Let's move on to March 2025. So, you're getting a call from Washington regulators. What? Tell us about it. And you moved to Washington.
Yes. So, I think the coolest thing is how quickly the entire stablecoin industry has moved on from the Genius Act, right? And in early 2025, uh, FRA, I, uh, co-founder Travis Moore and a few other people like the Blockchain Association, Brian Armstrong from Coinbase and all these, uh, titans of American industry American industry , were actually regulating and discussing the wording of the Genius Act, right? So for those who don't already know or, uh who don't already know or, uh , just want a reminder, the Genius Act legalized stablecoins as, essentially, a federally regulated, adopted, uh, digital dollar. So, I think this is probably the biggest event that's happened in the US since we've been in the US, and stablecoins, uh, are probably the biggest category, maybe outside of professionals in the industry.
Uh, it was, essentially, a fundamental, uh, year. So, let's just break down the parts of the law that interest you and that are important to you as a founder. Hmm, as we talked about some key points earlier. Which ones do you think are the most important to turn into real products? Yes.
So, just like the TLDDR of the Genius Act, if you are a stablecoin issuer and you issue stablecoins that have three or four very strict and narrow types of collateral, uh, Fed reverse repos, money market fund securities, Treasury bills Treasury bills , uh, and, uh, FDIC-insured bank deposits or RWAs that represent them, you can actually be a Genius-compliant stablecoin issuer in the United States. You can go to the OC or a state regulator and actually issue, essentially, uh, legal tender that banks, companies, fintechs, and others can actually accept, knowing that it's a federally regulated, uh, digital dollar. Steeply. And as you know, FRA has been around for a long time. I think you guys have been strategic about your positioning and you know, pretty much moving where the puck is going, which is where this industry is right now.
Hmm, why did you decide to create, um did you decide to create, um , a new version of Fracks like this ? Hmm, and how, um, did Genius Hack report this? Yeah, that's a great question because we're Ethereum, ahem, DeFi, kind of the OG group and protocol, and the original stablecoin released by FRA was a hybrid collateralized algorithmic stablecoin. Hmm, this is no longer our flagship product flagship product . We obviously can't just close it like that, can we ?
But, um, FRAXUSD, which is a Genius-compatible stablecoin, which is, um, integrated into a lot of important places like A4, Curve, other partners that we'll be launching with soon, that's our flagship product flagship product . And what this is, and the reason why we went in this direction, is that essentially, after the Genius Act, I think Genius Act, I think there is a very important base level of money that everyone in DeFi should use as a core infrastructure, whether it's USDC, or FRAUSD, or any USDC, or FRAUSD, or any other Genius-compatible stablecoin. There will be some important digital dollars issued for the infrastructure of major stablecoins, right? And this is the main thing, that this is actually the flagship Fracks product that we created. And we actually like to say that we were the first to create it, because as soon as we launched FRAUSD last year, it was almost exactly when the Genius Act was passed in July 2025 .
Uh, and obviously, you know, it doesn't necessarily matter who was first, but it was a cool milestone to say that this stablecoin was created exactly according to an actual law that was just passed in the US, right? And so I think it's super cool from the perspective of, well, like, having this, well, I don't know, I just think the organization has something that government regulators, you, your customers can support. Um, but let's look at the journey of Fracks users today. They visit your website. How is it different from, well different from, well , maybe Neo Bank or Coinbase?
Maybe you could. Yes. They simply add their bank account and borrow. What are they doing? Yes.
So I think the best way to think about it is that right now, in everything blockchain related, there needs to be a risk-free digital dollar, which is mostly using USDC or USDT. The problem is that many of these places don't actually have any relationship with the issuer. They do not receive any actual underlying risk- free rate return. Uh, they might do some kind of campaign or launch if they're lucky, or they'll be big like, uh, Hyperlid or something like that, but they're not really aligned in that way, are they? For example, the specific thing we're working on with A is their V4 launch, actually created a mechanism where if you borrow FRAUSD from V4, you always get a flow of the risk-free rate to yourself on the blockchain.
So, through our platform and through the actual FRAUSD smart contracts, we broadcast the underlying asset, and so there is a baseline risk-free rate that you always receive as a lender of FRAUSD on AV4. And so actually right now, even though it's still in the early stages, it's the highest TVL, uh, most borrowed digital dollar on v4. And so this vision is that all the new major infrastructure of the future, uh, should use fraud because it's much more coherent. We're not trying to turn back time, are we? If you look at AV3, yeah, which has billions and billions of USDC, USDT, uh, borrowed, we're not going there, are we?
We're not going to burn a bunch of tokens or anything like that. We look ahead and see where the major important DeFi primitives, DeFi assets, RWA assets are, where they need liquidity? Uh, where will they be used? Where will they be borrowed? Where will they have AMM pairs?
