The Frax Finance community is currently voting on adopting BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) as a reserve asset for the proposed stablecoin, Frax USD (frxUSD). The voting process began on December 26, 2024, and will run until January 1, 2025.
Support and Benefits
The proposed adoption of BlackRock’s BUIDL fund, which is pegged 1:1 with the US dollar, offers multiple benefits, including increased liquidity, yield opportunities, improved transfer capabilities, and reduced counter-party risk. This initiative is a bold step in bridging the gap between traditional finance and decentralized finance (DeFi) by bringing institutional-grade investments on-chain.
Community Engagement
The proposal, introduced by Securitize—a real-world asset tokenization platform, has received strong community backing. A prominent Frax Finance community member, “achaffee,” underscored the value of tokenized real-world assets (RWAs), deeming them a vital tool for integrating traditional finance into DeFi ecosystems.
About BlackRock’s BUIDL Fund
Launched in March 2024, BlackRock’s BUIDL fund surpassed half a billion dollars in assets under management within four months. It primarily invests in U.S. government securities and delivers daily dividends to investors through a partnership with Securitize. Its solid track record offers Frax USD a secure and stable backing if adopted as its reserve asset.
A Momentous Decision for the Future of Stablecoins
The adoption of BlackRock’s BUIDL fund could significantly enhance Frax USD’s stability and utility, setting a precedent for how decentralized financial protocols incorporate traditional financial instruments. The Frax Finance community eagerly anticipates the final vote count, which could mark a new chapter in stablecoin development.