanisms in response to market conditions.

Products

Three Stablecoins:

FRAX: USD-pegged stablecoin for stability and predictability.
Frax Price Index (FPI): Pegged to a basket of consumer goods, creating a unique unit of account separate from traditional currencies.
FraxEther (frxETH): Pegged to ETH, designed to replace WETH in smart contracts.

Fraxswap:

Native AMM with time-weighted average market maker orders.
Used for rebalancing collateral, minting/redemptions, managing stablecoin supply, and deploying protocol-owned liquidity on-chain.

Fraxlend:

A permissionless lending market for Frax-based stablecoins.
Enables debt origination, customized non-custodial loans, and onboarding of collateral assets within the Frax Finance ecosystem.

Fraxferry:

An optimistic transfer protocol for moving Frax-based tokens across multiple blockchains.

Frax Share (FXS):

Governance token for the entire Frax ecosystem.
Accrues fees, revenue, and excess collateral value.
FPIS: A governance token specifically for FPI, sharing value capture with FXS holders.

Gauge Rewards System:

Allows the community to propose new gauge rewards for strategies involving Frax-based stablecoins.
FXS emissions are fixed and decrease annually, with distribution based on votes from veFXS stakers.

Should FRAX Be in Your Portfolio?

Before you decide whether or not to add FRAX to your portfolio, click here to scan the contract on Solsniffer. Solsniffer is the number one blockchain intelligence tool to detect security risks on Solana. Security risk analysis on Solana has never been easier, make sure to be aware of potential DeFi wallet scams and other crypto security concerns before investing.

Due Diligence Tips Before Investing or Trading FRAX

Analyzing FRAX as a token is important for understanding its potential. Review its whitepaper, community engagement, development team, and long-term roadmap. Is the project solving a real problem and has a clear plan for the token in its ecosystem?

Perform in-depth research before trading any Solana-related project, including FRAX. Understanding the project’s whitepaper, the use case, and the founding team’s goals will give you insight into the coin’s potential.

The orderbook can leave clues too, when there are more buy orders than sell orders, FRAX’s price is likely to rise, while an excess of sell orders could lead to a price drop. It can also help identify past market manipulation.

Develop a Safe Trading Strategy

Having a structured trading strategy prevents making emotional mistakes. If you cover multiple aspects, such as considering market conditions, clear trading goals, and determining entry and exit points, it can improve your chances of success. Your risk tolerance can make a great plan if you follow it and if the market agrees with your strategy.

In crypto, it’s easy to get caught up in the excitement and make impulsive decisions, especially when seeing how many others are making loads of profits. Avoid rushing into buying FRAX during a price pump, as a correction can follow.

An effective risk management strategy is a great differentiator as a trader, and that includes FRAX. Use stop-loss and take-profit orders to limit losses and lock in profits automatically. Also, position-sizing is smart to not risk too much of your capital on a single trade, protecting your portfolio from significant losses.

How to Scan FRAX on Solsniffer

Copy the FRAX contract address: FR87nWEUxVgerFGhZM8Y4AggKGLnaXswr1Pd8wZ4kZcp
Open the Solsniffer website and paste the address in the search bar.
Within seconds, a detailed analysis of FRAX on-chain data is generated.
A security score called Snifscore also ranks the project out of 100 to determine the authenticity of the project.

FRAX Tokenomics

Total Supply: 649,434,270
Max Supply: Infinity
Market cap: $645,211,031

Snifscore Analysis

Snifscore: 63/100
High-risk factors: 4
Medium-risk factors: 3
Low-risk factors: None

Summary of (5) Contract Passed Indicators

No concerning metadata found
No auto-freeze risk
No transferability risk
No scams linked to owner’s wallet
Active interaction in last 30 days

Summary of (7) Contract Risks to Consider

Mintable risk detected – High Risk
Private wallet holds significant supply – High Risk
Top 10 wallets hold significant share – High Risk
Top 20 wallets hold significant share – High Risk
Metadata mutability risk – Moderate Risk
Risks in unknown liquidity pools – Moderate Risk
Low LP provider count – Moderate Risk

Find Out if FRAX Is a Fraudulent Token

Detecting a scam project requires a combination of caution, research, and vigilance. Fraudsters come up with numerous ways to trick investors, staying awake to the warning signs before falling victim.

One of the first red flags is an offer that guarantees high returns with little to no risk. Rug pulls are the most common scam at the moment, the project creators build hype around a new Solana project and then disappear with the profits. If the team of a project stops providing updates, it could be a sign of trouble.

A few tips to protect yourself is to research the team behind a project, see how well they execute their roadmap, use secure wallets, enable 2FA and avoid giving your personal data to social media giveaways.