And we're working with protocols and asset issuers, and we're creating a sustainable revenue stream on those platforms so that the preferred and agreed-upon digital dollar, the secure, regulated, redeemable, Genius-compatible digital dollar that they should choose is FRAUSD, right? Good. So, let's double- click on this. I think that, you know, I'm sure people in the audience, you've used DeFi before or at least before or at least know about it. I don't think people realize that when they go to A and invest, you know, any USDC, uh, they lend it to V4, they earn that lending rate that they're getting now.
Uh, I think it's about 2% now, 2.5% about 2% now, 2.5% last time I checked. Yes. And if this is without incentives from, perhaps incentives from, perhaps , other projects, historically it has been even lower.
And, um, it's kind of terrible for me as a user if I borrow USDC because I should at least get the risk-free rate, right? For example, why am I not achieving this for all these other products? And that's why I think I'll just pause for a second. What you guys are doing is very important because we are using these primitives, these on-chain primitives, these on-chain metal... There is a lack of a secure digital dollar created in 2026 that would broadcast profitability on the blockchain.
That is, you can see all RWA assets that meet Genius requirements that support a stablecoin; you see stablecoin; you see how much it earns on the balance sheet and then it actually gets translated to these different venues, meaning you can go to the FRA website and see how the underlying RWAs make it up, and there are only money market fund securities, treasury bills held at U.S. institutions like BlackRock, BNY, uh, Wisdom Tree, uh, and any tokenized types of bank deposits that pass our risk profile for FDIC insurance. Of course. And so these underlying assets increase in value.
They bring in revenue, and this is how it gets passed on to your users in users in different ways, for example, on... Yes. So we have, essentially, this reserve linkage, as we call it, a smart call it, a smart contract that checks the balances in partner protocols like Curve pools, and the average, uh Curve pools, and the average, uh , FRAUSD balance, uh, is taken into account every day, and then the reserves that grow, there are new FRAUSD that are generated against them and then transferred directly to those venues. So it 's important to think about, as you say, this is the monetary Lego that underlies fiat currency, right? Basically, uh, this doesn't currently exist for, you know, other stablecoins like USDC and PYUSD.
They just run campaigns like this, right? They do this, uh, airdrop, or they can share some of the profits some of the profits , and then the most, uh, sustainable and long-term campaign is Coinbase USDC Earn, right? This is the one everyone is familiar with. Imagine a programmable version of this in the most important places in DeFi so that all the new underlying infrastructure of the future, like v4, new RWA pools, new protocols, new repositories, and everything else, would have a more consistent stablecoin to actually create and use. And it's important to add that stablecoins, which are the base money, which are the base infrastructure, not savings accounts or stores of savings, they are the biggest network effect, uh, in my opinion, uh, in products in cryptocurrency.
Because the definition of a network effect is that when n + 1 users when n + 1 users , uh, use it, the nth plus one gets more utility, right? It's much more expensive for the former when n is 1, right? To actually use a stablecoin, no one else accepts it. Nobody cares anymore, right ? N plus two, right ?
It's still more expensive ? It's still more expensive , but a little less so because there's another place that accepts it. As N gets bigger and bigger and bigger, right? For example, N is 1000, that actually becomes valuable, right? People don't exchange it.
They just keep it, right? Because 999 other places accept it as digital dollars. This is the most important feature the most important feature that needs to continue to be built for the core stablecoin infrastructure. If you have, for example, a stablecoin with a yield, something like vault 4626, the most important thing is a good risk-adjusted yield, right? This is the most important thing for you.
It doesn't matter if the you. It doesn't matter if the 10,000th person, uh, uses your stuff to save money, right? This does not change the next person's profitability. It's the same thing, right? And that's what's really important.
And we built FRAUSD so that every place, from A Curve to other places like Ether Fi, accepts FRAUSD as a direct expense along with USDC. All these places make it even more valuable as money. Yes. I think the reason I've always been inspired by DeFi always been inspired by DeFi is the idea of financial empowerment, right? Anyone in the world, internet connection, mobile phone, computer, whatever.
You can take advantage of opportunities that maximize your earning potential, your savings capacity, for example, things that are the foundation of human existence, you know, living in society. I always liked what Vitalik said about unnecessary rent seeking, and the fact that simply being a bad thing always resonated with me. And I think when you have some of these decentralized lending protocols where the stablecoin issuers don't pass on the profits, the interest that, you know, is generated by customer deposits, at some level they have costs, right? They have to, you know, pay legal fees, all the different things that make up their business. But now we have $300 billion in stablecoins, with about $16 billion in stablecoins issued by lending protocols.
