The tokenized platform Securitize, under BlackRock, announced on 12/21 that it will introduce BlackRock's institutional digital liquidity fund BUIDL as one of the reserve assets for the stablecoin Frax USD.
Currently, this proposal has not undergone formal voting, but members of the Frax DAO are quite optimistic, with some stating that this will be one of the innovative collaborations between traditional finance (TradFi) and decentralized finance (DeFi).
Securitize proposed to introduce Frax USD with BUIDL as one of the reserve assets.
Securitize stated that incorporating the BUIDL managed by BlackRock into the reserve asset list of Frax USD would not only enhance the security and convenience of Frax USD but also reduce counterparty risk of the reserve assets. If this proposal is approved, Frax USD will become another stablecoin supported by BUIDL, following the stablecoin USDtb from the stablecoin protocol Ethena. BUIDL is currently primarily invested in cash, U.S. Treasury bonds, and repurchase agreements, managing assets exceeding $530 million.
BlackRock currently manages assets of approximately $5.3 billion in BUIDL. The Frax USD is about to be revamped, adding reserves and a stakeable stablecoin.
The Frax team plans a comprehensive upgrade to Frax USD, renaming it to frxUSD. According to the governance proposal, the reserves for frxUSD will include the Ethena stablecoin USDe, USDC, and the stablecoin sDAI from the DeFi protocol Sky Protocol, as well as collateralized debt positions (CDPs) within Frax and cash-equivalent asset (BUIDL). Additionally, Frax plans to launch a stakeable stablecoin, Staked Frax USD (sfrxUSD), to provide additional yield.
Frax founder Sam Kazemian stated that this revision includes the design of a 'built-in custodian' mechanism, which is a specially authorized institution or entity that has the right to mint or redeem frxUSD. These custodians must be approved by the Frax governance layer to be authorized to operate.
Sam Kazemian further stated that if BlackRock's proposal is approved, any user who goes through KYC can mint frxUSD 1:1 using BUIDL, and the same applies for redemptions.
(BlackRock launched the tokenized fund BUIDL on Ethereum and strategically invested in Securitize)
This article discusses the major overhaul of the Frax USD stablecoin! The Securitize proposal includes the BlackRock tokenized fund BUIDL as a reserve asset. It first appeared in Chain News ABMedia.
