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Frax Finance Eyes Protocol Fee Switch Revival and Boosted FRAX Collateralization

Frax Finance

Frax Finance, the decentralized stablecoin project, is progressing with its plan to reinstate a protocol fee switch, as outlined in a recent proposal.

The proposal suggests activating the protocol fee switch, with 50% of the generated yield directed towards veFXS holders, while the remaining 50% will be utilized to purchase FXS and other Frax assets for pairing in the FXS Liquidity Engine (FLE). This move aims to bolster Frax’s balance sheet and enhance liquidity for FXS and associated assets.

The proposal also introduces a new tokenomics system designed to fully collateralize the decentralized stablecoin FRAX, along with proposing enhanced yield structures. As part of the plan, veFXS stakers will receive protocol fees, with distributions set to be integrated into both the Ethereum mainnet and the veFXS yield distributor contract on Fraxtal.

Frax Finance had initially suggested activating the protocol fee switch on Feb. 26, reversing a prior decision to halt rewards. Sam Kazemian, the protocol’s founder, expressed that the timing is opportune to activate the switch, anticipating significant revenue generation.

Frax Finance oversees the FRAX USD-pegged decentralized stablecoin, along with its native token FXS and veFXS token, which users receive upon staking FXS. As of March 21, FXS was trading at $7.48, marking a 1.13% increase over the previous 24 hours, according to data from The Block’s FXS price page.

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