Frax Shares (FXS) is the governance token of the Frax Protocol, a decentralized stablecoin system that combines collateralization with algorithmic adjustments. Frax is unique in its approach, categorizing itself as a fractional algorithmic stablecoin—partly backed by collateral and partly governed by algorithms that adjust the collateral ratio based on the price of the stablecoin (FRAX).

The Frax protocol operates in a decentralized manner, governed by the community, with decisions made algorithmically and no active management. The protocol uses a full-chain oracle system, incorporating data from Uniswap and Chainlink to maintain accuracy.

Frax’s goal is to provide a highly scalable, decentralized currency to replace fixed-supply assets like Bitcoin. The FRAX stablecoin is designed to stay close to a $1 peg, while FXS accumulates fees, mint revenues, and the value from excess collateral, offering holders the ability to shape the protocol's future.