jason choi – @habits

Podcast notes – Frax with Sam Kazemian – Blockcrunch: “Frax wants to be the Central Bank of the digital economy”

Frax milestones in 2022
-only large stablecoin that didn’t break peg (other than DAI)
-launched Frax Ether – an ETH-pegged stablecoin and liquid staking derivative

Products
-Frax stablecoin (Frax USD) has ~$1B TVL
-FPI – CPI pegged stablecoin
-Frax ETH – ETH pegged stablecoin
-Considering a BTC pegged stablecoin

Only 8 employees at Frax, all engineers (!)
Focused only on building stablecoins

Use Curve and FraxSwap for liquidity

Increasing Frax USD collateral ratio to 100% (currently 90%, 10% is FXS) – still more capital efficient than Maker (130+% collateral)

Believes it’s impossible to have a USD pegged stablecoin at scale ($1B+ TVL) without having at least one single real world asset

No one has solved the stablecoin trilemma

Central Banks don’t lend directly to Apple, Tesla – they create money, give it to commercial banks – and the banks lend it
Frax isn’t a commercial bank – “it wants to be the Central Bank of DeFi, the digital economy”

On-chain, closest thing to risk-free asset is USDC – “call a spade a spade”
Blackrock manages all USDC treasury assets, in money market fund, buys reverse repos from NY Fed trading desk

Should a stablecoin have ONE or MANY real world assets?
Frax believes should just have one – “deposits on the Fed ledger”
Not going to lend to others – too hard to assess that risk
Maker plans to do this – it’s profitable, you take more risk

Goal is:
One entity – Frax DAO
One RWA (Fed deposits), not 50, not many counterparties
Whole stack simple – no intermediaries

Frax ETH – stablecoin pegged 1:1 to ETH, fully backed (100% CR), no interest, like wETH
Can stake in ETH PoS vault to earn interest – separate token from Frax ETH – currently offering 10% yield (but will likely drop as it grows), part of this is because people need to choose between staking Frax ETH or putting into eg Curve pool
Already 4th largest LSD
Frax core teams runs all the PoS validators – commodity hardware, geo-distributed – will eventually allow others to run validators
Protocol takes 10% cut of staking yields – 2% put aside for slashing risk
Lido has whitelist – to become a validator, have to ID and KYC – if slashed, losses are socialized

Measure of currency’s usage = amount of spot demand, amount of spot holdings
Like USDC, Tether, and Dai – they don’t incentivize any stablecoin holders, only way to measure organic demand for currency

Frax USD goal is to get as close to USDC as possible (100% CR, “risk free”, only one real world asset), but without blacklist

Podcast notes – Sam Kazemian (Frax founder) on Blockcrunch: “Bear market is bull market for stablecoins”

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

—

Here are older notes from Sam talking about Frax, Terra, Do Kwon, Curve, and more on Bankless

Podcast notes – Atom 2.0 with Zaki Manian and Sam Hart on Blockcrunch – “Pluralism is the way of Cosmos”

Guests: Zaki, Sam
Host: Jason Choi

Kyle Samani tweet: Solana = fat protocol thesis, while Cosmos = appchain thesis

Zaki – Cosmos origin is pluralistic view, a language / set of components to build a network of blockchains

Sam – architecture gives you a lot of control as an app designer, a next-gen platform, very customizable

2019 – Cosmos Hub launches, go to market – first production PoS; Binance uses SDK to build Binance chain; Akash, Kava launch

2020 – IBC ready and launches; then Osmosis launches; a giant forest of blockchains begins to grow

2021 – protocol controlled value / liquidity, MEV, shared security – can incorporate these primitives into ATOM and build a great value accrual story

Jason: initially didn’t think people would pay for Polkadot’s parachains (DOT), and that Cosmos ATOM didn’t have a great value accrual story

New monetary policy
-Existing target is 2/3 of tokens staked (when issuance rate changes)
-Now introducing liquid staking – remove the adaptive issuance model
–Extra initial issuance to kickstart process, but lower tail emissions – lots of community debate about this
-ATOM should capture real revenue

Will not nominate a single liquid staking protocol as the default – let the market choose among staking solutions

“Pluralism is the way of Cosmos”

