What is Frax Finance?

Frax Finance is a decentralized finance (DeFi) project best known for its dollar stablecoin, now called frxUSD. It also runs a liquid staking token for ether and its own blockchain, Fraxtal. The names have changed over time, so "Frax" can mean the project, the old stablecoin or the current FRAX token, depending on when a source was written.

What is Frax crypto?

Frax was founded by Sam Kazemian, Travis Moore and Stephen Moore, and its main contracts went live on Ethereum mainnet on December 20, 2020, according to IQ.wiki. The first product was FRAX, described as the first fractional stablecoin. Part of each coin was backed by collateral such as USDC, and the rest relied on the protocol minting and buying back tokens to keep the price near $1.

Today, Frax's documentation describes a wider ecosystem:

• frxUSD, the dollar stablecoin, and sfrxUSD, a vault version that passes on part of the protocol's yield.
• frxETH and sfrxETH, liquid staking tokens tied to ether. Our guide to liquid staking explains the idea.
• Fraxtal, a layer 2 network built with Optimism technology.
• FRAX, the token used for gas on Fraxtal and, when locked as veFRAX, for voting.

Is Frax a stablecoin?

The original FRAX was. Its design mixed collateral with an algorithm, a model explained in what is an algorithmic stablecoin. After TerraUSD failed in 2022, Blockworks reported that over 98% of voters backed a proposal to move to full collateral, at a time when the collateral ratio stood at 92%.

In a December 2024 roadmap, Frax said the stablecoin would be rebranded as frxUSD and its governance token FXS would become FRAX. IQ.wiki says frxUSD was introduced in January 2025. The older coin still appears in Frax's docs as legacy FRAX, so it is worth checking which token a wallet or exchange actually lists by its contract address.

What is frxUSD?

As of November 2026, Frax's docs describe frxUSD as fully backed by tokenized US Treasury funds held with institutional managers, naming BlackRock's BUIDL, Superstate's USTB and WisdomTree's WTGXX, plus the USDB stablecoin issued by Bridge, a Stripe company. Users can mint and redeem frxUSD one for one through Frax's FraxNet service using other stablecoins or those Treasury tokens. The docs say frxUSD runs on more than 20 blockchains and that Frax publishes reserve reports on a transparency page.

Holding frxUSD itself is different from holding sfrxUSD. The vault version earns a variable return from the reserves and other DeFi strategies, which brings added risk. Background on these reserve assets is in what are tokenized treasuries.

Who controls Frax Finance?

Governance runs through veFRAX, which users get by locking FRAX tokens for a set period, with votes held on Snapshot and discussed on a public forum. Frax is not a bank, and frxUSD is not deposit-insured. Its stability depends on the reserves, the smart contracts and the redemption process working as described.