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Frax Finance
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FRAX has one of the tightest pegs relative to its peers. It has performed well historically, especially during times of broader market stress. However, it is partially collateralized by the protocol’s native FXS token, which makes it prone to bank-run risks, but with limited loss potential.
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The Frax protocol is led by a public team of seasoned entrepreneurs/programmers based in the United States.
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Although Frax aims to be a decentralized protocol,
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It is heavily reliant on centralized assets such as USDC, USDT and DAI
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The core team controls a majority of the voting power (>51%) and also has complete control over FRAX's monetary policy and the protocol’s assets.
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In our assessment, FRAX is neither suitable for the average retail stablecoin holder nor for the decentralization-focused holders. It is more suited to risk-seeking yield farmers and liquidity providers who understand the complexities and nuances of the protocol and have appropriate risk management systems in place.