Frankencoin
Rejected venues wait the longest for re-review; a rejection has to earn another look before the scheduled date.
Frankencoin is a collateralized stablecoin that tracks the Swiss franc and runs without price oracles, using auctions to settle disputed collateral instead. At $73M TVL across Ethereum, Gnosis, and Base at the 2026-08-14 survey, it sits below our $100M materiality line. The design is distinctive, but a sleeve-sized position would be a meaningful share of the venue’s liquidity. Rejected on size; size alone decides it, whatever the protocol’s quality. DefiLlama now records about $67.8M on Ethereum, preserving the result. TVL sustained above the line reopens the file.
- TVL sustained above $100M for 30 days
The research file
Mechanism
Borrowers open collateral positions, choose a liquidation price and prepay an interest fee to mint ZCHF. Anyone can challenge collateral they believe is insufficient; an auction discovers its price without an external oracle. Bridges and approved minters can also mint or burn ZCHF under system rules.
Control and operating evidence
FPS reserve shareholders supply equity, earn fees and liquidation gains, and absorb residual losses. Governance is veto-based: anyone may propose a new minter or collateral mechanism, while two percent of voting power can veto. Frankencoin publishes a ChainSecurity assessment and detailed accounting documentation.
Exit consequences
A borrower repays and burns ZCHF to reclaim collateral. ZCHF holders do not have universal par redemption into Swiss francs; bridge liquidity and secondary markets support exit. Failed auctions consume the position reserve, then FPS equity, then the general borrower reserve, potentially socializing shortfall.
Why the class rule decides
At roughly $67.8M, Frankencoin remains below the $100M materiality floor. Size decides before evaluating every approved minter, collateral and bridge. Sustained scale would reopen peg liquidity, veto concentration, auction performance, minter authority and reserve adequacy.
Sources
The claims above trace to these. Where a number could not be independently verified, the thesis says so.
- Frankencoin Docs — system overview and governance · primary · accessed 2026-08-14
Supports: ZCHF, FPS equity, veto governance, minter architecture - Frankencoin Docs — challenge auction · primary · accessed 2026-08-14
Supports: oracle-free challenge, auction, liquidation proceeds, equity loss - Frankencoin Docs — reserve and loss waterfall · primary · accessed 2026-08-14
Supports: position reserve, FPS equity, general reserve, loss waterfall - DefiLlama — Frankencoin survey record · secondary · accessed 2026-08-14
Supports: survey TVL, Ethereum deployment, CDP category
Inherited controls
The verdict above grades the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The least safe layer sets the position’s grade, and the position table names which one that is.
| Chain | Verdict | Grade | Control constraint |
|---|---|---|---|
| Ethereum | Approved | sovereign | No sequencer, no upgrade key, no operator who can be compelled — rule changes require social consensus. |
| Gnosis Chain | Approved · limits | crypto-backed | the chain validator path is permissionless, but its xDAI and canonical bridge exposure adds an 8-of-15 governor multisig outside the base consensus grade. |
| Base | Approved · limits | hybrid | Coinbase — one regulated US company — operates the only sequencer, and admin keys can upgrade bridge contracts within ~7 days. |