Frax workshop

uh hello hey guys um how's it going I'm Sam uh one of the co-founders of fra uh honestly I I didn't have too much here it's an open AMA the the presentation is after which is a kind of funny order so I just thought to have a Open Mic AMA uh hang out and don't even have to really stand up here can go around and then uh the actual keyn note is I guess on the main stage so uh yeah if anyone has any questions or anything or if we want to just hang out yeah yes sir defi Dave I was how would you explain uh it's a great question so frax itself is a universe of of defi applications and and soon modular L2 but the flagship product is a uh usdp stable coin and it decentralized stable coin that has a very unique mechanism in terms of having multiple decentralized mechanisms a bond system and a yield system which is actually what the presentation's about anyone anyone oh okay defi Dave yet again yeah so actually the that's a good that's a good like history of kind of how everything started because as you kind of expand in terms of stable coins you want to build a lot of different stability mechanisms that actually end up being uh things like lending protocols protocol owned liquidity systems and also just overall like different types of defi Primitives and then now in this like modular era of like rollups and and and blockchains one thing I like to say is that uh chains are the new smart contracts so if you're actually going to have something that is its own network and is able to actually make its own block space valuable you have to basically make it a entire modular system and actually use the the right pieces that basically for da consensus and execution uh yes sir yeah for sure so the question is H how fra is the first uh M2 chain instead of an L2 chain it's like a interesting uh meme in the community that's taken a life of its own the goal with fraxel is basically to be a settlement layer for a lot of the uh Roll-Ups in the in the multi-chain world so the next two to three years I think there will be thousands and thousands of of rollups app chains everything in between and the idea is in order to actually uh unify a lot of these chains in a lot of places that actually need liquidity you'll need one place where assets which is M2 assets either lsds uh stable coins yielding stable coins and other things actually settle on right and so that's basically the the vision of fraxel which is to have a vibrant ecos system with a lot of settlement of of various different blockchains so in in the end actually the reason we call it an M2 is M2 money refers to the first layer of hypothecation and so if we can actually capture the most amount of M2 money that's actually settled on fraxel I think will be one of the the most important chains and and networks across thousands of app chains that'll probably exist yeah oh yeah that that's a a good one as well so fra we call it it a modular rollup so we actually split uh execution consensus da and settlement and the idea behind it is that we basically have a op stack roll up for the execution so every everyone building on top of fraxel has a very familiar system very familiar way to actually build applications but then we also have a middleware layer that we're developing so that anyone can actually push ZK proofs of state or have an enrin bridge that actually verifies their state and actually settle their state on fraxel itself so that one is under development and so we'll launch that later so right now on the initial launch it is a full network of of an OP stack main net people can actually start building and then later you can actually settle not just on the ethereum execution environment the OB stack system basically something like bass right that's the initial release but then think of it like Bas plus a middleware layer that has consensus and settlement that's the final form and that's a very different thing than than an app chain that uses for example uh just optimism and has an enshrined bridge on ethereum L1 and it has like da either on Celestia or or eum or somewhere else yes sir why did you decide toess on why why did we or oh why did we build the withdrawals on the fra ether system oh that that's actually very interesting what as opposed to not doing it or oh okay that's a very good question so uh the way that fra ether and also actually the fra stable coin that's back to the dollar works is there's protocol own liquidity for people that don't know and a lot of people buy and sell the the asset on curve or or amm and I think your question is how come you have very specific way of just redeeming one for one eth from fra ether right yeah that wasn't the case you're right um the the real reason to be honest is because uh since frax ether is is a LSD we call it a stable coin as well because it doesn't that one that token doesn't have yield we wanted to have like just a place where everyone can honestly see you could just get one to one frax ether for one eth out at any time and anyone that comes can actually just get exactly the the collateral out and also that that makes it so that you don't actually have to decide whether to take the exact 99 you know 91 or 99 whatever it is right on on curve or something at that exact time if you're willing to wait you could always get if if you have for example 2,000 ether right and you don't want to actually have any kind of price impact you can get 