The stablecoin bill has passed. How did FRAX become the biggest winner?

Written by: Alex Liu, Foresight News

Stablecoin Legislation and FXS

On May 20, the U.S. stablecoin legislation "GENIUS Act" passed a Senate vote, with only two major steps remaining for formal approval: a vote in the House of Representatives and submission for the President's signature. The market previously considered the Senate vote to be the biggest obstacle to the passage of the bill, and barring any unforeseen circumstances, the complete passage of the bill is merely a matter of time.

Which cryptocurrency project is the biggest winner of this legislative victory? Judging by the token price performance, it might be Frax Finance.

With the passage of the bill in the Senate, the Frax Finance token FXS (now renamed FRAX, not yet updated on centralized exchanges) briefly surged above 4.4 USDT, ranking first on the list of gains in major exchanges. Even though the price has slightly retraced at the moment, looking at the longer timeline, FXS has still increased by over 100% within the month.

Why is this bill beneficial for Frax Finance, and why do some people see Frax as the biggest winner of the GENIUS bill?

Frax Finance

Frax Finance's products are not just stablecoins, but also include liquid staking, lending, L2, and so on. However, they have deep roots with stablecoins. Frax was once the issuer of the hybrid algorithmic stablecoin FRAX, but after the collapse of Luna UST, it abandoned the "algorithmic stability" track and transformed into a fully collateralized stablecoin.

Subsequently, FRAX was further updated to frxUSD, using fiat currency as collateral, "the entire roadmap is to become the first licensed fiat stablecoin."

Frax founder Sam hinted that Frax stands to benefit the most from this legislation.

But how did frxUSD become the "first" licensed fiat stablecoin ahead of products like USDC and USDY? At the regulatory level, it indeed has the possibility of "gaining favor first from the source."

Sam Kazemian, the founder of Frax Finance, has frequently shared photos of himself with crypto legislative figures in Washington, D.C. since the beginning of this year. It is rumored that he has been deeply involved in the discussion and drafting of the 'GENIUS Act' as an industry insider. The market seems to be pricing in the regulatory advantages that Frax Finance is expected to have as a result.

Sam took a photo with crypto-friendly Senator Lummis.

If the speculation is true, as the drafter and participant of the bill, Sam naturally has a deeper understanding of the "GENIUS Bill" and can more easily align his project with the requirements. Additionally, it is uncertain whether a friendly relationship with legislators will open the regulatory green light for the future of FRAX.

The future roadmap of FRAX

In addition to the potential regulatory first-mover advantage, FRAX is building a vertically integrated stablecoin ecosystem that includes frxUSD (stablecoin), FraxNet (banking interface), and Fraxtal (L2 execution layer) to meet the demands of future regulatory environments:

frxUSD: As a stablecoin of FRAX, it is pegged to the US dollar at a 1:1 ratio.

FraxNet: A banking interface designed to connect traditional financial systems with DeFi.

Fraxtal: An L2 execution layer (or gradually transitioning to L1) that offers efficient transactions and scalability.

Token restructuring is also part of FRAX's future plans. FXS has been renamed to FRAX and endowed with functions such as Gas, governance, burning, and staking. This adjustment aims to enhance the functionality and market competitiveness of FRAX, making its operation more flexible within a compliant environment.

Staking FRAX for veFRAX can yield potential rewards such as FXTL (Frax's own points), Karak, Ethena, and Symbiotic points.

The founder actively operates and participates in stablecoin-related legislation, and adjusts its product roadmap to serve narratives. With the further implementation of the "GENIUS Act," the performance of FXS (FRAX) is worth looking forward to.