An Interview with FRAX Founder Sam Kazemian, Creator of “The Stable Version of Bitcoin”
All art by William R Goodwin
We often forget that the technologists we revere today—Wozniak, Torvalds, Jobs, and Gates—were obscured in their youth. At best, they were seen as mystical celibates, whispering to their motherboards; at worst, freaks touting “fad” technologies like graphical user interfaces and computer mice. Unlike actors or musicians, whose creations are instantly digestible to the masses, technology overtakes our lives slowly—only proving itself after billions are made and it’s become an everyday necessity. Only then do we look back and give its creators their flowers.
Who are those misty-eyed dreamers today? The technological priests summoning the next digital revolutions? The men who dream in code? Like the Eye of Sauron, all attention falls on the realm of blockchain. The blockchain is the foundational technology of Bitcoin, cryptocurrencies, and most recently NFTS (non-fungible tokens).
Sam Kazemian is only 28 years old, but he’s already played a vital role in blockchain history. The Iranian-American entrepreneur started mining Bitcoin during his junior and senior years at UCLA. Along with Theodor Forselius, he went on to found Everipedia, the first encyclopedia on the blockchain—which has achieved loads of other “firsts” including helping the Associated Press inscribe the 2020 election results onto the blockchain. In 2019, Kazemian partnered with former Federal Reserve Board nominee Stephen Moore to create Frax. Frax is an entirely new asset class of cryptocurrency called “algorithmic stablecoins”—which will be explained below.
Like most tech wizards, Kazemian’s story is scored with eccentricities: he’s a gifted powerlifter, he’s hobnobbed with Andrew Yang and Larry King, and he appeared in the outro of a Juicy J music video. Recently, Kazemian and his team released Frax v2. If you’re searching for a new cryptocurrency that will shoot to the moon, this could be the one. We spoke to Kazemian about Frax, why it’s the “new digital dollar,” and how to invest in it. He also told us his lifting PRs (personal records) and his MBTI personality type.
Countere: Sam, thanks for speaking to Countere. To a non-technical user, what’s the difference between Bitcoin and Frax?
Kazemian: The non-technical way to view this is that Bitcoin is like digital gold. It has a fixed supply—the number of bitcoins is always going to be 21 million. It’s probably a good investment. Yet Bitcoin isn't fundamentally different than it was literally last March, right before the COVID-19 lockdown. It was $4,000 then, not $60,000. Its volatility remains the same.
The whole idea with these algorithmic stablecoins—Frax being the biggest one—is that we can build something as decentralized and useful as Bitcoin, but with the stability of the US dollar. Some people think that one day everything will be priced in Bitcoin, but I don’t ever think that’s going to happen.
The thing about cryptocurrencies is that you don’t have to worry about the government taking them down. The Bitcoin company isn’t going out of business because it doesn’t exist. You’re able to send cryptocurrencies and not have a bank account. But these cryptocurrencies are either fixed supply or have an inflation rate agnostic to their own demand—so they’re volatile and not really good for buying everyday stuff.
Algorithmic stablecoins are a new asset class that can be priced aware of themselves. They expand supply when their price is above a dollar, and they retract supply when prices go below. And nobody’s thought to do this until recently because everyone was using cryptocurrency like an investment.
Frax is a coin that’s literally pegged to the dollar. One FRAX is one dollar.
So it’s like the new digital dollar, backed up by math.
Yeah, it’s backed up by algorithms and cryptography. And it’s not super easy to do. A lot of algorithmic stablecoins have failed. You can’t just say something is worth a dollar and then expect it to be a dollar. If it was that easy, everyone would just print dollars. There's a bunch of failed projects that stay over a dollar for like two weeks, which sounds kind of good, but not if it's supposed to be stable. And then the other side is even worse, because if an algorithmic stablecoin starts trading at 85 cents or something, people will be like wow, thank God I didn’t go anywhere near this.
So, it's really difficult to get it right. And thankfully, Frax has not broken the peg a single time in its current 90 days of existence.
Can you give us a brief history of Frax?
The project was founded by me, Travis Moore, and Kedar Iyer in mid 2019. We soon brought on Michael Gruen, a good friend and highly motivated guy. Soon after, Stephen Moore and Ralph Benko joined the original team. The crypto bear market in 2019 was pretty brutal and we made a lot of progress in the theory, code, and design of Frax, but didn't raise any investment. People were sour on the idea of crypto from the 2018 ICO bubble. We started circulating the first versions of the Frax whitepaper in late 2019.
[Wild Man: An Interview With John McAfee]
In early 2020 there was some attrition as developing the protocol proved harder than we originally thought. The bear market still hadn't let up and it would only get worse until March 2020 (where it would bottom out). Around when COVID started, a few people dropped off to pursue other ventures, go back home, or just take some time off. Kedar and Michael departed to pursue other things. Stephen and Ralph moved toward a more hands off advisory role for economics and DC outreach (which was further made impractical due to COVID and the world shutting down). Jason Huan joined the team soon after in mid-2020.