2,000 ether if you have 2,000 fra ether you could get 2,000 fracks uh ether redeemed immediately uh if you're willing to wait for the the actual queue right so um maybe one day uh I'll actually talk about it in the presentation maybe one day we'll have redemptions for fra stable coins as well um and and a way to get exactly 1.0000 out as well uh through like an rwa pipeline would would you yeah as a follow would you not have recommended we do that or actually go ahead please because open yeah that's a good question what kind of data actually what's interesting like I think there's been a decent amount of redemptions but I I guess my what's your alternative view so just to rebalance the amm from protocol in liquid have system Sy pushing it little one way or the other when it's so that you can stimulate theow simulate the volumes also help with the adoption of as the alternative to which people and and I think personally that this Redemption me instead of having that volume is it's a that's a really cool uh perspective actually we should definitely talk and and i' love to hear more of uh strategy that in fact we we were looking at actually Justin who's also on the court team we were just looking at the fra ether q and and stuff uh together and uh maybe we should uh think about integrating this idea more instead of redemption cues to you extion so like the market can move against you in the me and if someone sees you dumping 8000 like they might that right and you get worse exu so like I think big holders don't want to have to deal with all that that's a additional risk they don't have to deal with so I think yeah it's a that's a good point and and actually it's kind of exactly what Drake and everyone's saying like part of the thing actually was a lot of people wanted to use frax ether instead of lios steth and one of the things we mainly heard about is like we can't do like large amount actually what what everyone's saying like uh I think one of the first people uh was origin protocol um they they had like thousands of fra e and they just felt like it would be safer if like there was a Redemption mechanism and uh one of the things I guess you have to think about is it might be better for the protocol like volume wise and and stimulating growth and stuff like that what you're saying but if you can't get market share from like Lio or like large players or even just new new entrance uh without that feature um it just becomes a pretty hard like like uphill battle like even if that's objectively clear it's like a good good idea uh if people don't use it right if people would just be like well you could redeem from Lio I'd rather just have Lio uh it it becomes like pretty hard to to convince people but it's actually a good point love to talk about it after so there's not enough volume and liquidity to process so until you start seeing the of volumes coming in volumes being processed and liquidity are reinforced those never will be able to be processed so unless people start trading volumes start trading to see support So by providing that support you're gatekeeping that volume and that ad but you know in time it might be good grow stry in the because you get you get the size and then you can that's a good it's a cool idea I'd love to talk about it yeah uh yes yeah uh so at first okay I I'll be honest at first when aen layer came out I was a little bit skeptical about the size of like reaking services that would have to be people actually paying to move the needle on like on making yields any different yeah yeah right like think of the amount of like oracles da or something right I'll be honest I I was a little bit skeptical right like think of the math like even things like da like Celestia right they don't make a lot of Revenue right now right and the ideas they're super cheap right so if you think of oracles da other uses and things like that I didn't really get it um the idea is brilliant right reaking and and and actually like leveraging the eth validator set but I just didn't think the the unit economics of it Mak sense um but then it was like a bull market and I think Ian Lair has like a 50 billion FTV or something and I I like okay well they can uh incentivize 25 billion for like a decade so I'm stupid for thinking about it like that so I totally changed my mind and I was like okay let me Farm some igen points and everything so um the numbers now work out um so but but the idea is brilliant the supply side I don't know until the market pumped now I know so yeah okay oh this guy is so deep in in in the ecosystem he knows exactly so for people that don't know exactly uh are LSD any stable coin that we have we basically have a token that's just the unit right like frax ether it does not yield uh fra it's p to USD it does not yield and then we have a staked version which just gets close basically to the risk-free rate whatever the the closest thing is in that system uh that's like a zero duration rate uh he's asking when we launch frax Bitcoin which is like our Bitcoin stable coin later not anytime soon right now but after frax the launch and everything if there will be a staked version of that so there will actually be literally place where everyone can actually get some very very lowrisk NE risk-free uh rate on bitcoin uh one thing I can say is it's not going to be ethal we're not going to split up the yield from like the LSD to like fund