Frax Finance, an entity developing algorithmic stablecoins, reportedly disclosed the release of the Frax Price Index (FPI) on the Partisia blockchain.

Specifically, the stablecoins would be benchmarked according to the benchmark, functioning as a rival to the standard Consumer Price Index (CPI). 

Regardless of the CPI operating a near-universally adopted inflation gauge, people with skepticism still reportedly stated that the methodology it employs does not cover items like housing prices, college tuition, healthcare, etc., all of which have undergone major surges throughout the last ten years in the US. 

“Together with Partisia Blockchain’s advanced privacy oracles, a variety of crowdsourced demographic purchasing data are converted into trustworthy indexes enabling FPI to disrupt the non-transparent methods so far used to report inflation data” Brian Gallagher, co-founder at Partisia Blockchain, offered further elaboration regarding the development. 

Sam Kazemian, co-founder of Frax, reportedly shared an explanation that the FPI stablecoin will have a staking component. Consequently, an interest-bearing yield on the FPI will be available, apart from the core feature of performing to the CPI standard, hence bringing forth enhancements to the value proposition of a stablecoin pegged to it.

“And with the FPI, you can kind of think of it as essentially as a commitment to a peg in monetary policy,” Kazemian further claimed.

Per CoinGecko, Frax reportedly stands at the seventh spot in the list of top stablecoin, having a market cap of $1.35 billion. Different from fiat money stablecoins, algorithmic stablecoins balance funds are safely kept on the blockchain through smart contracts, with supply and demand rather than being dependent on reserves.