Exploring FraxLend, BAMM, and the Future of the Frax Ecosystem with Sam Kazemian
If you are in the Frax Finance official Telegram GC, you’d have observed that Sam Kazemian, co-founder of the Frax protocol has been shedding a bit of light on various aspects of the project’s development, including permissionless pools, BAMM integration, oracles, stability mechanisms, and the expansion into real-world assets.
Here are the key takeaways…
Permissionless Pools and Reliable Oracles:
FraxLend, a key component of the Frax ecosystem, has been exploring the idea of permissionless pools. However, according to Kazemian, enabling permissionless pools requires reliable oracles for effective operation. Deployers also need a deep understanding to set up these pools correctly.
Importantly, Kazemian clarified that FraxLend does not hold accountability for “bad debt” due to the unique nature of fTokens. To address this concern, the team believes the Byzantine Automated Market Maker (BAMM) is a more suitable solution for long-tail assets. Unlike traditional oracles, BAMM doesn’t rely on external price feeds and therefore doesn’t accumulate bad debt.
BAMM Integration and FXBs:
BAMM, which stands for Byzantine Automated Market Maker, is set to be integrated into a new version of FraxSwap with an upgraded architecture. Kazemian likened this integration to the transition from Uniswap v2 to v3, indicating a significant advancement in functionality and efficiency.
The flexibility of FXBs, the native token of the Frax ecosystem, allows them to operate on both FraxLend pairs and BAMM. Kazemian assured that FXBs will function on both platforms without the need for third-party oracles, streamlining operations and reducing potential vulnerabilities.
Oracles, Stability, and Regulatory Procedures:
Addressing concerns about oracles and stability mechanisms, Kazemian clarified that stablecoin oracles, including crvusd, are not immutable and can be adjusted as needed. He emphasized that considering stablecoins as immutable assets, akin to Ethereum or Bitcoin, is a misconception.
Regarding KYC (Know Your Customer) requirements, Kazemian highlighted that Frax v3 doesn’t require on-chain KYC. Instead, regulatory procedures are handled off-chain by custodians, ensuring compliance with regulations while preserving user privacy.
Real World Assets and Frax Bonds:
The discussions delved into the integration of real-world assets (RWAs) and the Frax ecosystem. Kazemian stated that FXBs, which are an integral part of the Frax protocol, do not provide rights to off-chain assets or redemption for fiat.
They assure conversion to one FRAX stablecoin at maturity without the need for KYC. Additionally, questions about auto-renewing FXB bonds were answered with the clarification that FXBs don’t offer rights to off-chain assets and have specific maturity dates.
Frax Ecosystem Expansion and Yield Generation:
As the Frax ecosystem evolves, the potential for staking and yield generation has been a topic of interest. Kazemian compared FXBs to Maker’s DSR, highlighting their versatility and potential for offering short-term yields. He also explained the redemption process for FRAX from FXB tokens, emphasizing that the contract responsible for creating FXBs also facilitates their redemption once the maturity timestamp is reached.
Conclusion:
The project’s focus on innovative solutions, such as BAMM, and its commitment to regulatory compliance highlight its determination to create a stable and sustainable algorithmic stablecoin protocol. As the crypto space continues to evolve, Frax remains at the forefront of innovation, offering a unique approach to price stability and value preservation.
