Frax Finance is a multi-product DeFi family — FRAX/frxUSD stablecoins, frxETH/sfrxETH liquid staking, Fraxlend, FraxSwap, and the Fraxtal L2 — governed via veFXS and an on-chain dual-Governor model.
How frxUSD holds $1 while idle collateral is put to work
frxUSD is fully collateralised, so arbitrageurs keep it pinned to $1. Drag the market price off peg and watch which direction the mint/redeem arbitrage flows to restore it.
Drag to move the market price away from $1.00
At peg — no arbitrage incentive. Mint and redeem are both worth exactly $1, so the market clears at $1.00.
Live signals detected by Sentinel monitors across all five risk classes.
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Stablecoins historically traded a trilemma between decentralisation, capital efficiency and durability — pure-algo designs (UST) failed, fully-collateralised designs (USDC, USDT) introduced bank/censorship risk, and over-collateralised designs (DAI) were capital-inefficient.
Frax pioneered the fractional-algorithmic model and AMOs (algorithmic market operations) as composable monetary policy, then expanded into a full ecosystem covering stablecoins (FRAX, frxUSD), LSTs (frxETH/sfrxETH), lending (Fraxlend), AMM (FraxSwap), and an OP-stack L2 (Fraxtal).
Category-definer for fractional-algorithmic stablecoins and AMOs. First TWAMM AMM. One of the first DeFi protocols to ship its own L2. Multi-product moat with five years of operational data and zero asset-loss exploits.
Frax Finance is a Stablecoin protocol operating on Ethereum, Fraxtal, Arbitrum, Optimism, Polygon, BNB, Avalanche, Solana. Frax Finance is a multi-product DeFi family — FRAX/frxUSD stablecoins, frxETH/sfrxETH liquid staking, Fraxlend, FraxSwap, and the Fraxtal L2 — governed via veFXS and an on-chain dual-Governor model.
DeFi Sentinel rates Frax Finance AA with a safety score of 89/100, indicating very low risk. The score reflects five risk dimensions: smart contract & technical risk, economic design & market risk, governance & centralization, sustainability & competitive position, and reputation & social trust. Frax Finance has 16 audits on record. As with all DeFi protocols, residual risk remains and users should review the full risk breakdown before depositing.
Frax Finance has a DeFi Sentinel safety score of 89/100 (rating AA), last updated May 21, 2026. The score is computed across smart contract & technical risk (30%), economic design & market risk (25%), governance & centralization (20%), sustainability & competitive position (15%), and reputation & social trust (10%).
Frax Finance is deployed on Ethereum, Fraxtal, Arbitrum, Optimism, Polygon, BNB, Avalanche, Solana.
Yes. Frax Finance has 16 audit reports on record from firms including Certik, Trail of Bits, Trail of Bits. Audit reports and dates are linked under the Resources tab on this page.
