{"id":"frankencoin","hidden":false,"ipfs":"QmS7vgApWptiACLvXc4vdKaAKbnf3XwRUvZa2CCouTFWq3","language":"en","transactionHash":"0xd4d9f41571b1832e101ef294f0ac39d90e811ca10cd5939bfd630592b619fc44","created":"2025-12-15T12:24:56.878Z","updated":"2026-10-06T18:50:28.081Z","title":"Frankencoin","summary":"Frankencoin is a decentralized, overcollateralized stablecoin protocol on Ethereum that issues ZCHF, a Swiss franc‑denominated stablecoin, and uses Frankencoin Shares (FCS) as its equity and governance token.","content":"**Frankencoin** is a decentralized, collateralized [stablecoin](https://iq.wiki/wiki/stablecoin) protocol designed to keep the value of its Swiss franc-denominated token in line with the Swiss franc (CHF) through over-collateralized positions, governance mechanisms, and market-based incentives. The system uses Frankencoin (ZCHF) as its Swiss franc-denominated [stablecoin](https://iq.wiki/wiki/stablecoin) and Frankencoin Shares (FCS) as its on-chain equity and [governance token](https://iq.wiki/wiki/governance-tokens), with FCS providing governance rights and exposure to the protocol’s reserve pool.[\\[1\\]](#cite-id-gbXtU0iYoAxdD0K8) Frankencoin Shares (FCS) is backed by the ZCHF reserve pool and is tradable on [decentralized exchanges](https://iq.wiki/wiki/decentralized-exchange).[\\[8\\]](#cite-id-e3hl2jt7t4)​\n\n## Overview\n\nFrankencoin is a decentralized, overcollateralized [stablecoin](https://iq.wiki/wiki/stablecoin) protocol built on [Ethereum](https://iq.wiki/wiki/ethereum) that issues Frankencoin (ZCHF), a [stablecoin](https://iq.wiki/wiki/stablecoin) designed to track the value of the Swiss franc, and uses Frankencoin Shares (FCS) as its single equity and [governance](https://iq.wiki/wiki/governance-tokens) token representing a share of the protocol’s ZCHF reserve pool. FCS provides veto-based governance rights over [collateral](https://iq.wiki/wiki/collateral) types and minting mechanisms, and earlier [governance tokens](https://iq.wiki/wiki/governance-tokens), Frankencoin Pool Shares (FPS), were migrated 1:1 into FCS when the new token was introduced.[\\[8\\]](#cite-id-e3hl2jt7t4)​[\\[6\\]](#cite-id-OC1Ztd3nJeWdBxwe) Unlike many collateralized [stablecoins](https://iq.wiki/wiki/stablecoin), Frankencoin does not rely on external price oracles to trigger [liquidations](https://iq.wiki/wiki/liquidation). Instead, it uses an economic model based on overcollateralization, governance, and market incentives to maintain price stability, with [liquidations](https://iq.wiki/wiki/liquidation) occurring over longer timeframes. The protocol is governed through a veto-based system in which FCS holders can approve or reject new [collateral](https://iq.wiki/wiki/collateral) types and [minting](https://iq.wiki/wiki/minting) mechanisms, while also assuming the financial risks and rewards associated with the system.\n\nThe protocol supports several primary functions, including payments, borrowing, and Swiss franc-denominated [digital assets](https://iq.wiki/wiki/digital-assets). Users can [mint](https://iq.wiki/wiki/minting) ZCHF by depositing approved [collateral](https://iq.wiki/wiki/collateral) into on-chain borrowing positions, similar to vaults used in other decentralized lending protocols, with borrowing costs charged upfront and reserves maintained to support [liquidation](https://iq.wiki/wiki/liquidation) events. The protocol consists of a series of [Ethereum](https://iq.wiki/wiki/ethereum) [smart contracts](https://iq.wiki/wiki/smart-contract) that manage token issuance, collateralized debt positions, governance, and [collateral](https://iq.wiki/wiki/collateral) approval. Its architecture allows additional [minting](https://iq.wiki/wiki/minting) contracts to be introduced through governance, enabling the system to support new [collateral](https://iq.wiki/wiki/collateral) types and issuance mechanisms over time.[\\[2\\]](#cite-id-sj2Bj0hGVctmJTrl) \n\n### History\n\nFrankencoin was developed from research by [Luzius Meisser](https://iq.wiki/wiki/luzius-meisser) at the University of Zurich and is based on the concept of a Continuous Capital Corporation, an autonomous financial system designed to manage capital through [smart contracts](https://iq.wiki/wiki/smart-contract), governance mechanisms, and market incentives. The protocol’s design explores the economic principles behind collateralized [stablecoins](https://iq.wiki/wiki/stablecoin), including [collateral](https://iq.wiki/wiki/collateral) risk, auction-based [liquidations](https://iq.wiki/wiki/liquidation), governance structures, and the incentives required to maintain price stability. Unlike [fiat](https://iq.wiki/wiki/fiat-money)-backed [stablecoins](https://iq.wiki/wiki/stablecoin) that depend on centralized issuers or traditional banking systems, and algorithmic [stablecoins](https://iq.wiki/wiki/stablecoin) that rely primarily on market-based mechanisms, Frankencoin uses a combination of overcollateralization, equity-backed governance, veto controls, and [oracle](https://iq.wiki/wiki/oracle)-free [collateral](https://iq.wiki/wiki/collateral) valuation. The system’s model places decision-making responsibility with participants who have financial exposure to the protocol, aligning incentives between governance participants, [collateral](https://iq.wiki/wiki/collateral) providers, and [stablecoin](https://iq.wiki/wiki/stablecoin) users.