Exclusive interview with Frax Finance founder: Frax is the only fully collateralized decentralized stablecoin

PANews · 2023-03-16T03:35:02.000Z

Written by: Revelo Intel Compiled by: Shenchao TechFlow In this episode, DeFi Dave interviews Frax founder Sam Kazemian and talks about Frax’s currency premium, stealth products, on-chain governance and other topics. Below are some notes taken, let’s learn more together. Stablecoin Any stablecoin that is not backed by at least 100% external collateral will not succeed. Recently, the Frax community voted to 100% stake the entire supply of $FRAX. $FRAX is the only fully collateralized decentralized stablecoin. Currency Premium at Frax Currency Premium is the concept that if you issue a stablecoin or liability, people will use that stablecoin without expecting an issuer payment or interest rate. The vast majority of crypto protocols will become stablecoins or issue their own stablecoins at scale. Most financial primitives look like fractional reserve banking. LSD or Liquid Collateralized Derivatives are basically $ETH stablecoins. A stablecoin is something issued by an entity with some implicit or explicit commitment to maintaining a certain price. $frxETH has a Curve AMO that can be exchanged between $frxETH and $ETH , like a mint and redeem feature. Financial rules or financial incentives affect protocols or protocol builders and communities. The most important and valuable way for large DeFi protocols to build moats to protect themselves and maximize their value is to issue a liability that people use as currency. Stablecoinism Stablecoinism is abstracted away, like cross-chain bridges that people might not think of. The most valuable advantage of a cross-chain bridge is that it is defensible and others cannot fork or commoditize it by lowering fees, but in fact they issue a stablecoin on the other side of the chain. The cross-chain bridge project is essentially a stablecoin issuer. Curve is an excellent exchange, better than anything else. The most important thing about being a builder is ensuring safety and seeing it as a responsibility, which is the foundation of this industry. It's no accident that Frax is becoming more secure because it's getting bigger and more important. Frax’s Stealth Product They are developing a product called BAMM, which stands for Borrowed Automated Market Maker, which is a potential zero-to-one innovation for DeFi. The idea is that without the need for an oracle, it will build liquidity against any asset and allow people to borrow against it as liquidity rises in the asset. On-chain governance at Frax Frax is designing a mechanism called FRXGov, with the idea that large protocols will always require some form of human intervention. They hope to be able to make recommendations for human intervention without requiring people to trust them. When Frax creates a signature, they fully submit it to the FRXGov contract on-chain and after a certain time $FXS holders can vote or veto the signature. Then after a certain time, the smart contract itself allows that signature to be executed on-chain. There are many people who like to be actively involved in governance. Regulation Everything will be sorted out in the future. The United States has no history of screwing up major financial or technological revolutions. There are many areas in cryptocurrency that require active cooperation with regulation. Stablecoins require their own regulation.

Written by: Revelo Intel
Compiled by: TechFlow
In this episode, DeFi Dave interviewed Frax founder Sam Kazemian and talked about Frax’s currency premium, stealth products, on-chain governance, and more. Here are some notes from the conversation to learn more.
Stablecoins
Any stablecoin that is not backed by at least 100% external collateral will not succeed. Recently, the Frax community voted to 100% collateralize the entire supply of $FRAX. $FRAX is the only fully collateralized decentralized stablecoin.
Frax’s Monetary Premium Monetary premium is the concept that if you issue a stablecoin or liability, people will use that stablecoin without expecting a payment or interest rate from the issuer. The vast majority of crypto protocols will become stablecoins or issue their own stablecoins at scale. Most financial primitives look like fractional reserve banking. LSD or liquid collateralized derivatives are basically $ETH stablecoins. A stablecoin is something that is issued by an entity and there is some implicit or explicit promise to maintain a certain price. $frxETH has Curve AMO, which can be exchanged between $frxETH and $ETH, like a mint and redeem function. The laws of finance or financial incentives affect protocols or protocol builders and communities. The most important and valuable way for large DeFi protocols to build moats to protect themselves and maximize their value is to issue a liability that people use as money. Stablecoinism Stablecoinism is abstracted away, like cross-chain bridges that people may not think of. The most valuable advantage of a cross-chain bridge is that it is defensible and cannot be forked or commoditized by others by lowering fees, but the fact is that they issued a stablecoin on the other side of the chain. A cross-chain bridge project is essentially a stablecoin issuer. Curve is an excellent exchange, better than anything else. Be a Builder The most important thing is to ensure security and see it as a responsibility, it is fundamental to this industry. It is no accident that Frax has become more and more secure as it has become larger and more important. Frax's Stealth Products They are developing a product called BAMM, which means Borrowing Automated Market Maker, which is a potential zero to one innovation for DeFi. The idea is that there is no need for oracles, it will build liquidity based on any asset and allow people to borrow it when the liquidity of the asset goes up. Frax's On-Chain Governance Frax is designing a mechanism called FRXGov, the idea is that large protocols will always need some form of human intervention. They want to be able to make recommendations for human intervention without requiring people to trust them. When Frax creates a signature, they submit it entirely to the FRXGov contract on the chain, and after a certain amount of time, $FXS holders can vote or veto the signature.Then after a certain amount of time, the smart contract itself allows that signature to be executed on-chain. There are a lot of people who like to actively participate in governance. Regulation All things will be solved in the future. The United States has no history of screwing up major financial or technological revolutions. There is a lot of room for active cooperation with regulation in cryptocurrencies. Stablecoins need their own regulation.