Market StructureAdoption
Frax Finance Says Frax USD Is 103% Collateralized Across 10 Positions
Frax Finance disclosed that its Frax USD collateral pool is currently maintained at 103% overcollateralization spread across 10 distinct underlying positions.
So what
Concentrating a protocol's backing across only 10 distinct positions creates extreme idiosyncratic default risk. A single distressed private company valuation markdown could wipe out the 3% overcollateralization buffer, threatening systemic contagion across the protocol's stablecoin iterations.
ProductsSource: TOKENPOST ↗