What Is Frax (FRAX, formerly FXS)? frxUSD and the Frax Ecosystem

Last updated: October 2026

Frax is a DeFi protocol that launched the first “fractional-algorithmic” stablecoin in December 2020 and has since grown into a suite of products: a fully collateralised dollar stablecoin, liquid-staked ETH, a lending market and its own Layer 2 chain, Fraxtal. The naming changed substantially in 2025, which confuses many guides. The governance token formerly called FXS is now FRAX, the gas token of Fraxtal. The dollar stablecoin is now frxUSD, while the original FRAX stablecoin was reclassified as the “Legacy Frax Dollar”. This page explains how that happened and how each product works today.

You’ll find this and every related walkthrough in our Coin Directory.

What Is Frax?

Frax is best understood as a stablecoin issuer that keeps adding infrastructure around its dollar. Its revenue comes from the assets backing its stablecoins, from ETH staking, from lending and from activity on Fraxtal. The FRAX token (formerly FXS) is meant to capture value from all of these.

• Key takeaway: FXS was renamed FRAX in the “North Star” hard fork on 29 April 2025 (proposal FIP-428); veFXS became veFRAX.
• Key takeaway: frxUSD, introduced under FIP-419 in early 2025, is the current fully collateralised, fiat-redeemable Frax dollar; sfrxUSD is its yield-bearing savings version.
• Key takeaway: The original FRAX stablecoin abandoned its algorithmic portion in 2023 and is now called Legacy Frax Dollar.
• Key takeaway: FRAX has no hard cap; it follows a tail-emission schedule that starts near 8% a year and declines to a 3% floor, offset partly by burns.

History & Origin Story

Frax was founded by Sam Kazemian, who previously co-founded Everipedia (later IQ.wiki). The idea, outlined in 2019 and launched on Ethereum in December 2020, was a middle path between fully backed stablecoins like USDC and purely algorithmic designs. Each FRAX was backed partly by USDC and partly by the value of FXS: when FRAX traded above $1, the protocol lowered its collateral ratio; when it traded below, it raised it. Over time Frax added Algorithmic Market Operations (AMOs), smart contracts that deployed collateral into DeFi protocols such as Curve and Aave to earn yield while defending the peg.

Frax became deeply embedded in the 2021–2022 “Curve wars”, accumulating CVX and veCRV to secure liquidity for FRAX. When Terra’s UST collapsed in May 2022, FRAX held its peg, which the team cited as evidence that partial collateral plus active management could work. Still, the episode changed sentiment toward algorithmic stablecoins. In February 2023 Frax governance voted to move FRAX toward 100% collateralisation, effectively ending the fractional experiment that had defined the project.

Meanwhile Frax diversified. It launched frxETH and its staked version sfrxETH in October 2022, the Fraxlend isolated lending markets and the Fraxswap DEX, and an inflation-tracking stablecoin, FPI. In February 2024 it launched Fraxtal, an Ethereum Layer 2 built on the OP Stack.

The 2025 restructuring tidied all of this up. FIP-419 introduced frxUSD, a dollar stablecoin issued through governance-approved “enshrined custodians” and backed by cash-equivalent assets, including tokenized Treasury products. Legacy FRAX and sFRAX were given an upgrade path to frxUSD and sfrxUSD. Then the North Star hard fork renamed FXS to FRAX and made it Fraxtal’s native gas token, replacing frxETH in that role. FXS on Ethereum became wrapped FRAX (wFRAX) 1:1.

How Frax Works Today

• frxUSD: Minted and redeemed against reserves held by approved custodians, aiming for a strict 1:1 dollar peg. Holders can deposit into sfrxUSD to earn yield from the reserves and protocol strategies.
• frxETH and sfrxETH: Deposit ETH to receive frxETH, then stake it as sfrxETH to accrue validator rewards. Rewards vary with Ethereum staking yields and Frax’s mechanics.
• Fraxlend: Isolated lending pairs, so a problem in one market does not automatically spread to others.
• Fraxtal: An OP Stack Layer 2 using FRAX for gas. Its “Flox” programme distributes FXTL points, convertible into FRAX, to users and developers who generate activity.
• Burns: The Frax Burn Engine destroys FRAX sent to it, including Fraxtal’s base fees.

For context on how frxUSD compares with other dollar tokens, see our stablecoin hub, and for why the fractional era ended, read our explainer on algorithmic stablecoins.

