TL;DR
- Frax Finance community is voting on adopting BlackRock’s BUIDL as a reserve asset for the proposed stablecoin, Frax USD (frxUSD), with voting open until January 1, 2025.
- The proposal, supported by the community, aims to create yield opportunities, enhance liquidity, improve transfer options, and reduce counter-party risk.
- BlackRock’s BUIDL fund, launched in March 2024, has surpassed half a billion dollars in assets under management and is pegged 1:1 with the US dollar.
The Frax Finance community has initiated a pivotal vote to determine whether BlackRock’s USD Institutional Digital Liquidity Fund (BUIDL) should be adopted as a reserve asset for the proposed stablecoin, Frax USD (frxUSD).
The voting process, which began on December 26, 2024, will remain open until January 1, 2025. So far, all votes cast by the decentralized finance (DeFi) lending protocol tokenholders (FXS) have been in favor of the proposal.
Benefits of the Proposal
According to the vote summary, the adoption of BlackRock’s BUIDL as a reserve asset for Frax USD could offer several advantages. These include creating yield opportunities, enhancing liquidity, improving transfer options, and reducing counter-party risk due to the backing of BlackRock.
The proposal, initially presented by Securitize, a real-world asset tokenization platform, aims to bridge the gap between traditional finance and DeFi by bringing institutional-grade investments on-chain.
Community Support and Discussion
The proposal has garnered significant support from the Frax Finance community. In a discussion on December 22, a user with the handle achaffee highlighted the potential of tokenized real-world assets (RWAs) to bridge traditional finance and DeFi.
Achaffee noted that RWAs provide an excellent bridge by bringing institutional-grade investments on-chain. This sentiment was echoed by other community members, who believe that the integration of BlackRock’s BUIDL could mark a significant evolution in how decentralized players manage their financial resources.
BlackRock’s BUIDL Fund
BlackRock’s BUIDL fund, which has surpassed half a billion dollars in assets under management (AUM) in less than four months since its launch on March 15, 2024, is pegged 1:1 with the US dollar and pays daily accrued dividends directly to investors through a partnership with Securitize.
The fund primarily invests in US government securities, providing a stable and secure backing for the proposed Frax USD. The ongoing vote to adopt BlackRock’s BUIDL as a reserve asset for Frax USD represents a significant step for Frax Finance and the broader DeFi community.
If approved, the proposal could enhance the stability and utility of Frax USD, while also fostering greater integration between traditional finance and decentralized finance. The Frax Finance community eagerly awaits the outcome of this vote, which could set a new precedent for the future of stablecoins.
