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Frax Finance Community Proclaims Full Mortgage for Stable Currency

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It is reported that the Frax Finance community voted to pass a governance proposal, setting the target mortgage rate (CR) of FRAX stable currency at 100%, and …

Frax Finance Community Proclaims Full Mortgage for Stable Currency

It is reported that the Frax Finance community voted to pass a governance proposal, setting the target mortgage rate (CR) of FRAX stable currency at 100%, and removing the algorithm support of the agreement for stable currency. In the future, FRAX will become a fully mortgaged stable currency. FRAX was originally designed as a partial mortgage and partial algorithmic stable currency, and its mortgage rate was adjusted according to FRAX’s market demand.

The Frax Finance community voted to completely mortgage the FRAX stable currency and remove the algorithm support

Interpretation of the news:


On October 13, 2021, Frax Finance made an announcement about their community’s decision to pass a governance proposal. The proposal advocates for setting the target mortgage rate (commonly known as CR) of their stable currency FRAX at 100% and eliminating the algorithm support of the agreement for stable currency. As a result, Frax will transform into a fully mortgaged stable currency.

Originally, the Frax stable currency was designed as a blended mechanism of partial mortgage and partial algorithmic stable currency. Its mortgage rate was frequently adjusted according to the market demands. The introduction of 100% mortgage rate and exclusion of algorithmic support imply a significant shift in the operation of the currency.

This step was taken in response to the shortcomings witnessed in the current stablecoin ecosystem. The idea behind it is to diminish the intense speculation and manipulative behavior that might have adverse effects on the value of the currency. The Frax community aims to mitigate these risks by improving its transparency and accountability measures using mortgage-backed securities.

A mortgage-based stable currency operates differently from an algorithmic one. Frax stable currency, backed by a fractional reserve of US dollar-based mortgage bonds, eliminates the need for users to worry about central authorities controlling the issuance of new currency or the volatility of underlying assets.

The process of establishing full mortgage-backed stablecoin is quite challenging, but Frax vows to ensure that their stable currency value remains unaffected despite market conditions. This will guarantee users a reliable and trustworthy source of long-term value and is expected to boost adoption among other DeFi ecosystems.

In summary, Frax community’s governance proposal will dictate Frax to transform into a fully mortgaged stable currency. This turn ensures that users do not have to worry about the volatility of unstable assets or the manipulation of central authorities. Despite the difficulty of this process, Frax has committed itself to maintain the stable currency’s value and offer a dependable source of value to its users.

Keywords Summary: Frax Finance creates a new proposal for a stable currency by setting a 100% mortgage rate, eliminating algorithm support, and allowing for full mortgage-backed securities to prevent speculations and manipulations; aims to improve its transparency and accountability.

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