Frax Finance (Frax for short), formerly known as Decentral Bank, is a fractional algorithm stablecoin protocol. Frax is an open-source, permissionless, fully on-chain protocol that currently runs on Ethereum (cross-chain operations may be possible in the future). The ultimate goal of the Frax protocol is to provide a highly scalable, decentralized algorithmic currency to replace fixed-supply digital assets such as BTC. FRAX is a stable currency with a target of around $1/coin. Frax Shares (FXS) are governance tokens that accrue fees, withhold income, and excess collateral value.

Frax (FRAX) is a partially algorithmic stablecoin whose supply is partially backed by collateral and partially algorithmically stabilized. The ratio of collateral depends on the market price of the FRAX stablecoin. If FRAX trades above $1, the protocol reduces the collateral ratio. If FRAX trades below $1, the protocol increases the collateral ratio.
Frax Share (FXS) is FRAX's non-stable ERC-20 governance token, and has the following use cases:
Governance: To grant token holders governance rights to add/adjust collateral asset pools, set minting/ Redemption fees, and renewal rates to change collateralization rates.
Mortgage: Mortgage in various pools to earn rebates at a preferred annualized rate of return.
Minting and redemption: FXS will be destroyed when FRAX is minted, and FXS will be minted when FRAX is redeemed.
Rewards: For users who deposit Uniswap LP tokens into an incentive pool, they can get FXS rewards.
In the initial stage, FRAX is mortgaged at a ratio of 100%, which means that minting FRAX only needs to put the collateral into the minting contract. In the partial mortgage stage, minting FRAX requires providing an appropriate proportion of collateral and burning FXS.