FXS Coin Price Prediction News: Co-founders of FRAX Crypto are Planning on Injecting $20 million in Buybacks to Improve Plunged Token Value

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The protocol, if approved, will purchase back and burn $20 million in FXS. Because of the repurchase and burn procedure, the tokens will be removed from circulation, reducing the circulating supply.

FXS token buyback

Quick Summary:

  • The initiative will use $20 million from the protocol to buy and burn its own FXS coin as part of the plan.
  • The buyback program aims to boost the token’s value, which has plummeted in the last six months.

Frax Finance co-founders Sam Kazemian and Travis Moore issued a fresh governance proposal for a $20 million repurchase of the protocol’s Frax Shares (FXS) token on Wednesday.

Frax Finance is a fractional algorithmic stablecoin protocol that uses FRAX as its stable currency.
The stablecoin’s peg to the US dollar is maintained by two mechanisms: partial collateral backing by USDC and a trading algorithm that trades FRAX and FXS.

The buyback, according to the proposal’s creators, is required to reverse the token’s price decline. FXS has dropped more than 85% from its all-time high of $42.80 set at the beginning of the year.

FXS, like the rest of the crypto market, has lost a lot of value during the current bear market, according to today’s proposal. However, Kazemian and Moore disputed that Frax as a stablecoin project is still alive and well.

As a result, at its current pricing, FXS is the project’s most undervalued asset. According to the idea, buying back the token is “the optimal use of money dollar for dollar invested.”

The protocol, if approved, will purchase back and burn $20 million in FXS. Because of the repurchase and burn procedure, the tokens will be removed from circulation, reducing the circulating supply.

Frax is now trading at $6, up from $4 when the proposition was first launched. At the present pricing, a $20 million repurchase would remove around 3.37 percent of the token’s total supply of 99.8 million tokens.

The buyback will happen via Fraxswap, a decentralized exchange built to process large trades at minimal slippage if the community approves the proposal. The process could take between three days or a month to be completed.

This latest governance proposal on Frax goes against the recent trend seen in some DeFi protocols where community members are calling for emergency treasury management actions.

The Block recently reported that a Lido developer proposed the project sell $17 million of ether from its treasury funds to “prepare for the bear market.”

Other projects like Fei are also looking at plans to liquidate a portion of their treasuries for the same reason.

 

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