8 months ago
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Frax Finance, a decentralized finance (DeFi) protocol, recently unveiled its Singularity Roadmap. It aims to propel the total value locked (TVL) of its layer 2 blockchain, Fraxtal, to $100 billion by the end of 2026. This notable surge would represent a 760,000% increase from the current TVL levels, which stand at $13 million.
Frax Finance Singularity Roadmap
According to the protocol’s announcement, Fraxtal, the substrate that powers the Frax ecosystem, serves as Frax Finance’s operating system. With the launch of Fraxtal and achieving an effective 100% Collateralization Ratio (CR), Frax Finance claims to have consolidated its core product offerings.
To reach the ambitious $100 billion TVL goal, the protocol has announced that it has already generated over $45 million, reaching the coveted 100% CR.
As announced, with this milestone achieved, the FRAX stablecoin, which has remained relatively dormant during the process, and the FXS revenue share, which has been temporarily reduced by 90% to conserve assets, can now undergo a “transformative change.”
In addition, the upcoming introduction of Layer 3s (L3s) on Fraxtal is expected to be a key factor in further contributing to the growth and adoption of the protocol.
Fraxtal, which is built on the Optimism (OP) network, stands out as one of the most widely used layer 2 solutions on top of Ethereum (ETH), according to the protocol. The Frax team says it has developed its underlying incentives to provide a seamless experience for developers and users, further encouraging adoption.
In particular, by owning the entire stack, Frax can introduce advanced features such as account abstraction, new precompiles, privacy features, aggregated decentralized applications (dApps), and interoperability with Superchain.
The protocol believes these features will enhance the on-chain experience, making Fraxtal the “preferred” platform for holding, staking, and transferring crypto assets.
Expansion Strategy
The proposal also unveils Frax Finance’s plan to establish 23 Layer 3s within 365 days, kicking off the “Fraxtal Nation” community. By supporting these 23 chains with developer access, incentives, and investment, Frax aims to foster a positive-sum approach and provide additional support to official partners.
The protocol also suggests that these partners will receive “substantial allocations” of FXTL points, aiming to solidify the role of the FXS token as the ultimate beneficiary of the Frax ecosystem.
Moreover, Frax Finance founder Sam Kazemian intends to allocate 50% of the revenue from protocol fees to veFXS token holders. In comparison, the remaining 50% will be used to acquire FXS and other Frax assets for pairing in the FXS Liquidity Engine (FLE).
This initiative will increase liquidity, strengthen the Frax balance sheet, and provide additional incentives for the protocol’s stakeholders.
Frax Finance’s proposal also seeks to reactivate the protocol fee switch, which was temporarily turned off during the consolidation phase of the protocol.
By reigniting this switch, a portion of the yield generated from protocol fees will be directed toward veFXS token holders. veFXS, or veiled FXS, represents a locked version of the native token, FXS, and offers enhanced voting power and participation in the Frax ecosystem.
As of the time of writing, FXS has not responded favorably to the news. Its current trading price is $6.93, reflecting a 3.5% loss in the past 24 hours. It is important to note that the proposed protocol features are still in development, and the impact on the Frax Finance ecosystem and the token’s performance is yet to be determined.
Featured image from Shutterstock, chart from TradingView.com
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