me.
So FRAX is a stable coin that is minted/redeemed based on the collateral ratio. So if CR is 100% we're going to give 100% collateral if it is less than 100% then we'll need to give FXS as rest of the component.
My questions:
I) What are the collaterals is currently supported by FRAX as far as I know only stables like USDC is supported as of now?
ii) FXS is volatile in itself as it is a governance token of DAO so how does it impact minting new FRAX?
Can anyone explain please?
anyone if u know anything about these. Please let me know.
the questions you ask all seem to be based on the 1st version of the FRAX protocol's system for collateral and keeping peg. that system is still active but other systems have been put in to place to add to this and thats what makes it a more complex question to answer.
where can I find that info? I'll read that if u can point me out
You can read here https://docs.frax.finance/amo/overview
https://docs.frax.finance/amo/frax-lending
an example is, if someone deposits ETH as collateral to borrow FRAX, that FRAX is then minted and is backed by that ETH.
I see. As I've read all these docs already but there's no mention regarding what kind of collaterals are supported as of now. If it is collaterized by ETH, let's say ETH goes down by 50% then what are the implications it would have on FRAX as a stable coin any idea?
each lending platform has its own systems, but generally speaking the loan will be overcollateralized and if the value of the collateral drops it is liquidated before it becomes an issue.
Okay so consider this scenario. If i want to stake my FRAX into the vault on uniswap v3. And let's say I collaterize USDC at whatever the current CR is and then stake it. Then what are the risks I face while my FRAX is staked? Anything related to breaking peg or over collateralization?
there has been 1 case where we had issue with lending, when the CREAM protocol failed. we lost about $1m of FRAX during that (some funds where later recovered). this set the protocol back about 3 days.
oh. So if such a scenario happens again then what kind of protection do you have in place? Any sort of insurance fund or something?
unless your talking about a large amount it would be better to just buy FRAX on the open market. but the risks you will have are FRAX losing its peg (this has never happened) , smart contract risk of uniswap
alright. so if I stake in uniswap v3 pool and it goes down then it'll be on uniswap not on FRAX. right?
FRAX could lose its peg if there was a massive attack on CURVE, or if someone market smashed a few $b in one trade.
if you stake your funds on any platform then you are trusting that platform with your funds.
Alright. just one last question, Is there effect of volatile currency on FRAX like ETH/BTC ? If there experience an extreme event would it affect FRAX at all? Also What's the role of CURVE on FRAX? Do they have large holding of FRAX or something?
FRAX has been tested during massive BTC / ETH moves and it had no issues. the biggest AMO is on CURVE, it holds about $1.5b of FRAX assets and the pool is about $2.2b in size.
Wen 100mn daily frax print
Alright. Can you list me the assets which can be used as collateral?
side note, the protocol also holds $m's in profit making assets, these are not used as collateral.
at current rate of growth i would expect to see our first $100m print day around 2025.
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