7 New Things We Learned About Fraxtal From Our Interview With Frax Founder Sam Kazemian

Samuel McCulloch
Samuel McCulloch
Feb 14, 2024
7 New Things We Learned About Fraxtal From Our Interview With Frax Founder Sam Kazemian

In our recent interview with Frax Finance founder Sam Kazemian, we picked his brain on Fraxtal, Frax's novel L2 blockchain. We learned a ton of new info from the interview and we've picked 7 things from our conversation which wasn't in the docs released this past week.

How Sam Views Fraxtal

Kazemian told us that Fraxtal is a modular L2 blockchain built by Frax, designed for general computation rather than a specific application. Unlike an Appchain, Fraxtal welcomes anyone to build on it and offers a unique incentive and technology layer.

While Fraxtal points exist, FXS remains the core token that captures the ecosystem's value. In the long run, FXS is envisioned to be the staking token for the entire Fraxtal network, governing and validating various modules and technologies being built.

Sam emphasizes that Fraxtal is not just a rollup but a general compute platform, encouraging developers to build on it and potentially leverage Fraxtal's technology for their own L3s, Validiums, or Appchains as they grow.

He went on to say that the core part of what makes Fraxtal special is Flox, its incentive mechanism design. Frax has always been a leader in being at the forefront of incentive design and it shows in Fraxtal.

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"The Flox mechanism...is like a weekly airdrop and whatever dApp is the most popular gets a big amount of the points."

The Flox epochs are set at 1 week in the beginning, as that is what other protocols have set as the normal time for an epoch. While the time might shorten into the future, the idea of Flox should match other incentive programs for ease of understanding.

Asset Availability Sampling

One of the more interesting things Kazemian shared with us is that the Flox mechanism will use a random sampling of data to determine points. There will be no set time or block when snapshots are taken. Instead, Kazemian told us about asset availability sampling, which will randomly choose blocks during the epoch to review. This will prevent any negative farming where Sybilers only hold assets through a specific time period and then sell them or move to another farm.

veFXS Boosting

One of the questions we asked Kazemian was about veFXS boosting. Boosts provide an additional bonus for Flox rewards to contracts or users that hold or veFXS. Sam clarified that boosts are not bribes, saying "I don't think it has a bribe component." But he did say there would be a way to "delegate" vefXS to contracts, although he's unsure if it will be ready by a specified date (March 13th).

frxBTC on the Roadmap

Kazemian told us about their upcoming plans for FrxBTC, which he aims to make the biggest issuer when it comes to Bitcoin.

Instead of trying to compete directly with Bitcoin itself, FraxBTC takes a different approach. Kazemian wants it to become the most widely used and circulated form of Bitcoin within DeFi. This means FraxBTC could be used as collateral for loans, for making payments, and for various other DeFi applications.

Currently, Wrapped Bitcoin (WBTC) holds the title of the largest Bitcoin unit issuer. However, FraxBTC aims to offer distinct advantages. It will be completely decentralized, unlike WBTC which relies on a centralized custodian. Additionally, FraxBTC will utilize a multi-computational threshold redemption system, adding another layer of security and trust.

In our discussion, Kazemian referenced the evolution of money, where paper receipts eventually surpassed the value of the underlying gold they represented. This suggests that FraxBTC, if widely adopted, could potentially become more valuable and used than actual Bitcoin.

"FXS is King"

DeFi Dave, curious about Frax Finance's long-term game, Kazemian, and his response revealed a bold vision stretching far beyond the current crypto hype.

"We're not just launching another chain with quick points and airdrops," Sam asserted. "Frax aims to be the issuer of the 21st century's most important assets." This is a decades-long commitment, ensuring these assets permeate the global economy.

FXS reigns supreme. Sam emphasized, "It's where I store my net worth. We're building for decades, aiming to become a foundational protocol like Ethereum or Bitcoin." He even drew inspiration from Vitalik Buterin's Ethereum journey, highlighting the power of staying true to a singular vision and token (ETH) for long-term impact.

While Sam personally favors a single token model, he acknowledged the decentralized governance structure. While Sam might favor one system over the other, "FXS holders ultimately decide," he stated. "Points earned through modules might merge into FXS, or the community might choose a different path." Dave then noted that "Sam isn't FXS; Frax governance is truly decentralized."

Allusions to Amazon AWS

Dave asked Sam Kazemian if the scenario of Frax becoming a top 5 chain and points converting to a more liquid token is similar to AWS splitting off from Amazon and rewarding power users with shares. Kazemian confirmed it's a good analogy, similar to how Amazon foresaw the potential of AWS and its impact on the company.

He emphasizes that Fraxtal is like the "AWS of the financial stack." A foundational element with broader applications beyond just Frax's current offerings. Kazemian noted how some questioned Amazon's move into cloud computing, the same type of people might not understand Frax's focus on a generalized blockchain initially.

Amazon identified the server space opportunity due to lower margins compared to Google's ad revenue and Microsoft's focus on software. This gave them a head start in a crucial area that led to billions in growth. For Frax, Fraxtal is in the early stages, and most likely will be part of the top 1% of chains that will likely exist in the future. Kazemian believes Frax is laying the groundwork for something special, similar to how AWS became a core part of Amazon's success.

A Universe of Fraxtals

We asked Kazemian about Fraxtal's endgame, specifically the vision of a ZK L1 where block hashes are committed to the network, similar to Celestia's thin layer approach. Sam confirmed this and expanded on the idea of a "universe of Fraxtals" connected at the state transition level.

He wants interoperability beyond basic bridges, aiming for seamless communication between Fraxtal and various L1s and rollups. This aligns with the modularity aspect of Fraxtal and contrasts with individual interoperability solutions from other rollup providers.

Sam envisions Fraxtal becoming a central point of reference for the state of these connected chains, enabling applications built on any participating chain to function atomically across the entire "universe." Its an incredibly ambitious vision and he said he would be expanding on this idea at ETH Denver, where he said "All roads would lead to Frax."

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