the the stake Bitcoin um but I think there will be srax BTC so so like there will be a way for people to actually store their Bitcoins in a extremely low risk I don't want to say risk-free especially because bitcoin's proof of work uh there's no way to get basically yield from the issuer itself from the P chain other than mining it but uh there will be a frax Bitcoin and it'll be a maybe not extremely high uh APR but I think even if there's 1% 1.9 2% way to get get yield denominated in Bitcoin I think we could have billion of dollars of of Bitcoin settled on fraxel it's a good question um eventually every fra asset should be able to be used on frax from account abstraction right and and like I was saying before we use op stack for the execution environment so when the optimism road map is fully coun abstracted so that they you can use anything yeah um but when it comes to the consensus and and and settlement from like the ZK proof aggregation that's going to be uh most likely fxs that that's going to be the actual staking token yes sir question is how much do you think about that as like AE part of in terms yeah uh it's it's good that we're we're talking about because it actually has directly to the presentation after this um for people that don't know we have a rwa uh system for the dollar PC stable coin so we're able to hold treasury bills uh broker account like t- builds different durations and and uh short data t- bills and all this stuff um it's a it's a pretty big part of our fra V3 design that's where a lot of s fra yield and fxbs the fra bond yields come from um that's actually what the presentation is is uh about so it definitely is a core part of of our long-term stable coin future and and road map but I guess the the right way to say it is that we're trying to move the fra dollar PC stable coin to become safer and safer and safer as as time goes on and the way to do that is actually make sure that it's it's basically backed by cash equivalence and and rwas depending on uh what kind of envir like yield environment it is and uh eventually allow that system to redeem fracks one to one for 1.00 USD uh I don't know if it'll be completely uh open to uh consumers but but basically kyc uh you know AML companies institutions and and things like that that that's the that's the longer term goal but I think that basically with with circle removing consumer uh uh accounts if you saw that and everything's just going through coinbase it becomes extremely difficult and extremely costly to to service like small scale consumer redemptions and consumer facing things so uh with fin BBC it's are like institutional way of holding a lot of asset that's a good point yeah yeah that's actually a good good way to say it too yes sir Dave yeah so uh fra V2 is the way that we're going to decentralize the the LSD uh system and so that is slated for I think probably like end of Q2 um most of it is is done it hasn't gone through the final final audit um we've we've set it up and and the audit date is like end of March I think yeah so Q2 yeah yes sir uh uh no but it'll have protocol own liquidity and curve so basically just the curve ammo for idle eth that is in the lending pool that no one's borrowing will be lped in in the fra uh we curve pool and if someone wants to borrow that to spin up their validators then they push yeah yeah yeah uh oh you mean literally just mint forax Ethan to like make it a CDP system you know we've we've thought about it for increasing yields and stuff but the only way to actually have that is if if people want to borrow fra right like like basically we've thought about it uh so I can't lie we definitely thought about it so we're kind of on the same page but uh we'll see undecided do you think the community would would vote for for that that risk of it I don't know I'm actually just asking I have no no idea like we've thought about we can propose it or you can propose it actually on on the governance for no but it's a good idea and I'm not going to lie we've thought about it but the the main thing is it's uh it's only as good as like you're saying people shorting fra right like people need to borrow it uh from like a but yeah oh oh if that's that's what you mean that I I think that that is a pretty risky Gambit I thought you meant more like uh you have a frax len pair for example of like you know um like let's say wbtc and then frax e for example right as as the borrow asset and someone says that I think Bitcoin is going to pump 10x and ethereum is not going to do anything so I'd like to use my Bitcoin as collateral and borrow tons of fraes because I'm going to sell it for more for more more Bitcoin yeah though that is a good idea I'm just saying I I I wonder how much volume it'll it'll get but that is a good idea we've thought about yeah oh what up uh I've been a pretty big advocate of adding longer maturity dates so for people who don't know um in fra V3 which is actually what the presentation is about after this uh we have these tokens called fra bonds and they all have a different maturity date and they trustless convert to Frack stable coin so they're very much similar to actual treasury bills what treasury bills are is they have a maturity date you know you're going to get repaid dollars you just don't know if dollars are inflating or or they're they're they're pretty good Peg to CPI or not right um we have three fxbs right