Legacy Frax Dollar

FRAX, now labelled Legacy Frax Dollar, was the first fractional-algorithmic stablecoin. Launched in 2020 by Frax Finance, it introduced a design where each token was backed partly by collateral and partly by an algorithmic mechanism involving the protocol's governance token, FXS.

The collateral ratio was adjustable. If FRAX traded above one dollar, the protocol lowered the ratio, requiring less collateral and more FXS to mint each token. If it traded below, the ratio rose. In principle this let the system find the minimum collateral the market would accept, using algorithmic backing only to the degree confidence permitted.

The move to full backing

After the collapse of purely algorithmic stablecoins in 2022, Frax governance voted to move the collateral ratio to one hundred percent, making FRAX fully backed. That ended the fractional experiment and left the token operating as a conventionally collateralized stablecoin.

The protocol later restructured its stablecoin lineup, introducing frxUSD as its main dollar product, which is why the original token now carries the Legacy label. Total and circulating supply of FRAX currently sit at roughly 219 million tokens, down substantially from its peak, reflecting that migration.

Legacy

Frax was influential well beyond its own supply. It built a broad ecosystem including a liquid staking product, a lending market, its own chain, and an automated market maker, and its fractional design was widely studied and copied.

Anyone encountering FRAX today should understand that it is a legacy product within a protocol that has moved on, and should check which token Frax currently designates as its primary stablecoin before assuming FRAX is the active one.