[\\[1\\]](#cite-id-gbXtU0iYoAxdD0K8) \n\n## Features\n\n### Savings Module\n\nThe Frankencoin Savings Module is an [Ethereum](https://iq.wiki/wiki/ethereum)-based [smart contract](https://iq.wiki/wiki/smart-contract) that enables users to deposit Frankencoin (ZCHF) and earn a governance-defined savings yield while retaining full ownership of their assets. Unlike traditional lending protocols, deposited ZCHF is not loaned to other users or used as [collateral](https://iq.wiki/wiki/collateral) to support the protocol, remaining fully segregated and available for withdrawal at any time. Interest is funded by the protocol's equity pool, begins accruing after a three-day waiting period intended to discourage short-term transactional deposits, and is calculated as simple interest on the principal balance rather than compounded. The savings and borrowing rates are determined independently through Frankencoin's governance process. The module also includes an optional referral mechanism that allows wallets, [decentralized applications](https://iq.wiki/wiki/decentralized-application), and other integrators to receive a configurable share of the interest earned by referred users, providing an incentive for third-party integrations while preserving the protocol's decentralized savings infrastructure.[\\[4\\]](#cite-id-TIR19kSMegEe6wJH) \n\n![](https://ipfs.everipedia.org/ipfs/QmaN1CGpRou9ZQNBb5rPcakiEwz9kyrG2zGzzJsUkXk4Yv)\n\n### Collateralized Minting\n\nFrankencoin uses a collateralized [minting](https://iq.wiki/wiki/minting) system that allows users to create new ZCHF by locking approved [collateral](https://iq.wiki/wiki/collateral) into on-chain borrowing positions. Each position is owned by a single user, who can deposit [collateral](https://iq.wiki/wiki/collateral) and [mint](https://iq.wiki/wiki/minting) ZCHF up to a predefined limit based on a [liquidation](https://iq.wiki/wiki/liquidation) price rather than an externally supplied market price. Unlike many decentralized [stablecoin](https://iq.wiki/wiki/stablecoin) protocols, Frankencoin does not rely on price oracles. Instead, it uses a challenge-and-auction mechanism in which any participant can dispute a position they believe to be undercollateralized. If challenged, the [collateral](https://iq.wiki/wiki/collateral) is auctioned to establish a market price and determine whether the position remains sufficiently collateralized. Users can either propose entirely new [collateral](https://iq.wiki/wiki/collateral) types, subject to governance review, proposal fees, and defined financial parameters, or immediately [mint](https://iq.wiki/wiki/minting) ZCHF by cloning an existing approved [collateral](https://iq.wiki/wiki/collateral) position, allowing faster access to borrowing under standardized terms.\n\nOnce a position has been created, its owner can adjust the [collateral](https://iq.wiki/wiki/collateral) amount, outstanding debt, and [liquidation](https://iq.wiki/wiki/liquidation) price, while [minting](https://iq.wiki/wiki/minting) fees and reserve requirements are applied upfront to help protect the protocol against losses. Repaying borrowed ZCHF releases the associated [collateral](https://iq.wiki/wiki/collateral), and reserve balances may be used to offset part of the repayment or absorb losses during [liquidations](https://iq.wiki/wiki/liquidation). The protocol's auction design is intended to reduce opportunities for price manipulation by separating the incentives of position owners and challengers, eliminating the need for external price feeds while ensuring [collateral](https://iq.wiki/wiki/collateral) values are determined through open market bidding. If an auction concludes below a position's [liquidation](https://iq.wiki/wiki/liquidation) threshold, the [collateral](https://iq.wiki/wiki/collateral) is liquidated, reserves are applied toward repayment, challengers receive predefined rewards, and any remaining gains or losses are absorbed by the protocol's equity pool, making governance participants responsible for the system's residual risk.[\\[5\\]](#cite-id-jNFKdTzPQR0TOIAl) \n\n## Tokens\n\n### ZCHF\n\nFrankencoin (ZCHF) is a collateralized [stablecoin](https://iq.wiki/wiki/stablecoin) designed to track the value of the Swiss franc through economic incentives rather than a direct [fiat](https://iq.wiki/wiki/fiat-money)-backed reserve or external price [oracle](https://iq.wiki/wiki/oracle). The system requires over-collateralization, meaning each Frankencoin in circulation must be backed by [collateral](https://iq.wiki/wiki/collateral) assets with at least equivalent value. Instead of relying on [oracle](https://iq.wiki/wiki/oracle)-driven [liquidations](https://iq.wiki/wiki/liquidation), Frankencoin uses market-based mechanisms that allow greater flexibility in accepted [collateral](https://iq.wiki/wiki/collateral) types while reducing dependence on external data sources, although this results in slower [liquidation](https://iq.wiki/wiki/liquidation) processes. Frankencoin Shares (FCS) holders influence the system’s long-term stability by adjusting economic parameters such as [minting](https://iq.wiki/wiki/minting) costs, creating incentives to maintain alignment between ZCHF and the Swiss franc while protecting the value of the broader protocol.