PoolTogether

Adding FRAX to PoolTogether

I am proposing adding FRAX to PoolTogether. Stablecoins are one of the largest categories in both market share and opportunity in crypto. Stablecoin has been a good hedge in volatile market. If we are headed for a bear market, then people are going to look for stablecoins to hedge their funds and FRAX is a hybrid model stablecoin which is more capital efficient. Pool Together offers a very appealing place to accrue stable coins over time in preparation for another bull run. Since the launch of FRAX, it has maintained its peg and as time passes, FRAX proves itself as a useful asset on PoolTogether.

Background

FRAX is the first fractional-algorithmic stablecoin protocol. It is a hybrid model stablecoin which is more capital efficient than fully backed/overcollateralized models. FRAX is a redeemable stablecoin with a dynamic collateral ratio that adjusts based on market demand. Frax is unique among recent stablecoin designs in that each FRAX is always redeemable for $1.00 worth of assets from the Frax protocol. This has kept the price of FRAX in a relatively tight band around $1.00, making Frax an ideal asset for PoolTogether. Frax was originally on Ethereum but currently on many chains such Polygon, Fantom, bsc network and so on.

Since launch in 2020, FRAX has never broken the peg and has stayed within 1 cent of $1 entirely which is an industry first for a non-overcollateralized stablecoin. FRAX also introduced the concept of Algorithmic Market Operations Controllers (AMOs) which allow for arbitrary market operation strategies that stabilize the price of FRAX by using other DeFi protocols. What makes FRAX unique compared to other stablecoin models is that it is robust enough to expand and contract with demand, keep a tight peg, and the first protocol to not be fully collateralized while doing so. This is opposed to USDT & USDC which is vulnerable to custodial risk and DAI which is dependent on the over-collateralization of assets.

References

4 Likes

Definitely agree this would be a good asset to add to PoolTogether:
-Solid stablecoin that has proven to be reliable
-Plenty of yield sources
-Available on other chains
-Massive community (they came out on top during the Tokemak Core event which was very competitive)

Similar to Olympus, the potential for the communities to integrate and benefit eachother is massive. Great suggestion!