Frax Finance

Frax Finance receives a B- risk grade (34/100) from Hindenrank, where lower scores indicate lower risk. Moderate risk — ambitious multi-product ecosystem where each new product adds smart contract risk to the stablecoin that backs everything A stablecoin ecosystem that pioneered partially-backed algorithmic dollars and has since expanded into liquid staking (frxETH), its own blockchain (Fraxtal), and a BlackRock-backed stablecoin (frxUSD). It manages $300M across all products. Its C grade reflects the sprawling product surface creating compounding smart contract risk.

The key risks identified for Frax Finance are: (1) The original FRAX stablecoin used a partially algorithmic design similar to UST. If the fractional mode is ever reactivated, a token price crash creates the same death spiral that destroyed $40B in Terra (2) The protocol parks its reserves in Curve and Aave. If either gets hacked, FRAX loses its backing without its own contracts being touched (3) A critical bug in the frxETH withdrawal system was secretly fixed without public disclosure, raising questions about what else might be patched quietly

Frax Finance scores 34/100 across eight risk dimensions: Mechanism Novelty: 5/15, Interaction Severity: 8/20, Oracle Surface: 3/10, Documentation Gaps: 3/10, Track Record: 4/15, Scale Exposure: 5/10, Regulatory Risk: 6/10, Vitality Risk: 0/10. The highest risk area is Regulatory Risk at 6/10.

Among 28 rated Stablecoin protocols on Hindenrank, Frax Finance ranks #5 by safety (lowest risk score = safest). Its 34/100 risk score and B- grade place it among the safer Stablecoin protocols.

Frax Finance scores 4/15 on the Track Record risk dimension, indicating some history of security incidents or exploits. Higher scores reflect more severe or frequent incidents. Review the full risk report for details.