Trump's Advisor Promotes a New Stablecoin Called Frax

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Stephen Moore, a former Trump advisor and his candidate for the Fed, revealed his plans to introduce a new stablecoin, Frax, which is supposed to be the world's first fully decentralized global currency.

On Monday, Moore announced plans for a new cryptocurrency that will be pegged to the US dollar, which will result in it being more stable than other stablecoins. The new currency's goal is to eliminate the costs of currency transactions and simultaneously reduce, currently worldwide common, currency manipulation.

Moore commented on the possible influence the stablecoins may have on financial markets:

"Central banks will soon feel the competition from private currencies such as Frax. The days of government monopoly of currencies by central bankers is coming to a screeching halt."

"Currencies are intended to retain their value over time, but given the wild gyration in values of currencies and the struggle in many countries with hyperinflation, we need a global currency that has a stable value to benefit consumers, businesses and investors."

- adds Moore.

Stephen Moore is a well-known economic commentator and former adviser to Donald Trump, nominated by him to a position of a member of the Federal Reserve Board (Fed). The nomination, however, was withdrawn. Moore, along with Ralph Benko (a former Deputy General of Ronald Reagan) is supposed to join Sam Kazemian, a co-founder of Everipedia, an online encyclopedia similar to Wikipedia, but based on blockchain. Frax will be launched in the coming months.

 

Frax and other stablecoins

Unlike other stablecoins, Frax will be based on a fractional reserve, which means it would be linked to the dollar value, but not necessarily one-to-one like other stablecoins. The mechanism is similar to the way in which central banks buy bonds back by issuing debt.

The project is be based on the algorithms of "borrowing reserves" and collecting interest, thanks to which the Frax's value will be connected with the dollar which, in turn, should maintain a stable price of the currency. As the creators claim, these "borrowings" are supposed to be granted as part of blockchain, which eliminates the need to have a central bank and provides the currency owners with complete confidentiality in the way the funds are spent. Currency users will have a possibility to make token transactions without fear of privacy, closure or bankruptcy of the government, and most importantly - price manipulations.

 

Does Frax have a chance of success?

Frax is not the first project of this type. A project called Basis, which raised $100 million in order to create a fractional reserve supported by a complicated series of bond sales became worldwide famous just a year ago. Due to regulatory actions, the project collapsed though.

Nevertheless, the creators of Frax are not discouraged by the failure of Basis. Moore's (an economist with decades of experience) experience and Benko's (chief adviser in the Reagan administration) specialized knowledge argue for the success of their project.

Benko said:

"Frax's unique and elegant design offers the prospect for success where other stablecoins have struggled. It will empower owners to trade in a currency that they know will remain a stable unit of account and store of value and transparent and reliable across the globe."

He also said that:

"We are making a reliable, safe and secure stablecoin designed to make the world's international financial and monetary system more stable and efficient, transforming the world of finance forever."

If the project will really be a success will be apparent in the coming months and years.

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