Frax Share (FXS)

Overview

Frax Share (FXS) is the governance and value‑accrual token of the Frax Finance ecosystem, a suite of decentralized finance (DeFi) protocols built around stablecoins, lending, trading, and a Layer‑2 blockchain called Fraxtal. In 2025, the project implemented the “North Star” upgrade that rebranded FXS to “Frax” (ticker: FRAX) within its own ecosystem and made it the native gas token on the Fraxtal network. Many exchanges and data sites still reference the asset by its original name, FXS, so you may see both names used in parallel. The token’s role is unchanged: it captures fees and surplus from Frax protocols, powers on‑chain governance, and now pays transaction fees on Fraxtal. (gov.frax.finance)

Frax’s core products include:

• frxUSD, a fully backed dollar‑pegged stablecoin with redemptions handled by regulated partners;
• Fraxlend, a pair‑based lending market;
• Fraxswap, an automated market maker that implements a Time‑Weighted AMM (TWAMM) for large, gradual trades;
• Frax Ether (frxETH/sfrxETH), a liquid staking system for ETH; and
• Fraxtal, an EVM‑equivalent Layer‑2 built on the OP Stack with a points system (FXTL) to reward builders and users. (docs.frax.com)

At a high level, Frax ties these pieces together using “Algorithmic Market Operation” (AMO) contracts. AMOs are modular smart contracts that move collateral, provide liquidity, and execute strategy in a rule‑based way, letting the system support stablecoins and other assets without a single, centralized operator. (docs.frax.finance)

History & Team

The Frax idea emerged in 2019, and the protocol launched on Ethereum mainnet on December 20, 2020. The original vision was a “fractional‑algorithmic” dollar stablecoin that mixed collateral with algorithmic supply changes. Over time, community governance steered the system toward full collateralization. (iq.wiki)

Frax Finance was founded by Sam Kazemian (also a co‑founder of Everipedia), with longtime collaborators and engineers Travis Moore and Jason Huan among the early builders. Kazemian is widely cited as the driving force behind the protocol’s design and roadmap. (en.wikipedia.org)

Major milestones:

• December 2020: FRAX stablecoin and FXS governance token go live on Ethereum. (iq.wiki)
• 2022: Launch of Frax Ether (frxETH and the yield‑bearing sfrxETH). (iq.wiki)
• February 2023: Governance passes FIP‑188 to target a 100% collateralization ratio for the dollar stablecoin, retiring the algorithmic component over time. (gov.frax.finance)
• Early 2024–2025: Frax launches Fraxtal, an OP Stack Layer‑2; later, the North Star upgrade rebrands FXS to FRAX and switches Fraxtal’s gas token to FRAX. (docs.frax.com)

Frax has attracted both community participants and outside backers. A public example is Crypto.com Capital’s 2021 strategic investment, and the team regularly documents governance progress and integrations in biweekly updates. (prnewswire.com)

Technology & How It Works

Stablecoins and AMOs

Frax’s design centers on AMO smart contracts—modules that automatically deploy collateral, operate liquidity, or conduct buybacks and rebalancing. In v3, FRAX’s dollar stablecoin architecture shifted to “full exogenous collateralization” (targeting ≥100% backing) through on‑chain positions and tokenized real‑world asset (RWA) funds held by partner institutions. (docs.frax.finance)

The ecosystem’s current USD stablecoin is frxUSD. It is fully backed by tokenized U.S. Treasury funds managed by partners like BlackRock, Superstate, and WisdomTree. Minting and redemption are available through those partners’ channels, while on‑chain AMOs and liquidity venues help keep the peg and provide utility across DeFi. A yield vault, sfrxUSD, routes staked frxUSD into whichever of three strategies is most attractive at a given time (carry‑trade venues, DeFi AMOs, or short‑dated T‑bill exposure), using a “Benchmark Yield Strategy” (BYS). (docs.frax.com)

Frax Ether (frxETH and sfrxETH)

Frax Ether brings the “two‑token” approach to ETH staking. frxETH is a token loosely pegged to ETH and used as a base asset; sfrxETH is an ERC‑4626 vault that accumulates validator rewards. By design, 90% of staking income flows to sfrxETH holders, 8% to Frax protocol contracts, and 2% to an insurance fund, as specified by community governance (FIP‑122). (docs.frax.finance)

