The Frax Protocol, a decentralised stablecoin ecosystem built on the Ethereum blockchain, includes the digital token Frax Share (FXS). The Frax Protocol's governance token, FXS, enables token holders to take part in decision-making and have an impact on the protocol's course.
The Frax Protocol was launched in December 2020, and as part of that project, Frax Share (FXS) was first introduced. The Frax Protocol aims to offer a stablecoin with a peg to the US dollar that is supported by a combination of collateralized reserves and algorithmic methods. To encourage participation in the Frax Protocol's governance and give token holders a stake in the protocol's success, FXS was established.
First and foremost, it performs the function of a governance token by enabling token holders to vote on proposals pertaining to the Frax Protocol, such as adjustments to the collateral ratio, stability fees, and other factors. Holders of FXS can bet their tokens in addition to receiving benefits from other revenue streams and stability fees associated with the Frax Protocol.
Additionally, FXS can be utilised on decentralised exchanges (DEXs) as a liquidity provider (LP) token to supply liquidity for trading pairings involving the Frax stablecoin (FRAX) or other assets in the Frax ecosystem. Due to this, owners of FXS can profit from lending liquidity to the ecosystem and receive fees and rewards.
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