The launch of FRAX v3, a stablecoin pegged to the dollar, has been announced by the community of Frax Finance.
The stablecoin uses AMO smart contracts and permissionless, non-custodial subprotocols to preserve its stability. The official documentation for FRAX v3, a stablecoin intended to sustain its value through AMO smart contracts and permissionless, non-custodial subprotocols, was made available by Frax Finance in a post updated three days ago.
As internal stability mechanisms, these subprotocols include Fraxlend, a decentralized loan market, and Fraxswap, an automated market maker with unique features.
Curve, an external subprotocol, strengthens the coin’s stability by pegging it to the dollar. The paperwork clarifies that the FRAX stablecoin’s peg to the USD will be activated if it reaches a 100% collateralization ratio to guarantee its stability.
In order to maintain FRAX’s value in line with the U.S. dollar, this pegging mechanism will rely on a combination of Chainlink oracles and a reference rate agreed by the governance structure.
Despite reports that numerous new stablecoins, like PayPal USD, have just entered the market, the stablecoin market has fallen by 35% over the past 18 months. Part of this has been ascribed to cryptocurrencies currently opposing U.S. regulatory attempts.