Interchain security
-Appchains can rely on Cosmos validators to secure their own chain (similar to rollups on Ethereum)
–ATOM validators will also validate consumer chains (the appchains)
-Help align communities between appchains and ATOM holders

Interchain scheduler
-buy / sell NFT for block space at a specified future time
–marketplace for block space futures
-protocol can guarantee delivery of these NFTs

What reason for an app chain to integrate scheduler?
-it’s purely elective, no requirement for use
-eg, for Osmosis, gives them way to consolidate management of multi-chain MEV

Cosmos new chains will ask, how to align with builders / community
-right now it’s only info sharing
-but there’s demand for economic integration
–

Interchain allocator
-tool for Cosmos hub to hold and delegate assets
-new governance features to allocate funds across community
–

Cosmos shared security philosophy
-Cosmos rejects random committee based security – eg, sharding, Polkadot, Near
-converging on shared security that’s robust – mesh security, interchain security (different use cases for each)

Cosmos chains are generally all heading toward economic and political integration

Jason – Atom 2.0 – creating a more unified economy and more value flow back to $Atom

Timelines
1. Liquid staking developed by Iqlusion – ready to be merged into Cosmos SDK
2. Interchain security – live by January / Q1 2023
3. Allocator – R&D for 3 months, still a lot of open questions
4. Governance – groups module has been written

Podcast notes – STEPN founder Yawn Rong on Blockcrunch

Guest: STEPN founder Yawn Rong

Move to earn game

**Now 700K DAUs, will break 1M DAUs in June

Yawn is based in Australia

Lifestyle app with game + social elements

Walking or running to earn tokens

Download Android or iOS app, setup wallet (biggest user hurdle), deposit crypto (currently support SOL or BNB)
Buy sneakers to start earning

Sneakers have different qualities, types, and attributes
Want it to be like RPG, level up your sneakers
Get healthier body thru the process

Entry price now is $600-800 for floor price common sneaker

Considered free to play, but having no barrier to entry has its own troubles
**Rather have higher barrier to entry, then reduce it (eg, thru a rental market)

Revenue comes from buying / minting NFT sneakers
Users refer friends
Move to earn / health & fitness is a broader audience than play to earn / current NFT gaming
Thus can grow for a very long time

**Need external energy to inject into system – like the sun providing energy to Earth

Saw Bored Apes’ success – importance of social value – people willing to show off, community

Partner with sneaker brands

Two tokens
GST – in-game token, infinite supply – minting to create new sneakers, onboard new users
GMT – governance, platform token for future things they’ll build, finite supply

Trying to discourage speculation – people hoarding GST to pump price
Implementing dynamic pricing for GST to reduce speculation, because retail users get burned, and don’t want sneaker mint costs to be too high

Started as gameFi – but saw that it’s speculative, death spiral – so pivoted away
**Lifestyle app has more social element – want a vibrant running community
Doing 5-10 offline events in Japan, Australia, Spain, US
Web3 wallet interaction is weak, but bringing people together offline is powerful
Then they’re willing to pay for social features in-app, impress friends & community

Now they’re making money
As app grows, they’ll make less – but they’ll have exercise habit, and have community / social connections
People new to crypto will be impressed with earning $10-50/day
Today that money is provided by STEPN, but in future more and more of the earnings will be provided by ecosystem partners (sneaker brands, health & lifestyle brands)

FTX auction – Taiwan buyer bot sneaker for 2500 SOL – donated to charity

**Sneaker is an advertising billboard
Can make celebrity sneakers, branded sneakers

**Use sneaker as social identity
Will release Panda Skin sneaker design
Will work like NFT PFP images (profile photos)

Most gamefi having trouble bootstrapping new users – because it’s still limited to just crypto natives
Games are difficult because you must create your own narrative and world
Axie design is difficult to change, lots of dependencies

Focused on product – hands-on with all bugs, user feedback, iterate quickly
**Simple lightweight frontend to move fast, focus on robust backend
Product & community orientation
Spent a lot of time to refine ideas, cut clutter, focus on system design — haven’t made significant changes since launch
Have experienced game producers on team
Still building according to their roadmap – have lots of modules they plan to add – new badge system, additional items
“Walk for an hour, make $500” – very simple message, don’t want that to change

Moat is user-based
For new app, who’s paying that “earn” part of play to earn? It’s from other users. So you need users who want to hold the token, want to purchase tokens
Initial need is financial returns, but will stay for the community
How you kick off the “earn” is very important, initial missteps can cause a lot of problems

