The Frax Finance community voted to completely mortgage the FRAX stable currency and remove the algorithm support

It is reported that the Frax Finance community voted to pass a governance proposal, setting the target mortgage rate (CR) of FRAX stable currency at 100%, and removing the algorithm support of the agreement for stable currency. In the future, FRAX will become a fully mortgaged stable currency. FRAX was originally designed as a partial mortgage and partial algorithmic stable currency, and its mortgage rate was adjusted according to FRAX’s market demand.

Interpretation of this information:

The Frax Finance community has voted to pass a governance proposal that sets the target mortgage rate (CR) of their stable currency, FRAX, at 100%. This means that in the future, FRAX will be fully mortgaged instead of it being a partial mortgage and partial algorithmic stable currency. The mortgage rate was previously adjusted according to FRAX’s market demand. With the new set target, the algorithm support of the agreement for the stable currency is being removed.

FRAX Finance aims to create a stablecoin that provides users with stability and transparency, unlike traditional stablecoins that are backed by a single asset or a basket of assets. Instead, FRAX operates on an algorithmic model that automatically adjusts its circulating supply, utilizing a blend of collateralized assets and algorithmic mechanisms to achieve price stability. This innovative approach was intended to create a stablecoin that could adjust to market demand while simultaneously providing security through its underlying asset reserves.

With the latest governance proposal, the Frax Finance community is taking a significant step towards a more conservative approach to stablecoin design. Moving to a fully-mortgaged stability model means that Frax will have a fixed amount of collateral backing each unit of FRAX. This effectively sets a minimum level of security for FRAX holders, ensuring that the stablecoin remains stable in times of market turbulence.

The removal of the algorithm support of the agreement for the stable currency also indicates a shift away from algorithmically-sustained mechanisms in the interests of added security. While FRAX has had recent success, with demand rising due to significant usage growth over the past several months, it is still a young project with lots of room to grow. The Frax community’s decision to move forward with a fully-mortgaged model indicates a commitment to long-term sustainability and stability.

In summary, the latest update from Frax Finance is a positive step towards increased stability and transparency for the FRAX stablecoin. The three keywords that are relevant to this development and that stand out are “fully mortgaged stable currency,” “target mortgage rate (CR),” and “removal of algorithm support.”