Frax Finance has launched frxUSD, an innovative stablecoin backed by BlackRock's tokenized BUIDL fund, marking a milestone in the convergence between traditional and decentralized finance.
The launch of this new stablecoin, approved by the Frax community through its DAO, combines the transparency and programmability of blockchain with the stability and trust of traditional assets.
Its creators have stated that, with BUIDL as a guarantee, frxUSD is positioned as a new standard in the world of stablecoins, offering a secure, auditable and efficient solution for users and institutions.
frxUSD, a new standard for stablecoins
Frax Finance’s new stablecoin, frxUSD, is an evolution of its flagship stablecoin, FRAX. What sets frxUSD apart is its exclusive backing in BUIDL, BlackRock’s Institutional Digital Liquidity Fund, tokenized by Securitize on the Ethereum blockchain. This fund invests in low-risk assets such as cash, US Treasury bills, and repurchase agreements, ensuring robust and transparent stability.
The integration of BUIDL not only strengthens confidence in frxUSD, but also enables direct conversions to fiat currency through a partnership with Paxos. This makes frxUSD the first stablecoin to offer a seamless fiduciary on-ramp and off-ramp, which both Frax Finance and Securitize have noted as a significant advancement in stablecoin usability.
BUIDL's role in frxUSD stability
BUIDL has emerged as a key bridge between traditional and decentralized finance. By tokenizing US Treasury assets, BUIDL offers a safe and liquid investment solution, ideal for supporting stablecoins. Its integration with frxUSD not only reduces counterparty risk but also allows users to access returns generated by low-risk assets.
Carlos Domingo, co-founder and CEO of Securitize, he highlighted that “real-world tokenized assets provide an excellent bridge between traditional and decentralized finance, bringing institutional-grade investments to the chain with unprecedented transparency and efficiency.”
For his part, Sam Kazemian, founder of Frax Finance, said that: “By partnering with Securitize to access and leverage BlackRock’s BUIDL Fund, we are Setting a new standard for stablecoins”. Kazemian stressed that frxUSD combines the transparency and programmability of blockchain technology with the trust and stability of BlackRock’s leading treasury offerings, offering direct fiat swap capabilities and increased compliance with U.S. financial systems.
The integration of BUIDL as collateral for frxUSD was approved by the Frax community through a vote in their DAO. As reported Bit2Me News, the proposal received overwhelming support, with 100% of the votes in favor.
Impact on the DeFi ecosystem
The arrival of frxUSD not only benefits Frax Finance, but also has significant implications for the DeFi ecosystem at large. BUIDL already supports other stablecoins, such as Ethena Labs’ USDtb, proving its versatility and reliability. Being a tokenized asset, BUIDL facilitates the fast and efficient transfer of value between different platforms and blockchains, promoting interoperability in decentralized finance.
Furthermore, the launch of BUIDL-backed frxUSD marks a milestone in the evolution of stablecoins, merging the best of traditional and decentralized finance. With strong collateral, unprecedented transparency, and the backing of leaders such as BlackRock and Securitize, frxUSD is positioned as a reliable and revolutionary option in the cryptocurrency market. This development not only strengthens Frax Finance’s position, but also sets a precedent for the adoption of tokenized assets in the blockchain ecosystem.
