TL;DR
- Frax Finance’s Ambitious Plan: Frax Finance aims to increase the total value of crypto assets secured in its Layer 2 blockchain, Fraxtal, to $100 billion by 2026. The current total value locked (TVL) is $13.2 million.
- Strategy to Boost FXS Liquidity: The proposal recommends reintroducing a mechanism to distribute protocol revenue among the stakers of its native tokens. It suggests activating the protocol fee switch, with half of the yield directed to veFXS, and the remaining half used to procure FXS and other Frax assets.
- Growth of the DeFi Sector: The DeFi sector is experiencing a surge in popularity, with the total value of tokens (TVL) deposited on DeFi-centric blockchains reaching $100 billion, the highest level since March 2022.
Frax Finance, a prominent figure in the decentralized finance (DeFi) industry, has recently revealed an ambitious plan for its Layer 2 blockchain, Fraxtal. The goal is to escalate the total dollar value of crypto assets secured in Fraxtal to an impressive $100 billion by the close of 2026.
Currently, Fraxtal holds a total value locked (TVL) of $13.2 million. The roadmap envisions the launch of 23 Layer 3 protocols within the next year, and the addition of new assets like frxNEAR, frxTIA, and frxMETIS.
Sam Kazemian, the founder of Frax Finance, along with other contributors, has suggested that both the existing assets (FRAX, sFRAX, frxETH) and the new ones should be issued on the Fraxtal blockchain. Layer 3 protocols are crucial in offering decentralized applications a highly adaptable and interoperable network built upon Layer 2 scaling solutions.
The Strategy to Boost FXS Liquidity and Fortify Frax Finance’s Balance Sheet
The proposal also recommends the reintroduction of a mechanism to distribute protocol revenue among the stakers of its native tokens. It suggests activating the protocol fee switch, with half of the yield directed to veFXS (a derivative of the governance and utility token FXS), and the remaining half is utilized to procure FXS and other Frax assets, which are then paired in the FXS Liquidity Engine (FLE).
This strategy is designed to fortify Frax’s balance sheet while significantly boosting the liquidity of FXS and its paired Frax assets. The roadmap further outlines intentions to fully back Frax’s stablecoin, FRAX, which is ranked among the top 10 cryptocurrencies pegged to the dollar globally. It also seeks to improve yields on staked FRAX (sFRAX).
The DeFi sector is witnessing a popularity boom, with the total value of tokens (TVL) deposited on DeFi-centric blockchains hitting $100 billion. This is the highest level since March 2022. The recent surge in TVL can be linked to the Bitcoin rally, spurred by the introduction of spot Bitcoin exchange-traded funds (ETFs) in the United States.
