Guest: Sam Kazemian (Frax founder, Everipedia founder)
Host: Jason Choi
Defi needs more zero-to-1 moments
Excited for FRAX’S FPI – stablecoin pegged to CPI instead of USD
Defi blue chips trending towards the “Trinity” of stablecoin, lending, and liquidity – clearly the future, strong network effects + consolidated value – it’s the original Defi stack
AAVE adding lending and stablecoin; CRV adding stablecoin; Frax has all 3; Binance does too
Frax is fractionally backed
-Didn’t believe in purely algorithmic stablecoins (like Luna)
-Claimed early that Basis and Terra don’t work
-They’re like banks with no reserves
-Frax is 93% backed by exogenous assets – protocol liquidity, stablecoins – closer to Dai than Luna
-worst case Frax will only de-peg to $0.93
-but 80+% of collateral is USDC (centralization risk)
Stablecoin trilemma – based on Vitalik’s blockchain scaling trilemma (throughput, scalability, decentralization)
1. Tight peg
2. Decentralized collateral
3. Capital efficiency
Fully decentralized ones – eg, RAI, LUSD – collectively don’t add up to much liquidity, hard to scale
“Bear market is bull market for stablecoins”
Expects Frax will approach 100% collateralized if the bear market lasts another year or so
Dai is $7B, Frax $1.5B stablecoin circulating supply
Would love for both to reach $1T supply
To get there, more economic activity needs to occur onchain – but whole industry mcap is only $1T right now
What’s he interested in angel investing?
-Really interested in L2 / scaling roadmap
-Hardware to accelerate ZKPs
-new innovative stability mechanisms for stablecoins
-new lending / liquidity methods
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Here are older notes from Sam talking about Frax, Terra, Do Kwon, Curve, and more on Bankless