Everipedia co-founder Sam Kazemian talks about changing DeFi, stablecoins, and banking through his latest startup, Frax.
Sam Kazemian is an Iranian-American software engineer, entrepreneur, and cryptocurrency enthusiast. He co-founded Everipedia, the first decentralized online encyclopedia on the blockchain, with Theodor Forselius, Mahbod Moghadam, and Travis Moore in 2015.
In June 2019, Kazemian started working on “Frax” with former Federal Reserve nominee Stephen Moore. The company plans to design a stablecoin which maintains its stability through an algorithmically managed reserve of cryptocurrency and digital bonds.
What is your professional background and how did you get started in blockchain?
“I actually got into blockchain back in college through Bitcoin and altcoin mining in 2013-2014. I taught myself programming and crypto stuff as a side hobby while studying neuroscience and philosophy at UCLA.”
What is the mission of your company?
“Frax is a personal passion project of mine because I’ve always thought that an algorithmic/fractional stablecoin is not only possible but can be the only thing in crypto probably bigger than Bitcoin itself. Frax’s mission is to be the first and largest algorithmic/fiat stablecoin solution.”
What are the problems with central banking?
“I actually don’t think central banking has philosophical problems. It’s problems are its lack of transparency and lack of access to central bank interest rates by the common man.”
Why does the world need decentralized banks?
“I think a lot of this has to do with DeFi solutions having clear traction and use cases right now in crypto. Decentralized banking/DeFi allows anyone in the world to secure loans, have access to interest rates/lending, and access to a stable currency with zero counterparty risk and global settlement. Think of what Bitcoin did for transfer of value, but DeFi is for classical financial operations. DeFi and stablecoins get me as excited about crypto as Bitcoin itself.”
Are there any drawbacks to decentralized banking?
“Just lack of understanding, low liquidity in the lending/DeFi markets, and lack of actually decentralized stablecoins other than Dai.”
What services will your company offer?
“We won’t offer any actual services. We will build the open-source Frax protocol which will be a fully decentralized stablecoin. Part of the Frax system will include DeFi loans of the fractional reserve in a manner similar to compound.finance. Think of it as a decentralized central bank (a Decentral bank!).”
What do you consider the biggest barriers to mainstream crypto adoption?
“I think everyone finally understands this in 2019: volatility in asset prices and lack of financial operations (lending/interest rates). That’s why stablecoins and DeFi solutions are so important. People from Donald Trump to Jack Dorsey have commented on the volatility of Bitcoin. My personal take is: it’s not the technical/UX/scalability that’s the problem with adoption, it’s the volatility which makes crypto a poor currency.”
What is your opinion of Facebook’s Libra?
“I think it’s an interesting initiative, but it’s disappointing that they are trying to create their own (consortium/semi-centralized) cryptocurrency rather than embracing fully decentralized, open standards like Bitcoin, Ethereum, and EOS, etc. They’d have much better chances of success if they incorporated open-source crypto rather than trying to capture the market themselves.”
What blockchain companies (other than your own) are you most excited about and why?
“I really like what Square is doing with Square Crypto. Jack is really an iconoclast in his view of how Bitcoin and blockchain fit into the mainstream. I see eye to eye with him on a lot of things.”
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