The Frax Finance community vote has begun to adopt BlackRock’s USD Institutional Digital Liquidity Fund (USD BUIDL) as a reserve asset for the proposed stablecoin Frax USD (frxUSD).
A vote of decentralized finance (DeFi) lending protocol token holders (FXS), launched on December 26, has so far all been in favor of the proposal. All comments in the discussion are in favor. Voting runs until January 1, 2025.
According to a voting summary, passing the proposal for Frax USD could provide benefits including yield opportunities, deeper liquidity, transfer options and reduced counterparty risk due to BlackRock’s support.
In a December 22 discussion about the proposal, first proposed by Securitize, a real-world asset tokenization platform that is a broker-dealer of BlackRock BUIDL, a user with the handle achaffee said the move would help bridge traditional finance and DeFi.
According to achaffee, tokenized real assets (RWA) “offer an excellent bridge” between traditional finance and DeFi by bringing institutional-level investments on-chain.
“Over the past nine months, we have seen major players, including DAOs and decentralized protocols, put out large public RFPs to explore how they can most effectively strengthen their treasuries or back stablecoins through RWAs,” achaffee said. I wrote it.
“This initial exploration represents a significant advancement in how distributed players manage their financial resources and consider cross-industry asset strategies,” he added.
In less than four months since launching on March 15, BUIDL has surpassed $500 million in assets under management (AUM).
relevant: Securitize proposes the BlackRock BUIDL fund as collateral for Frax USD.
Prices are pegged 1:1 to the US dollar, and through a partnership with Securitize, daily dividends are paid directly to investors each month. The fund invests in U.S. government securities.
According to Dune Analytics data compiled by 21Shares, $3.4 billion worth of tokenized treasury funds are currently on-chain.
Frax is not the first to consider a potential BUIDL-backed stablecoin. Ethena Labs, the developer of Ethena, which is responsible for the USDe synthetic dollar, said on September 26 that it is developing a BUIDL-backed stablecoin.
The stablecoin, called USDtb, is a separate product from Ethena’s USDe. USDtb launched on December 16 and has accumulated $89 million in total value locked (TVL), according to data from DefiLlama.
magazine: Bitcoin payments are being undermined by centralized stablecoins.