Bulls Are Surfing the 50-Day Exponential Moving Average

Frax Finance has recently become more competitive in the DeFi sector by incorporating Real World Assets (RWA) into its protocol. The inclusion of RWAs has boosted Frax’s potential in the DeFi sector, which has become increasingly competitive as more protocols join the space and old ones continue to make improvements.

Frax v3, the latest iteration of the protocol, was designed to achieve full collateralization through the use of assets such as RWAs. It heavily relies on AMO smart contracts and a mix of permissionless, non-custodial subprotocols to ensure its overall stability. The protocol also integrates internal stability mechanisms such as Fraxlend and Fraxswap, while external support from Curve adds an extra layer of stability.

What is the RWA Strategy of Frax Finance?

The RWA strategy includes four asset categories: short-dated U.S. T-bills, Federal Reserve Overnight Repurchase Agreements, USD held at Federal Reserve Banks, and Money Market Mutual Funds. This strategy aims to provide a reliable source of income by collaborating with FinresPBC which focuses on low-risk, cash-equivalent assets that closely match the IORB rate.

Difference Between the FRAX and FXS

Frax v1 utilizes fully on-chain oracles including Uniswap and Chainlink. The stablecoin FRAX is designed to maintain a tight band of around $1 per coin, while the governance token Frax Shares (FXS) gains fees, seigniorage revenue, and excess collateral value.

The sFRAX vault offers staking opportunities to users with the potential to earn returns in FRAX stablecoins. This approach tracks the Interest on Reserve Balances (IORB) rate of the U.S. Federal Reserve, a recognized risk-free rate, to provide traditional on-chain yields for the FRAX stablecoin.

Prediction of FXS Coin Price 

At the press time, the FXS coin price is trading at $6.85. The bulls are taking control as the trend is bullish. The immediate support as per the current price action is at $5.4 while the immediate resistance is at the $7.46 level. The RSI was showing bullish volume until the end of November when it touched the overbought level of 74. 

At present, the RSI is at 52 is indicating a neutral strength in the pricing. However, the bulls are surfing the 50-day EMA which is at $6.398. The prediction for the current trend will be bullish as long as the bulls can keep their territory of the uptrend line.

Conclusion

Frax v3, the latest iteration of the protocol, was designed to achieve full collateralization through the use of assets such as RWAs. The governance token Frax Shares (FXS) gains fees, seigniorage revenue, and excess collateral value. The current trend is bullish while the prediction goes with the trend.

Technical Levels

• Support Levels: $5.43 and $4.07
• Resistance Levels: $7.46 and $9.32

Disclaimer

The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading in stocks, cryptos or related indexes comes with a risk of financial loss.

With a background in journalism, Ritika Sharma has worked with many reputed media firms focusing on general news such as politics and crime. She joined The Coin Republic as a reporter for crypto, and found a great passion for cryptocurrency, Web3, NFTs and other digital assets. She spends a lot of time researching and delving deeper into these concepts round the clock, and is a strong advocate for women in STEM.