**Strongest advocates for STEPN are those who never exercised before – see the changes to body, energy, diet

GPS track to prevent just using a treadmill
Temporarily allow multiple phones
But anti-cheating is very important – otherwise hackers / bots can print money
Working continuously to improve

Chose walking and running because it’s the most broad accessible exercise
Even bicycle requires having access to a bike

Biggest milestone is getting 10s of millions of web2 users to web3, using STEPN app + STEPN wallet
STEPN as their first web3 experience, then provide more complex / deeper web3 experiences
Want to be web2>web3 gateway

Podcast notes – Secrets of NFT trading – DeezeFi and Jason Choi on Blockcrunch

Guest: DeezeFi “Deeze”
Host: Jason Choi

2017, playing fantasy sports, saw friends making money on crypto / eth
2018, lost all that money in shitcoins

Spent next 2 years dollar cost averaging into ETH and crypto, learning, trading

Defi summer – spent all day in Telegram for alpha

Lightbulb moment – flipped a floor punk, NFTs are like trading rare items in MMOs (WoW, Runescape) – had done a lot of that before, gave up on trading tokens (coins), and went full time on NFTs

owns 1500-2K NFTs, probably 300 “nice art” (1/1s)

initially bothered by lack of privacy, but now it’s a huge asset to easily show credibility / past performance / DAOs

hard to get accurate degenscore because he splits activity across wallets

Biggest win?
Holds a hoodie 3D glasses pipe cryptopunk
Realized wins: Squiggles (minted 50+ for under $100 each, sold $30K+), Fidenza (69eth to 290+ flip)

He flipped punks more for market making, higher volume and lower spreads

Biggest loss was buying Punk for 142eth and sold for 88eth

Spray and pray approach, similar to VC bets

Most important is team – Are they doxxed? Can he chat with them?

Hosts Twitter Spaces with interesting projects, brings other trusted investors / collectors to also ask questions, good way to vet team and project

Galactic Game NFT (?) – psychedelic PFP project
each one looks like a piece of art
artist was doxxed, prior track record

So much of NFT prices is memetic desire / human psychology
Only thinking “can I sell this to someone else for more money?”

Nansen holders breakdown is useful
See which whales have big positions
Some whales have paper hands – warning sign if they own large % of a collection

Bet on Azuki – good community, good team, NFT ownership was distributed

Crypto OGs generally buy what they like
New whales / institutions generally buy what’s popular / memetic

Early 2021 – Top Shot went insane – sparked lot of NFT degeneracy
Big issue is over-supply (also Art Blocks)

Still holds some Art Blocks – praying new institutional money will come in to bid

Which ones does he value most?
-his 2 forever Punks
-Squiggles – genesis Art Blocks project, by SnowFro
–CloneX – bet on the RTFKT team, just hodled for 100+ eth gains
-Azuki

negative on Pixel Vault, but early hodlers did very well (5+ eth)

Punks – limited supply, one of first, OG community, betting on lindy effect
not as bullish on Apes, doesn’t know how to value $APE coin

wary of hype
constantly “tries to sell hype”

always need 3 (of an NFT collection) so you don’t feel bad when you sell one

hired early to Fractional (fractionalizing NFTs) – thought their model was more sensible than NFTX
unlocks upside for large NFT owners, protects downside for smaller NFT buyers

photography NFTs
collected Twin Flames early – creator Justin Aversano was also doing stuff in Punks community
met other photographers, featured them in Twitter Spaces
sold a Twin Flames for 100+ eth

every 1/1 NFT – he immediately assumes it’ll go to zero (price)
allows him to hold for a long time, for a (potential) big win

in NFT space, you wanna bet on artists who are extraverts – someone who keeps sharing their narrative online
Justin (Aversano) was borderline annoying in how persistent he was in meeting his collectors and getting his work out there

Apes – very big grassroots movement – how they launched dogs to reward hodlers + gain momentum, then mutants, etc

Need 1 or 2 influencers to get ball rolling (for projects)
Ideally your project has “tinder”, the influencers add the fire

Advice to NFT investors
-be active on Twitter – add value and make friends
-survive the swings, steadily add capital
-be ok with losing – but you need to learn from your losses