The vast majority of crypto projects slumped this week after a market-wide drop on Tuesday and Wednesday. But one decentralized finance (DeFi) altcoin has turned the trend upside down.
Frax Shares (FXS) is one of two tokens used by Frax Finance, a stablecoin where the cryptocurrency is partially algorithmically stabilized and partially backed by collateral. The 65th ranked crypto asset by market cap, FXS is used as a store of value and in the management of the Frax protocol. At the time of writing, FXS is trading at $35, up more than 57% in the last seven days.
The Block reported this week that the project is considering creating reserve collateral consisting of billions of dollars worth of other major layer-1 (L1) cryptocurrencies.
Frax Finance founder Sam Kazemian said:
“Remember, this strategy means that every L1 chain (including BTC/lightning) will encourage the flow of FRAX stablecoins in their economy, as this creates a central bank-sized market demand for L1 tokens.”
Frax is not the first project to create such a reserve. According to Do Kwon, founder and CEO of Terra, stablecoin issuer Terra (LUNA) is moving forward with plans to accumulate a massive $10 billion Bitcoin (BTC) reserve.
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