we've launched them there's um you can do that up to a certain point actually it is a good idea for smaller uh rates but then if you think about it bonds move too right like like the bond actual price of t- bills moves when when interest rates change and so like if you basically fix the fra lend pair like the actual like lending protocols rate to zero so that someone's only essentially paying the the increase of the the bond interest what you're basically doing is giving a 0% uh loan right to some asset that is volatile right bonds do move up and down in price uh it's a good idea for like small amounts because like small amounts is in like 10% of fra market cap or something um you get into the liquidy problem and I don't know if there's like fans of liquidy and I like liquidy a lot too but one of the main issues with liquidity is uh fixed term uh borrowing right and so like it it doesn't work in situations where the interest rate should be way way higher than than what it is so in small amounts it works well which is also why liquid is market cap doesn't grow because in small amounts it works well yeah yeah go ahead yeah yeah I mean bond market liquidity is always a big problem for people that are in trafi and have have trafy experience um in theory there doesn't need to be incentivized liquidity people could just not buy the bonds from the auction contract and if they do buy them they just either have to hold them to maturity or like maybe OTC it or something like that just like trafi OTC that you pick up the phone and you're like I have this many bonds or something but uh I think there should be basically like a few major major liquidity pools like right now there's a 2026 fxb um uh that has millions of dollars of tvl both on curve and arbitrum uh curve as well and Main net um I think there should be a 2031 20 maybe like 2029 and stuff but yeah you're right not like every single year like because it it's kind of pointless right yeah I think maybe just one or two questions or something uh Dave um and then we can right or how long does it does it go yes yes sir yeah and and like uh this is a good time to emphasize like we've we've been here for a really long time and we're going to be here just like Bitcoin and ethereum so we we think multiple Cycles uh you know o over time and so the goal and and the vision is that we think in the next like 5 years there will be thousands and thousands of app chains and rollups especially if you've you know you've been around here at the conferences uh outside of stable coin Summit everything is app chain modular L2 different da and and everything right and so the goal with fraxel is to basically make it the chain where the most amount of either app chains mod chains actually settle their state to and and get incentivized to settle their state so we have this flocks block space incentives mechanism which is kind of the the way that our our point system are distributed and so anyone that uses fraxel for either building on top of or having an in Trine Bridge or actually pushing ZK proofs too they'll get a constant stream of of points and so a lot of people will have a interesting choice to make when they like go to a rollup as a service provider or something right and they see okay I want to launch my app I can do settlement on base ethereum this fractal that uh and then it it says if you pick fractal you'll get constant rate of uh emissions if you kind of think about it it's a little bit like curve since everyone here probably knows curve the reason curve is always in the like the king maker of like stable coins is that if you have a stable coin you'd rather just just stake it and curve and just earn some CRV right some some gauge like emissions it's better than just like having it in your wallet right and so curve is always the place where people just go to stake their stable coins right and so what we thought is okay if we can actually replicate this idea of you just push some proofs to this place and you get paid to do it and you can coordinate as many app chains to do this as possible and get paid to do it all of a sudden you have like a very very big Hub kind of a a settlement black hole because you can settle from all these different places and everyone's doing it because they're following their own incentives just cuz they're getting paid but then it's a very powerful thing to do right and and so once you have like 5 10 15 20 chains it becomes so much easier to actually get the remaining like 100 right and then once you have that it's you know yeah that's the five to 10 year Vision but the first 20 chains hopefully the first year right cool uh I don't know if uh maybe just one more and then we hang out and go to the main stage uh yes sir um you you mean like the oh oh like the idea that um you can kind of leave vfxs for like a bonding curve idea were I've thought about it I haven't really like modeled it out yet I know exactly the governance post you're you're talking about it's a really cool idea we might be able to do something with the new version of vfxs deployed to fraxel um but I think we might have to think about like the actual bonding curve it's it's a little bit it's a little bit difficult to do it especially on on Main net to be honest but it's a cool idea I actually really like it yeah cool be good yeah thanks everyone thanks for coming and uh the actual presentation is after I guess so