not at all collateralized
They are collateralized, but with BTC and short contracts on the collateral. So they are collateralized with 2 assets. It's a ~100% CR design.
So I'm assuming that implies that FRAX should be cheaper to borrow?
It should be cheaper to borrow if the AMOs want it to be. There are certain situations where the protocol would not always want FRAX to be borrowed cheaper (since borrowing FRAX means it is a short on the stablecoin). But yes, the protocol can lower the interest rate on borrowing FRAX much easier than other stablecoin designs. That doesn't mean it always will. But it can easier than anyone else.
Sorry I dont understand what you mean by borrowing FRAX is shorting the stablecoin?
When someone takes out a loan to borrow FRAX (or any other stablecoin), they are shorting the stablecoin. Meaning they can sell the stablecoin and if the peg breaks, then they make money.
Обсуждают сегодня