Frankencoin

Frankencoin is a collateralized stablecoin that tracks the Swiss franc and operates without price oracles. It uses auctions to settle disputed collateral instead. At $73M TVL across Ethereum, Gnosis, and Base in the 2026-08-14 survey, it was below our size floor. The design is distinctive, but a sleeve-sized position would make up a meaningful share of the venue’s liquidity. We do not open an individual review until it clears the floor; size alone decides this judgment, whatever the protocol’s quality. DefiLlama now records about $67.8M on Ethereum, so the result remains the same. TVL sustained above the floor would reopen the file.

Review triggers: events that reopen the verdict
• TVL sustained above the retired TVL threshold for 30 days

Watched nightly: a warning on its venues or files, or a cited document that changes, reopens the memo. The first confirmation is due 2026-11-15.

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 then finds its price without an external oracle. Bridges and approved minters can also mint or burn ZCHF under the system’s rules.

Control and operating evidence

FPS reserve shareholders provide equity, earn fees and liquidation gains, and take any remaining losses. Governance works through vetoes: anyone may propose a new minter or collateral mechanism, while two percent of voting power can veto it. Frankencoin publishes a ChainSecurity assessment and detailed documents on its accounting.

Exit consequences

A borrower repays and burns ZCHF to reclaim collateral. ZCHF holders cannot always redeem at par into Swiss francs; bridge liquidity and secondary markets provide their exit. Failed auctions draw first from the position reserve, then FPS equity, then the general borrower reserve. A shortfall could therefore spread to other borrowers.

Why the class rule decides

At roughly $67.8M, Frankencoin remains below the size floor. We do not open an individual review of each approved minter, collateral and bridge until it clears that floor. Sustained scale would reopen the review of peg liquidity, veto concentration, auction results, minter authority and reserve adequacy.

Research status

This is a capacity-unproven record for Frankencoin, not a quality rejection or approval. Reported TVL says how big the venue is, not what the client owns, who can change the rules, or how a position exits at a proposed size. The individual review opens when the protocol clears the size floor.

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 research above describes the protocol layer. Every position also inherits the asset it holds and the chain it settles on. The layer with the most administrative power sets the position’s effective control; that describes control, not quality or suitability.