Frankencoin (ZCHF) is a decentralized, over-collateralized stablecoin designed to track the value of the Swiss franc (CHF). The system operates on the Ethereum blockchain and several other networks, utilizing a dual-token model with the stablecoin (ZCHF) and a governance token, Frankencoin Pool Shares (FPS). ^{[1] [2]}​

Overview

Frankencoin was conceived from a PhD thesis titled "A Continuous Capital Corporation" at the Department of Finance, University of Zurich. The project's main founder is Luzius Meisser, who has a background in both computer science and economics. The name "Frankencoin" was chosen to reflect its autonomous, self-governing nature while also acknowledging "the risks associated with releasing an artificial machinery into the wild." The primary goal of the Frankencoin system is to provide a crypto-native, decentralized stablecoin representing the Swiss franc, a historically stable "safe haven" fiat currency. The system serves three main purposes: facilitating payments denominated in CHF, acting as a stable store of wealth, and enabling borrowing through the minting of new ZCHF against collateral.

Frankencoin employs a "soft peg," this means there is no rigid 1:1 link to the Swiss franc. Instead, a series of economic constraints and governance-controlled parameters, such as minting fees and savings rates, create arbitrage opportunities that incentivize market participants to push the price of ZCHF toward parity. This approach is analogous to how a central bank manages its currency's exchange rate. The core assumption is that FPS holders are incentivized to govern the system responsibly to maintain the peg, as the value of their own tokens is tied to the system's overall health and stability. ^{[2] [1] [3]}

Use Cases

• Payments and Store of Wealth: ZCHF provides a stable, on-chain asset for transactions and value storage denominated in Swiss francs. ^[2]
• **On

• and Off-Ramps:** Partners like DFX.swiss and Mt Pelerin facilitate the conversion between ZCHF and fiat currencies. ^[1]

• Asset Tokenization: The protocol can be used to tokenize real-world assets, such as company shares, enabling fractional ownership and on-chain trading. ^[3]
• Cross-Chain Interoperability: Through bridges like Bungee and its native multi-chain deployment, ZCHF can move seamlessly across different layer 1 and layer 2 networks. ^[1]

Architecture

The Frankencoin protocol is a modular system of smart contracts primarily built on Ethereum. Its architecture is designed to be resilient and decentralized, most notably through its avoidance of external price oracles for its core functions. ^[2]​

Core System Components

• Collateralized Debt Positions (CDPs): Users can mint new ZCHF by creating a personal position where they lock approved crypto assets as collateral. These positions must remain over-collateralized, meaning the value of the locked collateral must exceed the value of the minted ZCHF debt. To reclaim their collateral, users must repay the borrowed ZCHF. A portion of the minted ZCHF is held back by the system as a reserve to cover potential liquidation costs. ^[2]
• Equity Reserve Pool: This system-wide pool serves as the primary capital buffer and is funded by minting fees and direct investments from FPS holders. It has three main functions: absorbing losses from under-collateralized positions that cannot be fully covered, paying interest to users who lock their ZCHF in the savings module, and determining the value of FPS tokens through a bonding curve. ^[1]
• Frankencoin Savings Vault: This is an ERC-4626 standard vault where ZCHF holders can deposit their tokens to earn interest. The yield is paid from the Equity Reserve Pool, and the interest rate is a key parameter controlled by FPS governance to influence ZCHF demand. ^[1]

Tokenomics

The Frankencoin ecosystem operates on a dual-token model: ZCHF, the stablecoin, and FPS, the governance and equity token.

Frankencoin (ZCHF)

Frankencoin (ZCHF) is a collateral-backed stablecoin issued on the Ethereum blockchain (ERC-20) and designed to reference the value of the Swiss franc. It operates through a set of smart contracts without reliance on price oracles, with issuance and stability supported by on-chain collateral mechanisms.The multi-chain address for ZCHF is used on Polygon, Arbitrum, Optimism, Base, Avalanche, Gnosis, and Sonic networks. ^{[1] [4]}

Frankencoin Pool Shares (FPS)

FPS is an ERC-20 governance token on Ethereum. It does not have a fixed supply, as it is minted and burned via the bonding curve mechanism when investors add or remove capital from the Equity Reserve Pool. Its value is directly tied to the health and profitability of the Frankencoin system. ^[1]​

Security Audits

The project has undergone multiple security audits from several firms to ensure the integrity of its smart contracts. These include:

• Code4rena
• Blockbyte
• Decurity ^[1]

Use Cases

• Payments and Store of Wealth: ZCHF provides a stable, on-chain asset for transactions and value storage denominated in Swiss francs. ^[2]
• **On

• and Off-Ramps:** Partners like DFX.swiss and Mt Pelerin facilitate the conversion between ZCHF and fiat currencies. ^[1]

• Asset Tokenization: The protocol can be used to tokenize real-world assets, such as company shares, enabling fractional ownership and on-chain trading. ^[3]
• Cross-Chain Interoperability: Through bridges like Bungee and its native multi-chain deployment, ZCHF can move seamlessly across different layer-1 and layer-2 networks.

Partners and Integrations

Beyond on-ramps and bridges, the project's partners include Aktionariat, Ammer Cash, stayliquid.co, and Operal Solutions. The Swiss law firm LEXR provides legal counsel. ^[1]​

ZCHF is traded on both centralized and decentralized exchanges. Centralized exchange listings include MEXC. Decentralized trading venues include Uniswap v3 and Curve on Ethereum, Aerodrome SlipStream on Base, and Oku Trade on Gnosis Chain. ^[4]​