Frax Finance Community’s Vote for Target Mortgage Rate

02/23/2023 01:18 • Crypto & Markets • 69 views

It is reported that the Frax Finance community voted to pass a governance proposal, setting the target mortgage rate (CR) of FRAX stable currency at 100%, and removing the algorithm support of the agreement for stable currency. In the future, FRAX will become a fully mortgaged stable currency. FRAX was originally designed as a partial mortgage and partial algorithmic stable currency, and its mortgage rate was adjusted according to FRAX’s market demand.

The Frax Finance community voted to completely mortgage the FRAX stable currency and remove the algorithm support

Interpretation of the news:

Recently, the Frax Finance community voted to pass a governance proposal, ensuring the stability of its stable currency, FRAX. The proposal sets the target mortgage rate (CR) of FRAX at 100%, and removes the algorithm support of the agreement for stable currency, making it a fully mortgaged stable currency in the future.

FRAX was initially designed as a partial mortgage and partial algorithmic stable currency, with the mortgage rate being adjusted according to FRAX’s market demand. However, the community’s decision to make it a fully mortgaged stable currency has several significant impacts.

Firstly, the total number of FRAX in circulation will reduce as the entire supply will be backed against the collateralized assets. This move aims to increase confidence in the stable currency as investors and users can be assured that their digital assets are fully supported by mortgages.

Secondly, the move gives more control to the community. If market demand for FRAX goes up, the community can increase the mortgage CR to ensure its stability. In contrast, if market demand goes down, the community can adjust the mortgage CR to prevent a collapse in its value. This change provides users with more predictability and stability, lowering risks and uncertainties in the market.

Finally, the governance decision will enable the FRAX stable currency to compete with other popular stable coins such as USDT, USDC, and DAI, among others. Frax’s transition to a fully mortgaged stable currency and its ability to adapt to changing market demands will be critical in its competition.

To conclude, the Frax Finance community’s vote is a significant milestone in the evolution of the stablecoin market. Frax’s shift to a fully mortgaged stable currency is expected to increase user’s trust, reduce market risks and uncertainties, and put it in a better position to compete with other popular stable coins.

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Frax Finance Community’s Vote for Target Mortgage Rate

The Frax Finance community voted to completely mortgage the FRAX stable currency and remove the algorithm support

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