Buckle your seat belts as we speed around on an exciting lap of the possibilities that FraxChain brings and its potential impact on FXS, Frax Finance's native token.

Gas on the pedal, this might just be the nitro boost that takes FXS to the moon and beyond!

TLDR 📃

• FraxChain is not your average DeFi project. It combines FRAX, frxETH, Fraxlend, Frax Swap, Frax Ferry, and Frax Shares (FXS) into a robust DeFi ecosystem.
• FraxChain doesn’t scrimp on security. It’s got all of Ethereum's security features, just like Arbitrum and Optimism.
• There’s a proposal to buyback $1M FXS if the token goes back down to $5 
• FXS must break above $7.50 and establish a strong support level for a significant upward move.

Disclaimer: Not financial or investment advice. Any capital-related decisions you make are your responsibility and yours only.

Frax Finance to launch FraxChain this year 🚀

Frax Finance is no stranger. It is the powerhouse behind FRAX, one of the biggest stablecoins in DeFi with its impressive $1 billion market cap. It also lays claim to frxETH, a popular liquid staking token worth another $400 million. 

Now, Frax Finance is revving its engines to join the L2 race with its own Layer 2 solution, FraxChain. But what exactly is FraxChain, and how does it fit Frax Finance’s ecosystem? 

Let's take a closer look!

FraxChain integrates all the key components of Frax's ecosystem, giving the tokens more utility. Let's break it down.

The idea here is for FraxChain to become the ultimate pit stop for all your DeFi needs. It's like a one-stop shop where you can conveniently carry out all your DeFi activities. 

But wait, there's more! FraxChain goes the extra mile by emphasizing community control. FXS holders have the power to vote on the sequencers, acting as the traffic directors of the roll-up. This democratic approach ensures that collective decisions by the users guide the operations of FraxChain.

And here's the cherry on top - when you stake your FXS tokens, you not only get a say in decision-making but also earn fees generated by the network. 

Corporate speak aside, what does FraxChain mean for FXS? 🤔

Interestingly, when FraxChain's launch was announced, Ouroboros Capital, a crypto research firm, proposed a token buyback strategy. It's a move that often signals confidence in the project and indicates that the token may be undervalued.

Here's how it works: If the FXS falls below $5, Frax will kick off a buyback program worth $1 million. And if the price dips even further, below $4, they'll launch an additional buyback of $1 million that will last for a whole month. 

This kind of proactive approach shows that Frax's founder, Sam Kazemian, supports the proposal and believes in the token's potential.

But why does Kazemian think FXS is undervalued? Well, let's take a closer look. 

Currently, Frax's main revenue stream comes from its liquid staking product, Frax Ether. It's projected to generate around $1 million in revenue this year. However, with the introduction of FraxChain, the revenue potential is expected to skyrocket.

Just by comparing the monthly revenues of Optimism and Arbitrum, two other layer 2 solutions, we can see the exciting possibilities. BTW, check out our latest scoop on Arbitrum here.

Now, imagine if FraxChain captures just 30% of Optimism's usage. Even at that conservative estimate, FraxChain would be able to increase its revenue by 220%! 

And here's the exciting part: unlike Arbitrum and Optimism, who don't share that revenue with token holders, Frax will distribute a portion of the revenue to FXS token holders. That's a game-changer because it will likely make FXS much more valuable in the long run.

Price analysis 📊

If you are wondering where you can get in on the action and accumulate some FXS for yourself. Here’s what you need to know!

With the market rising, FXS has more upside potential. It's nearing the $7.15 - $7.50 resistance range, about 20% above its current price.

To confirm a significant upward move, FXS must break above $7.50 and establish it as a strong support level.  

To make an investment, wait for FXS to establish $7.50 as support. Alternatively, consider dollar-cost averaging to invest calmly without focusing too much on market fluctuations and achieve a favourable average price.

Cryptonary’s take 🧠

We're downright thrilled about the upcoming launch of FraxChain!  With FraxChain, the main goal is to help Frax capture even more value and give its tokens extra utility.

However, there's a challenge ahead—convincing other DeFi protocols to jump on board and join the new chain. We'll be keeping a close eye on how this pans out because it will shape the future of FraxChain.

That said, Frax will have the opportunity to generate a lot more revenue and this revenue will be shared with FXS stakers. That's why we believe FXS is undervalued right now. 

If you're eager to get in on the action and grab some FXS, here's a tip. Keep an eye on the support level around $7.50 for FXS. Once it establishes itself there, it could be a good entry point. 

Another approach worth considering is dollar-cost averaging. By gradually investing over time, you can navigate market fluctuations and build your FXS position steadily.

As always, thanks for reading.🙏

Cryptonary, out!