Frax Finance to Launch Its Own Ethereum Layer-2 Network

The Frax Finance team plans to launch its own L2 blockchain called Fraxchain by the end of the year, according to founder Sam Kazemian on the Flywheel DeFi podcast.

⛓️FRAXCHAIN⛓️

Yesterday, we released a landmark episode where Sam revealed that Fraxchain would most likely be launched by the end of the year! ?

Heres a quick recap of what we learned? pic.twitter.com/iinwQT3AKH

— FlywheelDeFi.eth (@FlywheelDeFi) June 15, 2023

EVM-compatible solution is based on hybrid technology Optimistic rollups and zero-knowledge proofs.

According to the developers, such a design will offer a number of advantages for Fraxchain over other rollups:

• faster transaction finality;
• enhanced security through validity proofs;
• increased throughput;
• decentralisation capabilities.

The DeFi project is known as the issuer of three decentralised stablecoins:

• FRAX — pegged to the US dollar;
• Frax Price Index (FPI) — tracks the US Consumer Price Index;
• FraxEther (frxETH) — represents Ethereum (ETH) for use in smart contracts.

The protocol also issued the Frax Share (FXS) governance token. It is expected that all assets from launch will be available on Fraxchain. Through the cross-chain solution Fraxferry, the coins can be transferred to a number of other blockchains.

The project’s ecosystem includes AMM-platform Fraxswap and a decentralised lending market in its own stablecoins Fraxlend. 

Total value locked in the protocol’s assets amounts to $731 million (DeFi Llama). At its peak in March 2022 the amount exceeded $2.34 billion.

As of writing, the price of FXS over the last 24 hours rose 6.4%, though over the week quotes fell more than 15%. The token trades at around $5 — almost 90% below its January 2022 high of $42.8.

Frax’s market capitalisation slightly exceeds $1 billion. The token ranks seventh by this metric among stablecoins (CoinGecko). In February, the DeFi project’s community decided to gradually transition from algorithmic backing of FRAX to full backing. 

The founder expects that the Fraxchain launch will generate millions of dollars in revenue for the protocol. The forecast largely hinges on the potential expansion of frxETH’s use—the stablecoin would be used to pay gas on the L2 network and could bring some value from Ethereum into it.

The staking version sfrxETH from the protocol became the first collateral asset for the borrowing mechanism crvUSD on a DEX Curve Finance.