Fraxlend and Fraxswap

Fraxlend is an isolated‑pair money market. Each pair has its own collateral and borrow asset, with oracles and rate calculators chosen per market. This design contains risk to each pair and lets governance tune loan‑to‑value limits for different asset types. (docs.frax.com)

Fraxswap is Frax’s AMM with a built‑in TWAMM. TWAMMs execute large orders gradually over many blocks, improving execution for slow rebalances and giving DAOs a tool for steady buybacks, collateral rotations, or peg operations. (docs.frax.com)

Fraxtal Layer‑2 and FXTL points

Fraxtal is an EVM‑equivalent rollup built on the OP Stack. It adds a blockspace incentive scheme called Flox that rewards gas spenders and contract developers with FXTL points every epoch. Following the North Star upgrade, FRAX (formerly FXS) is Fraxtal’s native gas token. The docs also describe a conversion path between bridged FXS on Ethereum and FRAX on Fraxtal. (docs.frax.com)

Tokenomics & Utility

Supply, locking, and gauges

FXS launched with a 100 million hard cap and a distribution that emphasized liquidity incentives and community programs. Holders can lock the token into vote‑escrowed positions (veFXS) for up to four years to gain voting power and farm boosts across Frax gauges—a system inspired by Curve’s veCRV model. veFXS balances decay linearly as locks approach expiry and cannot be transferred. (docs.frax.finance)

After the 2025 North Star upgrade, FXS rebranded to FRAX within the ecosystem, with governance describing a “tail emission plan” that introduces declining annual emissions and migrates vote‑escrow to veFRAX. This aligns the brand around a single base token used for governance, value capture, and Fraxtal gas. (gov.frax.finance)

Value capture

In earlier versions, minting the dollar stablecoin burned FXS, linking token scarcity to stablecoin demand. In v3, value flows to locked holders through protocol fees, AMO revenue, and targeted buybacks or distributions set by governance. Fraxswap’s TWAMM is one venue used for steady buybacks using AMO profits. The token also gains direct utility on Fraxtal as the gas asset, creating a new sink for demand within the network. (docs.frax.com)

Governance reach

With ve‑locking, holders vote on collateral policy, gauge weights, fee parameters, and subprotocol settings (e.g., Fraxlend LTVs). As the system expanded, FXS/FRAX also became the unifying governance link across subprotocols like FPI, with plans to phase FPIS into FRAX over time according to previously approved roadmaps. (docs.frax.finance)

Ecosystem & Use Cases

Stable value and yield

• Use frxUSD for dollar exposure and payment on many EVM chains; stake to sfrxUSD to pursue BYS‑routed yield without moving funds between venues. (docs.frax.com)

Staking ETH with DeFi composability

• Convert ETH to frxETH, then stake to sfrxETH to accrue validator rewards. sfrxETH’s ERC‑4626 design integrates cleanly across lending markets, DEX pools, and vaults. (docs.frax.finance)

Lending and market‑making

• Supply or borrow assets in Fraxlend’s isolated pairs, and route large treasury operations through Fraxswap’s TWAMM to reduce price impact. (docs.frax.com)

Layer‑2 activity

• On Fraxtal, pay gas in FRAX (prev. FXS), build apps with OP Stack tooling, and earn FXTL points for activity—an incentive system aimed at growing the developer and user base. (docs.frax.com)

Governance and meta‑governance

• Lock to veFXS/veFRAX to guide emissions, direct liquidity, and vote on proposals shaping collateral, integrations, and subprotocol evolution. External research has also highlighted Frax’s active role in Curve/Convex governance, which it uses to deepen stablecoin liquidity across DeFi. (docs.frax.finance)

Advantages & Challenges

Advantages

• Unified stack: Frax operates stablecoins, lending, AMMs, and now an L2, letting the DAO coordinate tools rather than depend on external protocols for every function. (docs.frax.com)
• Collateral clarity: Since FIP‑188, the dollar stablecoin targets full exogenous collateralization, addressing a common concern about algorithmic components. (gov.frax.finance)
• ETH staking design: The frxETH/sfrxETH split gives users flexibility (base asset vs. yield‑bearing vault) and directs most validator rewards to vault stakers. (docs.frax.finance)
• Sophisticated market tools: TWAMM and AMOs give the DAO fine control over liquidity, buybacks, and peg operations. (docs.frax.com)
• L2 synergy: Making FRAX the gas token on Fraxtal ties network usage directly to the token’s utility. (docs.frax.com)

