On June 16th, Frax Finance, a project specializing in algorithmic stablecoins, announced the upcoming launch of its Layer 2 blockchain called Fraxchain, scheduled for the end of 2023. This announcement led to a strong price increase of the FXS token, exceeding 10% in less than a day. However, the question remains whether Fraxchain will help change the long-term position of Frax Finance.

Overview of Frax Finance: Frax Finance is known as a project specializing in stablecoins, but to enhance its competitiveness, it has expanded its product range horizontally and vertically.

The key product of Frax Finance is the Frax stablecoin, which is pegged to the USD. Additionally, Frax Finance has developed the FPI stablecoin, which is pegged to the US Consumer Price Index (CPI).

Some of the vertical products unrelated to stablecoins developed by Frax Finance are:

Frax Ether (frxETH): It allows users to receive synthetic frxETH assets by staking ETH. Currently, Frax Ether has an APY of 5.13%, higher than Lido's 4.3%.

Frax ETH V2: This is being developed to create a decentralized, permissionless, and non-custodial ETH lending market for node operators.

Frax Share (FXS): FXS is a governance token that can be staked as veFXS to manage the infrastructure protocols and stablecoins within the Frax Finance ecosystem.

Fraxswap: This automated market maker (AMM) facilitates large trades, asset rebalancing, and stablecoin supply adjustments.

Fraxlend: It is a decentralized lending platform that allows users to borrow and lend various ERC-20 tokens.

Fraxferry: It enables the transfer of tokens within the Frax Protocol across multiple blockchains, similar to a cross-chain bridge.

To learn more, let's explore the development strategy of Frax Finance and the significance of Frax Wars.

Despite three years of development and experiencing an uptrend season, Frax Finance has yet to produce any truly standout products. FRAX stablecoin faces challenges competing with DAI. FraxSwap has not gained as many users as Uniswap. Frax Ether lags behind Lido in terms of adoption. Fraxlend has not generated as much buzz as AAVE or Maker. Fraxferry is also not as well-known as Synapse or Multichain. The market capitalization of FRAX stablecoin is only a quarter of DAI's market capitalization, according to DeFi Llama.

Thus, in order to create differentiation, Frax Finance needs unique products and strategies. Fraxchain could potentially be the solution it needs.

Introduction to Fraxchain Layer 2: Fraxchain is a Layer 2 solution being developed by Frax Finance, with an expected launch in Q4 2023.

According to Sam Kazemian, the founder of Frax Finance, Fraxchain will be a hybrid rollup that combines the strengths of Optimistic Rollup, ZK Rollup, and a Sequencer design that operates in a cyclical manner.

Combining Optimistic Rollups and ZK Rollup: Most Layer 2 solutions currently focus on developing using a single technology. For example, Arbitrum, Optimism, Boba, Fuel Network, and Cartesi all utilize Optimistic Rollup technology. Starkware, zkSync, Aztec Network, Scroll, and Loopring solely rely on ZK Rollup technology.

To differentiate itself and compete in the market, Fraxchain combines both Optimistic Rollups and ZK Rollup technologies, which is a unique approach in the crypto market. These are currently the two best

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