So this scales 10x in 10 years. We're saying they'll just continue to make a certain amount of money, perhaps not based on actually doing more work. I think this is an issue I am addressing in the current model. And so I'm really excited and inspired to see products like FRA doing these things, passing on interest, making, um, the core parts of stablecoins composable, modular, and programmable. Um, I think that's cool.
I don't know. Yes, thank you. I mean, we definitely bring both efficiency, um, in market alignment and layout, as you said. So I think that's actually a very important thing. This is not just some launch campaign.
This isn't just some, um, um, flow of risk-free bets this month. This is a stable infrastructure that is composed and will exist, for example, on v4 in all these places that we will announce soon. And the important thing is that I, I said this earlier today, where the name of the game is something that's different from the last cycle, right? We're not going to, for example, centralize exchanges and say, "Oh, add FRAUSD pairs," because Tether is doing great and dominates the industry, right? We are not trying to provide extreme liquidity for FRAUSD relative to ETH, WBTC, or, you know, OG DeFi assets.
That's because USDC is already, uh That's because USDC is already, uh ...and as you said, they, because they dominate there, are able to capture all of that risk-free rate, right? And, uh, not to give it back, not to be inconsistent about it. What we see and what we are trying to do is think about what the next infrastructure of tomorrow will be like tomorrow will be like V4. What is WBTC's next asset?
What is the next RWA? They will need liquidity against a settled, safe, regulated digital dollar. And so we want them to choose FRAXUSD, because it's obvious, right? Where is the next biggest lending protocol after v3? This is probably v4 or or or morpho.
And we want them to start using mostly RAUSD because it makes economic sense, layout sense, alignment sense. And then, in 2-3 years, if you look around, right? Uh, in about 24 months, you might think, “Hmm, half of the stablecoins provided in V4,” which is now, you know, hopefully in two years will be much larger than V3, will turn out to be fraudulent. Oh, half of the risky assets and stocks that securitize Superstate, Centrifuge, uh, are redeemed against, uh, it's against, uh, the fracking US dollar, not just USDC. And that's when we know we've won, within striking distance, because that makes it one of the default digital dollars that is leveling out.
So, are you concerned about whether end users are transacting with fracking, you know, FRXUSD on websites? Or, for example, what are the key performance indicators or things that you're aligning around and how might that indicate, yeah, you know, where this space is going? Because I always thought it was a little silly, right, that we have these different stablecoins, right? If you just came here, why can't I just have dollars? I do n't really care about anything except making it work.
I think that's a good point, because I think that ultimately it's just going to be dollars, especially Genius-compliant ones, because everyone knows that the federal government is going to regulate the issuers and make sure they actually back up what they promise, and that they're safe money , right? Um, I think they'll actually become US dollars, right? When you transfer funds from Wells Fargo to JP Morgan, right? It's just 1:1. It doesn't say you transfer your Wells Fargo deposits for 0.
996 Wells Fargo deposits for 0.996 , yes, to JP Morgan or vice versa. Um, I think Genius stablecoins will hopefully be the first for XUSD, and then later on, the biggest ones, will be the ones that people will just remove the ticker from, right? They just pay in dollars. So, we have a few minutes.
Let's make a few predictions. I think this is this space, where is it going? Where is he going? What do you offer me? Uh, I think if we go back to this stage or to this conference in a year, so 12 months, the supply of stablecoins will double from about 300 billion now to about 600 billion.
I hope FraUSD will take on a significant portion of this amount. But I think people will be surprised to see once this all comes out, once banks start moving some of their balance sheets to hold compliant stablecoins, once companies and in Web 2 make treasury stablecoins for distribution and payouts. Some of these agreements we have actually signed ourselves, but have not yet announced publicly announced publicly . You'll just see every week JP Morgan issue 3 billion, you know, something like stablecoins, right? Or this company issues two billion stablecoins and starts paying out stablecoins with the treasury, right?
Especially if it's a fraction of US dollars, they'll earn the entire underlying asset, right? And just as we were no longer surprised to see DTCC tokenizing all stocks, this is just the new headline that everyone is expecting. People wouldn't be surprised if some institution issued two billion billion stablecoins and held them in a treasury, right? This is a huge event. Now, if you go to DeFi Lama and look at a look at a stablecoin that's two billion, it's like fourth place in the rankings or something, right?
In a year, my prediction is that we will see headlines like this every day. Some new bank is releasing something. They will issue three billion billion stablecoins. Some publicly traded company will make the payments. They will have a treasury.
They will transfer about 30 billion of their cash into three billion in stablecoins three billion in stablecoins . Yes. Steeply. I think we've all run out of time. Yeah, yes.
Thank you to everyone who listened. Thanks, guys.
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