So a lot of concepts of Frax being a Central

Question

So a lot of concepts of Frax being a Central

Bank for DeFi seem to be borrowed from the FED, right? Ex: AMOs = OMOs, Fractional Reserves, etc.

I like going back to definitions/fundamentals. I'm still confused over these basic concepts:

1.) FRAX is going back to 100% CR, but it is still considered to be a Fractional Reserve. What does Fractional Reserve truly mean? I get you can take $100 to a bank and it must keep 10% on hand....but how does that relate to FRAX?

2.) Past critics stated that FRAX is going to be a USDC wrapper because it is going to be 100% CR. The counter point was that it is not a wrapper because FRAX will be used in FraxLend, AMOs, etc. and it'll be a fractional reserve? Is the concept that the AMO can create unbacked FRAX and generate extra yield?

I'm wondering if a lot of concepts are borrowed from TradFi, but it's something a normal DeFi user (such as myself currently) has yet to learn about.

#cryptocurrency #english #frax

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22.05.2023

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Simplify DeFi Автор вопроса

Westwood
No more fractional reserve. Every frax in circulat...

What are mirror LPs 👀

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22.05.2023

Westwood · Accepted Answer

Westwood

No more fractional reserve. Every frax in circulation will be backed by mirrored LPs, overcollateralized loans, or stablecoin deposits. This is the future of banking since duration mismatch and transparency in the age of the internet are a death knell to legacy banking practices.

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22.05.2023

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So a lot of concepts of Frax being a Central

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