How is frax minted?

FRAX, a U.S. dollar-pegged stablecoin, offers a unique minting process accessible to any user. To participate, individuals must contribute not solely collateral tokens, specifically USDC stablecoins at present, but also governance tokens known as FXS, the native tokens of the Frax protocol.

The Frax collateral ratio (CR) serves as a pivotal mechanism, dictating the precise percentage allocations of each token required for minting FRAX. This dynamic system ensures a balanced approach, integrating both financial security through collateral and community influence via governance tokens.

The incorporation of governance tokens into the minting process underscores Frax's commitment to decentralization. By granting holders of FXS a say in the protocol's workings, Frax fosters a sense of ownership and trust among its user base, differentiating it from traditional stablecoin models.

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