We released Frax v1 on December 20th, 2020. It was an instant hit and phenomenon. We had over $300 million worth of "total value locked" (TVL) in the protocol. This is a term used in decentralized finance (DeFi) which means the total value of all the cryptocurrency inside your product including loans, liquidity, collateral, and yield generation. It was incredible because I've never started a project that accrued over a quarter billion dollars of value in a matter of days. Imagine if your friend told you that he started a website and after a couple of days there was over $300 million worth of products being bought, sold, and listed on it. Wouldn't that be insane? That's basically what the crypto version of $300 million TVL means.
There's two tokens in the system: FRAX and the Frax Share token (FXS). FRAX is meant to be $1. FXS is not a stablecoin and is meant to be volatile and accrue value if the system is growing. The FXS token is what you would want to hold if you wanted to take part in supporting FRAX and be a part of its governance voting. Since FRAX is meant to always be $1, the FXS token is meant to be entirely volatile like Bitcoin and increase in price with Frax usage and growth.
The idea is that if you believe Bitcoin is a good investment but a bad currency, you should look into Frax because it is a decentralized stable version of Bitcoin. You can invest in the Frax protocol by buying FXS.
FRAX is the first algorithmic stablecoin to be listed on Binance, the world’s largest cryptocurrency exchange. Unfortunately, Binance’s functionality is limited in the United States—but it’s still quite easy to invest in the Frax Share Token (FXS).
If all the world’s economic systems collapse, would FRAX still be at $1 and able to be traded?
Since Frax tracks the price of the dollar, I'm unsure what $1 would buy you if the entire world's economic system collapses. But Frax can, in theory, re-peg its algorithms to track a new price target that is different from the dollar if the day truly comes where we can no longer rely on the legal tender of the US but need a decentralized, trustless, stable store of value. Bitcoin fulfills the role of decentralized digital gold & investment. But it is not, and will never be, stable in purchasing power. That's why decentralized stablecoins like Frax have the most potential for growth after Bitcoin itself.
What books, manifestos, or philosophical texts inspired Frax?
The original Seigniorage Shares whitepaper by Robert Sams gave me the first ideas about stablecoins back in 2014. I got into crypto around 2013-2014 back when I was at UCLA. Back then it was just a hobby for me. That whitepaper is kind of like the Bitcoin whitepaper of algorithmic stablecoins. The Frax whitepaper was written with inspiration from that.
This post by money scholar JP Koning about why Bitcoin's volatility can never go down is a really important read for why we need decentralized stablecoins. Frax is the exact opposite of Bitcoin. Frax is always tracking a stable price peg.
What's your current daily schedule? What percentage of your time do you spend coding a day?
My day is pretty simple but packed. I work from home now and Frax is entirely remote—decentralized on the blockchain, who would have thought. There's no Frax office just like there's no Bitcoin headquarters. I usually wake up, crack a Red Bull or coffee—no heavy food, just caffeine—then get straight to work with some Zoom calls. Around noon, I start coding or doing product and protocol design. I still don't eat a full meal yet because I don't like feeling groggy and lethargic. Around 5-6pm, I sometimes take a break to crack another Red Bull or coffee and lift for 2-3 hours. The pattern here is consistent work while you have high energy. I hate eating meals early in the day and it's easier to save the time and stay mentally sharp.
By 7-8pm, I'm absolutely exhausted and hungry so I'll have my first (and usually only) meal of the day. I don't watch what I eat or track any calories. I truly eat however much and whatever I want since it's the only meal I'll have in 24 hours. Afterwards, if I have more stuff to work on for Frax, I'll actually have a third coffee (I know...) and work into the night. Sometimes I have meetings late into the night due to timezone differences between Asia since crypto is truly global. There's just as many important calls late into the night as there are in the day. I usually head to bed around 3am.
Then wake up at 9am and do it again!
What role does lifting play in your life?
Lifting plays a huge part in my life. I've been lifting since 2012 and was on the UCLA powerlifting team. I really like lifting because once you're under the bar it doesn't matter who you are, how much your net worth is, who you know, or what other things you've accomplished in life—the weight is the same for everyone. It's an equalizing force. You have to put in the work and consistency to accomplish your goals. I think it's a really important part of my life to stay strong physically and sharp mentally. If I don't lift, I feel like I'm losing years of hard work so I'm never going to stop.
I don't actually go to the gym anymore after COVID, but I bought an entire gym for my apartment. It's a bit cramped in here, but I have everything a pro gym has. Literally. There's a squat rack, bench press, barbells, and even foam deadening pads so I can deadlift without making much noise. I think it speaks for itself how seriously I take the lifting when I have to recreate the entire thing even during a global pandemic. I won't let my routine change just because the world happens to be experiencing the deadliest plague in over 100 years. It's still no excuse. I got the gear in May of 2020 less than 2 months after everything shut down. When there's a will, there's a way.
[You Say Essential Worker, I Say Essential Lifter]
What are some of your proudest personal PRs (personal records)?
Some gym PRs pre-COVID were:
Squat: 455lbs
Bench: 385lbs
Deadlift: 550lbs
Not sure about them now, but it can't be too low since I've been keeping up my lifting.
What's your MBTI score?
INTP-A. (Editor’s note: Although 16Personalities diagnoses Sam as an INTP, he is the epitome of an INTJ Lifter.)
Follow Sam Kazemian on Twitter.
