Frax Share price prediction: Where to next for FXS?
The FXS token performed well in the first quarter of 2022, but what’s next for the ‘fractional-algorithmic’ stablecoin protocol?
- The FXS token: What you need to know
- From the Frax Finance whitepaper
- FXS price movements
- FXS forecaster targets
Frax Finance is a dual-token stablecoin project that was launched by Sam Kazemian, an Iranian-American software programmer, in early 2020. The multibillion-dollar market cap FRAX stablecoin operates through a unique combination of algorithmic stability and collateralised reserves.
Frax Finance started out as Decentral, a project created by Kazemian and Stephen Moore, a conservative economist, former adviser to Donald Trump and unsuccessful candidate for a position on the board of the Federal Reserve.
Decentral was labelled as “dumb even by crypto’s standards” by New York magazine after an interview with Kazemian in June 2019, because of its non-stable collateralisation strategy.
But that is just one viewpoint. In this article, we dive into Frax Share (FXS), the governance token with its own set of functions and uses. What is Frax Share (FXS) and what are the Frax Share price predictions?
The FXS token: What you need to know
Before jumping into the Frax Share price prediction for 2022 and beyond, let’s go over the key facts.
FXS launched at the tail end of 2020, with 60% of the 99.9 million supply made publicly available through various yield farming, liquidity incentives and exclusive governance proposals. Company tokens account for 35% of supply, vested over various 12-month and two-year stages. The remaining 5% stays in the treasury for marketing purposes and other business expenses.
One of the primary features available to holders is that FXS allows for on-chain governance of Frax Finance’s protocol and system changes. But FXS’s utility goes beyond that.
In simple terms, FXS “steps in” to provide collateral when needed. In essence, inflation of FXS increases as and when needed. Through Frax Finance’s minting and redeeming procedure, the value of FXS is directly linked to the demand and supply of FRAX; a healthy FRAX stablecoin should theoretically drive the value of FXS up.
Frax Finance actively encourages arbitrage trading, since dollar-pegged FRAX stablecoins can be minted even if FRAX is slightly below pegged market value, allowing arbitrageurs to capitalise on small price fluctuations.
Frax Finance also has a long-term staking programme for FXS holders who are willing to lock their tokens up for an extended period. To get a greater understanding of the FXS token, it is advisable to read the in-depth whitepaper.
As of 23 August 2022, FXS was trading at $6.43, down nearly 2% in a recent 24-hour trading window, with a circulating supply of 16.2 million tokens, and a market capitalisation of around $104m.
From the Frax Finance whitepaper
The whitepaper states: “Frax attempts to be the first stablecoin protocol to implement design principles of both to create a highly scalable, trustless, extremely stable and ideologically pure on-chain money. The Frax protocol is a two-token system encompassing a stablecoin, Frax (FRAX), and a governance token, Frax Share (FXS). The protocol also has a pool contract which holds USDC collateral. Pools can be added or removed with governance.
“We believe that the fractional-algorithmic design of Frax is paradigm-shifting for stablecoins. It is fast, real-time balancing, algorithmic, governance-minimised, and extremely resilient. We strongly believe the Frax protocol can become a foil to Bitcoin’s ‘hard money’ narrative by demonstrating algorithmic monetary policy to create a trustless stablecoin that all of the crypto community can embrace.”
FXS price movements
FXS performed slightly differently from many other altcoins recently, perhaps in part due to its close relationship with the FRAX stablecoin. In fact, a high of $42.65 was reached on 12 January 2022, a time when Bitcoin was in freefall, bringing down many other cryptocurrencies with it.
However, the market caught up with FXS soon after that, dragging the trading price back down to $17.82 by 24 January, though this was still well above the all-time low of $1.52 seen in June 2021.
On 3 April 2022, FXS reached a new high of $42.67 after rallying by 80%, following an announcement by Terraform Labs’ founder, Do Kwon, detailing the launch of 4pool, a liquidity pool that was to consist of the FRAX, TerraUSD, USDC and Tether stablecoins.
Numerous on-chain developments continued into April, and the stablecoin consistently saw itself in the top gainers’ category on many centralised exchanges, including Binance and Crypto.com. By 20 April, the token peaked at $37.28 but fell rapidly in the following weeks.
After the collapse of the TerraUSD stablecoin, the price of FXS fell by around 80% from the peaks in April, and on 20 May, the token saw trading lows of $6.02. By the close of June, the token was worth $4.81, following yet more market turmoil.
As of 23 August 2022, the token is currently trading at $6.43. So with all this in mind, where could FXS go to next?
FXS forecaster targets
In the long run, FXS could hit $168.05, according to PricePrediction’s Frax Share price prediction for 2030. The forecaster’s Frax Share average price target is $13.03 for 2023, and $25.96 for 2025.
TechNewLeader’s FXS price prediction targets give a 2022 maximum target of $8.12. Its Frax Share price prediction for 2025 is $24.41, with a maximum of $155.02 for 2030.
According to DigitalCoinPrice’s Frax Share coin price prediction, the coin will average $8.30 in 2022. The site also suggests the coin could be worth an average of $12.37 by 2025, then follow a year-on-year uptrend to reach $29.92 by 2030.
WalletInvestor’s Frax Share price prediction gives a 12-month price target of $11.95 and a five-year target of $32.55.
Bear in mind a couple of things. First, since the value of FXS is heavily reliant on the performance of the FRAX stablecoin, any Frax Share price prediction should take into account the FRAX stablecoin’s potential for growth, as well as the effects of the recent TerraUSD collapse on 4pool.
Also, while forecaster predictions may serve as a guide, they should not be regarded as genuine financial advice. Further independent analysis is always recommended – cryptocurrencies are highly volatile and past performance is not a guarantee of future results. Never invest more than you can afford to lose.
How many Frax Share coins are there?
There is currently an FXS circulating supply of 16.2 million, against a total supply just short of 99.9 million.
Is Frax Share a good investment?
The health of the FXS token is heavily contingent on the popularity of the FRAX stablecoin, so any serious investor is advised to read up on the overall Frax Finance ecosystem and fundamentals before putting money down on an investment.
Will Frax Share go up?
Keeping in mind that while forecaster price targets should always be taken with a grain of salt, most do believe that Frax Share will rise in value. Most targets for 2022 are quite modest, although the longer-term projections are healthier.
Should I invest in Frax Share?
FXS presents investors with a way of investing in the Frax Finance stablecoin project, while also providing governance options and other utility.
Currency.com does not make recommendations, so any potential investment should be supported by independent analysis, including reading the whitepaper and assessing social media and other community engagements.