Original Author: Alex Liu, Foresight News
Stablecoin Legislation and FXS
On May 20, the U.S. stablecoin legislation "GENIUS Act" passed a vote in the Senate, with two major steps remaining for formal approval: a vote in the House of Representatives and submission for the President's signature. The market previously viewed the Senate vote as the biggest obstacle to the bill's passage; barring any surprises, the complete passage of the bill is just a matter of time.
Which crypto project is the biggest winner of this legislative victory? Judging by token price performance, it may be Frax Finance.
With the bill passing 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 in the mainstream exchange price increase list. Even though the price has slightly retraced, looking at the longer timeline, FXS has still increased by over 100% this month.
Why is this bill beneficial for Frax Finance, and why do some view Frax as the biggest winner of the GENIUS Act?
Frax Finance
Frax Finance's products are not limited to stablecoins; they also include liquid staking, lending, L2, and more. However, they have deep connections 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, with the "entire roadmap aimed at becoming the first licensed fiat-backed stablecoin."
Frax founder Sam hints that Frax benefits the most from this legislation
But how does frxUSD become the "first" licensed fiat-backed stablecoin ahead of products like USDC and USDY? From a regulatory perspective, it indeed has the potential for "first-mover advantage."
Frax Finance's founder Sam Kazemian 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 may gain from this.
Sam with crypto-friendly Senator Lummis
If the speculation is true, as a drafter and participant of the bill, Sam naturally has a deeper understanding of the "GENIUS Act," making it easier for his project to meet the requirements. Additionally, whether his friendly relationship with legislators will open regulatory doors for FRAX's future remains to be seen.
FRAX's Future Roadmap
In addition to potential regulatory advantages, FRAX is building a vertically integrated stablecoin ecosystem, including frxUSD (stablecoin), FraxNet (bank interface), and Fraxtal (L2 execution layer), to adapt to future regulatory demands:
frxUSD: The stablecoin of FRAX, pegged 1:1 to the U.S. dollar.
FraxNet: A bank interface designed to connect traditional financial systems with DeFi.
Fraxtal: An L2 execution layer (which may gradually shift to L1), providing efficient trading 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 operations more flexible in 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 is actively engaging in stablecoin-related legislation, and the product roadmap is being actively adjusted to serve the narrative. As the "GENIUS Act" is further implemented, the performance of FXS (FRAX) is worth looking forward to.
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