This Week in Frax - July 21, 2023

Sam K on Ripple, PrismaRisk releases sfrxETH review, FXS whale almost liquidated, Bluechip drama

Samuel McCulloch
Samuel McCulloch
July 21, 2023

Bluechip Drama Explained

The entire week in the Telegram chat was dominated by discussion of Bluechip’s stablecoin ratings. We covered the back and forth between Sam K and Deathereum on Monday.

Check out our write up of the events

Sam Kazemian comments on the SEC vs Ripple news

Editors note: We’re reprinting Sam Kazemian’s tweet thread in full here.

It's important we don't lose site of what Judge Torres' Ripple ruling means (and what it doesn't mean). I'm going to try to cut through the noise and keep things concise.

My main conclusion is that this is a political battle and after the first inning, crypto is winning. 🧵

Without any doubt, most importantly, the case struck down the "embodiment doctrine" that has pervaded mainstream legal discourse until this ruling. It's great to finally break free from this psyop.

Embodiment doctrine states that tokens most likely "embody" the contract (carry the spirit of the original fundraising event+promotions+scheme+circumstances) with them into existence & thus every future sale, trade, secondary tx, speculation, etc is a security tx under Howey.

This ruling unequivocally said tokens do not necessarily "embody" the contract just as orange groves or their oranges didn't embody the contract when sold in Howey. This is stated in no uncertain terms. No analysis/lawyering is needed. Only 1st grade reading comprehension.


In the coming weeks, it's important to not get distracted by details or legalese that the other side wants to smoke screen with. They want to psyop you into thinking guilty/security until proven innocent. Not innocent/token until proven guilty/security.

@iampaulgrewal said it best. Do NOT be mistaken or misled by people interpreting the ruling as sometimes XRP is a security & sometimes it's not. The real ruling is that the token is NEVER a security. Don't forget this. Break free from the psyop.

It’s not an a priori fact that a token embodies the original investment contract scheme/ICO.

A token+issuer+promotion+obligations=investment contract.

But just token=investment contract is NEVER true.

That is the clear ruling from this case. Full stop. Don't get it mixed up.

Without assuming the embodiment doctrine, THEN each class/type of token transaction needs to be analyzed. Which is what Judge Torres did. And found that sometimes XRP+contracts+promotions=securities offering while sometimes buying/selling XRP itself=not securities. Very simple.

A lot of embodiment maxis want to psyop you to believe the ruling is all wrong. They'll try to smoke screen with completely irrelevant examples. Because they know now that everything hinges on embodiment doctrine not being thrown out by the judicial branch.

"If I bought Meta stock on an exchange & not from the company it's still a security! If Meta gives equity comp to employees, that's still a sweat equity offering!"

This ruling is all incorrect (if I assume the embodiment doctrine). They won't say that part out loud.

"If I treat the token as a stock" then...all my arguments work! Judge Torres is wrong. They want to say a token always carry the spirit of the original offering even after a decentralized network/system exists. But it's not true. Now people are finally snapping out of it.

I respect Matt Levine & love his writing (and still do!), but he's fully outted himself as a Genslerian token embodiment theorist.

He refuses to believe people writing to the court under oath that they bought tokens thinking of them as genuine commodities can exist. They don't really mean what they testified apparently. "Everyone surely had the same economic motivations!" is what an embodiment maxi claims.

Even if people write under oath to a court of law that they didn't! This irks embodiment maximalists. They refuse to accept that it's even possible or a reasonable starting point. They are the extremists.

This is why you have people that are extremely anti-crypto rejoicing about "crypto investors being protected." It's all political positions. The people that seem like they have never touched crypto REALLY want people trading crypto to be protected. How nice of them!

Countless XRP holders/speculators wrote the court telling the truth: they bought XRP because they genuinely thought it as if they were speculating on a commodity asset like oil, sugar, gold. This is simply a political position Genslerians do not accept.

That's why they're all extremely annoyed/silent after this ruling. They'll claim this protects institutions & harms retail the most. While the actual people that they supposedly want to protect are the happiest & celebrating:

Even when actual token holders write to a federal judge under oath saying they truly, honestly trade & hold XRP like a commodity & they want commodity disclosures, not securities disclosures. Apparently, these people don't exist to protection racket maxis.

Thankfully a growing moderate, reasonable group of bipartisan lawmakers, judges, & regulators believe securities/embodiment maximalism is wrong including Judge Torres, Commissioner @HesterPeirce, Congressman @PatrickMcHenry, @CongressmanGT, & Senators @SenGillibrand, @SenLummis.

We're blessed America has a brilliant legal system, separation of powers, & a civilly engaged population. America has been on the right side of history with every kind of innovation including railroads, automobiles, & the internet. It will be with crypto as well.

PrimsaRisk releases Collateral Assessment of sfrxETH

This is the best and most in-depth report on sfrxETH we have seen so far. Every possible risk metric is analyzed and reviewed. This is the gold standard for understanding sfrxETH.

Check out this new LSD staked ETH yield tracker

Head over to Joey to check out their beta launch that tracks all LSD ETH yields. They also have a Telegram group you can join and discuss.

Huobi lists FXS

Convex shifts votium incentives for cvxFXS/FXS to new pool

Frax whale almost got liquidated

We saw a FXS whale who was getting dangerously close to liquidation this week. He was within .20 of losing his whole stack.

After we tweeted this, he started to pay down his debts and and currently has a $5.40 liquidation level.


If he had been liquidated, it would have been the largest so far on Fraxlend. The largest liquidations were a month ago and Frax received over $100k in fees.

IQ WIki on Daves speech at ETH CC

IQ Wiki wrote an epic recap of Dave’s speech from ETH CC

Watch the full video here of his speech.

Sommelier Fraximal vault still growing

Fantom yields are crazy rn


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