Frax Bonds (FXBs) are tokens that resemble a zero-coupon bond that converts to the FRAX stablecoin on maturity. FXBs are debt tokens denominated in FRAX stablecoins, not a claim on any other asset or collateral.^[1][2]

Overview

FXBs (Frax Bonds) are decentralized utility tokens that convert into 1 FRAX stablecoin when they mature. FXBs can have any unix timestamp as their maturity date that veFXS governance approves so there will be multiple FXBs circulating in the future onchain.^[3] The initial launch will be 3 FXBs with timestamps of 6/30/2024, 12/31/2024, & 12/31/2026.^[2][4]

FXBs are debt tokens denominated in FRAX stablecoins, not a claim on any other asset or collateral. FXB tokens are only convertible to FRAX stablecoins, they do not guarantee FRAX peg, FRAX value, or yield/interest denominated in any other asset except FRAX. FXBs do not entitle the holder to any asset offchain or onchain (other than FRAX stablecoins). Thus, FXBs are not redeemable for US Treasury Bills nor any real-world asset, are not directly backed/collateralized by them (or any specific asset), and do not have any utility except converting to FRAX stablecoins at the pre-programmed maturity timestamp generated at their minting.^[2][3]

FXBs allow the formation of a yield curve to price the time value of lending FRAX back to the protocol itself. Each FXB token is a fungible ERC-20 token deployed from an onchain factory contract. Immediately at the minting time, FRAX stablecoins are minted into the FXB redemption contract for conversion on maturity. This prevents any external actions from being necessary for the full FXB cycle to occur and entirely remains trustless. Multiple FXB series can be circulating at all times (decided by frxGov) and no limit for the minimum or maximum maturity timestamp for FXBs deployed from the factory.
FXBs mature at the end of the day of their maturity date in UTC and have no expiration.^[2][4]

Series Auctions

FXB series price discovery happens through a continuous gradual Dutch auction (GDA) auction system that has quantity and price limits set by frxGov. This guarantees that FXB tokens are not sold for prices lower than the floor limit. Auctions happen through the FXB AMO contract and are trustless, permissionless, and non-custodial. New auctions can happen at any time through frxGov and FXB AMO Timelock-initiated transactions.^[2]