All frax from AMO is collateral, what you r talking

Question

Frax Finance

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All frax from AMO is collateral, what you r talking

about?

#cryptocurrency #english #frax

0

24.05.2023

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Mark11

imajinl
For example, when FRAX is minted into the Curve po...

It isn't in circulation unless it is traded for and as soon as it is traded for and in circulation it is backed

0

11 месяцев назад

Dirt Diggler

Mark11
It isn't in circulation unless it is traded for an...

Is this the absolute ticket? The explanation that I’ve been desperately looking for to understand? That the FRAX in these pools does not need to 1:1 collateralized until it’s traded out of the pool … At which point it’s in circ and is now collateralized ? 🤯

0

11 месяцев назад

imajinl

Mark11
It isn't in circulation unless it is traded for an...

Yep. I said that trades utilizing that liquidity are essentially mints and redemptions, so basically what you said.

0

11 месяцев назад

imajinl · Accepted Answer

For example, when FRAX is minted into the Curve pool (through the Curve AMO), it isn’t backed by anything, is it? What I mean is, if the Curve pool can handle a deposit of 1 million FRAX without the peg dropping 1 cent (since a percentage of FRAX deposited is sold for USDC based on the composition of the pool), the protocol will mint 1 million FRAX into that pool. What is it backed by? Nothing, but that's fine, since the protocol can descale and any swaps utilizing that minted liquidity into the pool are acting as a mint/redeem function.

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All frax from AMO is collateral, what you r talking

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