Frax DAO Votes to Use BlackRock’s BUIDL as Stablecoin Collateral
On December 26, the Frax Finance community began voting on whether to add BlackRock's BUIDL, a tokenized US Treasury product, as a reserve asset for Frax USD, its upcoming stablecoin.
Launched in March, the fund aims to provide decentralized organizations and institutional investors with a blockchain-based investment solution, offering a new method for backing stablecoins.
Frax Community Votes in Support of the Proposal
The proposal, introduced earlier this month by Securitize, has garnered positive responses from the community, with all 42 votes cast in favor. Voting will remain open until December 31, 2024. If approved, integrating BlackRock’s BUIDL could enhance yield generation, lower counterparty risk, and facilitate asset transfers through collaborations with industry leaders like BlackRock, Securitize, and Bank of New York Mellon.
Community discussions emphasized the significance of incorporating tokenized real-world assets (RWAs) into the Frax ecosystem. A user named "achaffee" noted that these RWAs bridge traditional finance and decentralized finance, allowing institutional investments to transition onto the blockchain more effectively.
“In the past 9 months alone, we’ve seen major players including DAOs and decentralized protocols put out large, public RFPs to explore how they can most effectively bolster their treasuries or back their stablecoins with RWAs,” achaffee remarked during the December 22 forum.
Not the First
While Frax Finance considers adopting BlackRock’s BUIDL as collateral, Ethena Labs has already leveraged the fund to support its new stablecoin, USDtb. Last week, Ethena Labs announced its decision to use BUIDL for its stablecoin to offer users an alternative product with a different risk profile compared to its USDe stablecoin.
“In light of the rapidly accelerating demand for different stablecoin options, we saw a clear opportunity to provide a new product that offers users an entirely different risk profile from USDe without them having to leave our trusted ecosystem,” stated Ethena founder Guy Young. The stablecoin aims to maintain a 1:1 peg to the US dollar, holding 90% of its reserves in BUIDL. Launched on December 16, USDtb has already reached $89 million in total value locked (TVL), according to DefiLlama data.