PANews reported on December 23 that the decentralized stablecoin protocol Frax Finance is considering integrating BlackRock's BUIDL token as a reserve asset in its upcoming relaunched Frax USD stablecoin, but this decision needs to be approved by the governance process. Securitize Markets has written a governance proposal for this, pointing out that this move will not only enhance the practicality, security and convenience of Frax USD, but also reduce counterparty risk of reserves. The BUIDL token currently manages assets of over $530 million, mainly short-term U.S. Treasuries. Although the proposal has not yet been voted on, initial feedback from members of the Frax Finance Decentralized Autonomous Organization (DAO) has been generally positive.
Meanwhile, Frax’s core team is planning to rename its core stablecoin to Frax USD (frxUSD) as described in another governance proposal, and to launch Staked Frax USD (sfrxUSD) as a yield-generating counterpart. If the partnership with Paxos is successful, frxUSD will be directly convertible to fiat currency and may benefit from Frax Finance’s efforts to gain access to the U.S. Federal Reserve’s master account. The launch of the stablecoin will also be accompanied by a new minting-redemption system, where entities will be able to obtain minting-redemption rights to frxUSD if governance allows their assets to back frxUSD.
Competing tokenized fund platform Superstate has also made two governance proposals suggesting that Frax adopt its USTB Treasury and USCC crypto arbitrage funds as stablecoin backing. Superstate calls on Frax to allocate up to $20 million to its USCC fund and up to $100 million to the USTB fund.