Challenges

• System complexity: AMOs, gauges, multiple tokens, and an L2 make Frax powerful but intellectually demanding. New users may need time to learn how parts fit together. (docs.frax.finance)
• Governance trade‑offs: Consolidating around a single base token (FXS→FRAX) and absorbing adjacent tokens (like FPIS over time) reduces “token sprawl” but also concentrates decisions and value capture into one asset, which some community members debate during major upgrades. (gov.frax.finance)
• External dependencies: frxUSD’s mint/redeem path relies on regulated RWA partners; yields in sfrxUSD and ecosystem liquidity may respond to conditions on other DeFi platforms. (docs.frax.com)

Where to Buy & Wallets

Frax Share can be purchased on major centralized exchanges. FXS is available on Kraken and OKX. It is also listed on Binance and appears on trading dashboards with USD and USDT pairs. Decentralized options exist on EVM DEXs like Uniswap as well. (kraken.com)

FXS/FRAX can be stored in any wallet that supports Ethereum‑compatible (ERC‑20) tokens. MetaMask and Coinbase Wallet both support ERC‑20 assets and EVM networks, and you can add the token by contract address if it does not appear automatically. On Fraxtal, FRAX (prev. FXS) serves as the native gas token and can be bridged via the project’s official bridge flow. (support.metamask.io)

Regulatory & Compliance

Frax is a decentralized protocol suite. Its stablecoin operations are designed to be fully backed and transparent, using tokenized U.S. Treasury funds held at regulated partners such as BlackRock, Superstate, and WisdomTree. These partners manage minting and redemption channels with standard compliance procedures, while on‑chain AMOs handle liquidity and peg stability. As a result, frxUSD’s primary compliance touchpoints occur at the partner institutions, not in end‑user transfers on public chains. Regulatory approaches vary by region, and governance continues to evolve mechanisms that work across jurisdictions. (docs.frax.com)

From an Islamic finance perspective, many reviewers consider governance and utility tokens generally permissible because they do not, by themselves, represent interest‑bearing debt. FXS—now FRAX in the Fraxtal context—functions as a governance and utility asset, and protocol revenue comes from on‑chain operations, fees, and staking/validator income rather than contractual interest. That said, Islamic finance opinions are not uniform. Some scholars emphasize avoiding riba (interest) and excessive uncertainty, and they may ask investors to assess specific yield strategies (for example, certain carry‑trade venues) on a case‑by‑case basis. (salaamgateway.com)

Future Outlook

Frax’s roadmap points toward a more integrated stack with Fraxtal at the center. Using the OP Stack gives developers familiar tooling, while the Flox/FXTL system aims to bootstrap activity by rewarding both users and builders. As more Frax assets launch directly on Fraxtal and the gas token role for FRAX (prev. FXS) deepens, the ecosystem ties governance, value accrual, and network usage together. The stablecoin side is also evolving: frxUSD’s fully backed model and the sfrxUSD BYS framework position the protocol to route dollar liquidity to the highest‑quality opportunities across on‑chain and tokenized off‑chain markets. ETH staking via frxETH/sfrxETH remains a core pillar that complements this design. (docs.frax.com)

Summary

Frax Share (FXS) began as the governance and value‑accrual token of a novel “fractional‑algorithmic” stablecoin system. Over several years, the protocol matured into a broader DeFi platform with fully backed stablecoins, a liquid ETH staking system, its own AMM and lending market, and a Layer‑2 network. In 2025, the North Star upgrade unified branding by rebranding FXS to Frax (FRAX) within the ecosystem and making it the gas token on Fraxtal. Through AMOs, vote‑escrowed governance, and deep integrations, the token links protocol economics, decision‑making, and now network usage. For learners and builders, Frax is a case study in how a DeFi project can iterate from a single stablecoin idea into a multi‑product, L2‑anchored platform—while keeping a governance token at the center of the design. (gov.frax.finance)