Sam Kazemian, founder of Frax Finance, said that as long as stablecoins grow in proportion to each other through shared liquidity pools and staking schemes, there will never be real competition among stablecoins.
Kazemian explained that the growth of the stablecoin ecosystem is not a zero-sum game, as each coin is increasingly intertwined and dependent on the performance of the other. Kazemian believes that the greater transparency of USDC across the industry and its reserves should make it the most valuable stablecoin for collaboration within the ecosystem.
He called USDC a low-risk and low-innovation project, acknowledging that it serves as a base layer for further innovation in other stablecoins. While the FRAX stablecoin is algorithmically partially stable, Kazemian says pure algorithmic stablecoins simply won’t work.