[\\[2\\]](#cite-id-sj2Bj0hGVctmJTrl)​[\\[3\\]](#cite-id-8srFGlELvhAbmHHm) Users can also access a 1:1 bridge between ZCHF and the CHFAU asset, enabling redemption of on-chain ZCHF into Swiss franc-denominated bank money through intermediating infrastructure.[\\[2\\]](#cite-id-sj2Bj0hGVctmJTrl) \n\n### FCS\n\nFrankencoin Shares (FCS) are the equity and [governance](https://iq.wiki/wiki/governance-tokens) token of the Frankencoin protocol, representing a claim on the reserve pool that accumulates fees and interest from ZCHF minting. Users can add reserve capital to the protocol to receive newly created FCS, while redemptions reduce the share supply, so that FCS supply expands only when new capital enters the reserve pool and contracts when capital exits. The value of FCS reflects the financial position of the protocol, increasing as the system accumulates income from borrowing fees and successful [liquidations](https://iq.wiki/wiki/liquidation), and decreasing when reserves absorb losses, giving holders exposure to both the upside and downside of protocol performance.[\\[8\\]](#cite-id-e3hl2jt7t4)​\n\nFCS grants time-weighted governance rights in which voting power grows with both token holdings and holding duration, rewarding long-term participation. Holders can veto proposed new minters and [collateral](https://iq.wiki/wiki/collateral) positions with a relatively small share of total voting power, with around 1% of votes being sufficient to [block](https://iq.wiki/wiki/block) changes under the protocol’s veto rules.[\\[8\\]](#cite-id-e3hl2jt7t4) The protocol uses a predefined capital valuation model in which the market value of FCS is tied to the amount of equity held in the reserve pool rather than determined solely by secondary-market trading, allowing users to [mint](https://iq.wiki/wiki/minting) or redeem shares against the pool’s net asset value. When FCS was introduced, the earlier [governance token](https://iq.wiki/wiki/governance-tokens), Frankencoin Pool Shares (FPS), was migrated 1:1 into FCS, preserving prior holders’ proportional exposure and governance rights without altering the underlying economic structure of the reserve pool.[\\[6\\]](#cite-id-OC1Ztd3nJeWdBxwe) \n\n## Governance\n\nFrankencoin uses a veto-based governance model designed to balance decentralization with operational efficiency. Rather than relying on lengthy token-weighted voting processes, governance allows participants to submit proposals that can be enacted if no qualified Frankencoin Shares (FCS) holders veto them during a defined review period. Proposals typically require a fee and can include changes such as introducing new [collateral](https://iq.wiki/wiki/collateral) types or minting modules. The system’s [smart contracts](https://iq.wiki/wiki/smart-contract) are immutable after deployment, but modular extensions can be added through governance, allowing new functionality such as collateralized [minting](https://iq.wiki/wiki/minting), savings mechanisms, and cross-chain integrations without altering the core contracts.\n\nGovernance power is determined through accumulated FCS voting rights, which increase based on both token ownership and holding duration, rewarding long-term participation while limiting short-term manipulation.[\\[8\\]](#cite-id-e3hl2jt7t4) Holders with around 1% of voting power can [block](https://iq.wiki/wiki/block) proposals, with delegation mechanisms allowing participants to combine voting power across addresses. The governance model extends across supported [blockchains](https://iq.wiki/wiki/blockchain) by allowing [mainnet](https://iq.wiki/wiki/mainnet) voting rights to be verified on other networks. By relying on economic incentives, long-term capital commitment, and targeted veto authority rather than frequent votes, Frankencoin aims to maintain decentralized oversight while reducing governance complexity.[\\[7\\]](#cite-id-b4KsH7LlWSsOBivp)​\n\n## Partnerships\n\n* Mt Pelerin\n* DFX\n* [Curve](https://iq.wiki/wiki/curve-finance)\n* [Uniswap](https://iq.wiki/wiki/uniswap)\n* Enso\n* [MEXC](https://iq.wiki/wiki/mexc)\n* [CoW Swap](https://iq.wiki/wiki/cow-protocol)\n* Zeal\n* [GnosisPay](https://iq.wiki/wiki/gnosis)\n* Aktionariat\n* Plusplus\n* Bitcoin Suisse\n* [Morpho](https://iq.wiki/wiki/morpho)\n","recentActivity":"{\"items\":[{\"id\":\"40a048f8-bd22-40ee-b6ac-6d258976eaeb\",\"title\":\"Frankencoin\",\"description\":\"Frankencoin (ZCHF) is a decentralized stablecoin soft-pegged to the Swiss franc. 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