On Thursday, Frax Finance, developer of algorithmic stablecoins, announced that it would launch the Frax Price Index, or FPI, on the Partisia blockchain. The benchmark would have its stablecoin pegged to it and serve as a competitor to the standard Consumer Price Index, or CPI. Although the latter is an almost universally adopted indicator of inflation, skeptics have claimed that its methodology does not take into account elements such as house prices, college tuition, health care, etc. All of which has increased significantly in the last decade in the United States.
Brian Gallagher, co-founder of Partisia Blockchain, explained the development:
Together with the advanced privacy oracles of the Partisia Blockchain, a variety of collectively collaborative demographic purchase data is converted into reliable indices that allow FPI to disrupt the non-transparent methods used so far to report inflation data.
In a previous interview with Cointelegraph, Sam Kazemian, a co-founder of Frax, explained that FPI's stablecoin will have a participation component. As a result, there will be an interest-bearing performance on the FPI in addition to the primary function of complying with the CPI standard, thereby enhancing the value proposition of a stablecoin pegged to it. "And with, with the FPI, you can think of it as essentially a commitment to monetary policy parity," Kazemian said.
According to CoinGecko, Frax is currently the seventh largest stablecoin with a market capitalization of $ 1.35 billion. Unlike fiat money stablecoins, algorithmic stablecoins balancing funds held on the blockchain through smart contracts with supply and demand rather than relying on reserves.
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