Frax token names: old vs new

If a wallet, exchange or price page shows a “FRAX” price near $1, it is referring to the legacy stablecoin; if it shows a fluctuating price, it is the former FXS. Checking the contract address is the only reliable way to tell them apart.

Tokenomics & Supply

The FRAX token (formerly FXS) has no maximum supply. Under the North Star design, emissions start around 8% a year and fall by one percentage point annually to a 3% floor, funding incentives, the DAO and ecosystem growth. Burns from Fraxtal fees and other sources offset part of that issuance. Market trackers in 2026 show roughly 100 million FRAX in total supply; confirm the current figure on CoinGecko or Frax’s dashboard.

Locking FRAX produces veFRAX, which provides voting power over gauges, parameters and revenue policy and boosts certain rewards. Longer locks give more weight. As always, compare emissions with revenue to judge whether holders are being diluted; our tokenomics guide explains the method.

How to Buy, Stake and Use Frax

Buying the FRAX token

1. Check how your exchange labels the token. Some venues updated to FRAX after the rename, while older listings or data pages may still show FXS or confuse it with the Legacy Frax Dollar stablecoin.
2. Verify the contract address on CoinGecko or Frax’s official site before buying on a DEX.
3. Decide where to hold it: as wFRAX on Ethereum, or as native FRAX on Fraxtal if you plan to pay gas or participate there.

Using frxUSD and sfrxUSD

Acquire frxUSD by swapping on a DEX or through Frax’s app, then deposit into sfrxUSD if you want yield. Yields float with reserve income and are not fixed. Check redemption routes and any fees before relying on frxUSD for large balances.

Staking ETH with Frax

Through the Frax app, convert ETH to frxETH and stake it to sfrxETH. Understand that exiting may involve DEX liquidity or redemption queues. Compare alternatives in our Ethereum staking guide.

Bridging to Fraxtal

Use the official Fraxtal bridge or a supported third-party bridge, keep some FRAX for gas, and test with a small amount first. Withdrawals from OP Stack chains via the native bridge take about seven days.

Risks & Is Frax a Good Investment?

• Complexity: Multiple products, renames and token versions increase the chance of user error.
• Custodian dependence: frxUSD relies on approved custodians and the assets they hold.
• Smart-contract risk: AMOs, lending markets and bridges each add attack surface.
• Dilution: FRAX’s tail emissions continue indefinitely; value depends on burns and revenue keeping pace.
• Competition: USDC, USDT, Sky’s USDS and Ethena’s USDe dominate stablecoin liquidity, and new regulated issuers keep entering the market.
• Naming confusion: Mixing up legacy FRAX, wFRAX and native FRAX can lead to buying the wrong asset or sending to the wrong chain.

The optimistic case is that frxUSD gains share as on-chain dollars grow and Fraxtal activity drives burns. The pessimistic case is that Frax remains a respected but niche issuer while emissions dilute FRAX holders. Compare designs with Ethena, a newer competitor.

FAQ

Is FXS the same as FRAX now?

Yes. The North Star hard fork on 29 April 2025 renamed FXS to FRAX and veFXS to veFRAX. FXS on Ethereum maps 1:1 to wrapped FRAX, and FRAX is the native gas token on Fraxtal. The old FRAX stablecoin was separately renamed the Legacy Frax Dollar, with frxUSD as its successor.

Is Frax still an algorithmic stablecoin?

No. Frax pioneered the fractional-algorithmic model in 2020, but governance voted in February 2023 to move to full collateralisation. Its current dollar, frxUSD, is designed to be fully backed and redeemable through approved custodians, so the algorithmic element that defined early Frax is gone.

What is Fraxtal?

Fraxtal is Frax’s Ethereum Layer 2, launched in February 2024 on the OP Stack. Since April 2025 it uses FRAX as its gas token. Users and developers earn FXTL points through the Flox programme, which convert into FRAX, and base fees are burned through the Frax Burn Engine.

Is frxUSD safe?

frxUSD is designed to be fully collateralised and redeemable, which is safer than the original fractional model. It still depends on custodians, reserve assets, smart contracts and governance. It has a shorter track record than USDC or USDT, so treat it as carrying more risk than the largest stablecoins.

Crypto is volatile and risky; this is education, not financial advice. Do your own research.