As a seasoned crypto investor with over a decade of experience under my belt, I find myself intrigued by the recent development between Frax Finance and BlackRock. The prospect of Frax USD, a new stablecoin backed by Blackrock’s USD Institutional Digital Liquidity Fund (BUIDL), is indeed exciting.
From December 27th, 2022 to January 1st, 2025, there will be a voting period for the acceptance of BlackRock’s USD Institutional Digital Liquidity Fund as a reserve asset for Frax Finance’s upcoming stablecoin, Frax USD.
Financing platform based on decentralized finance, Frax Finance, is gearing up to introduce a new stablecoin called frxUSD. However, before launching, the protocol must decide if it will utilize Blackrock’s USD Institutional Digital Liquidity Fund or opt for self-construction (BUILD) as its reserve asset.
In relation to this decision, Frax Finance presented a plan that explains the essential aspects, advantages, and history of BUIDL, positioning it as an on-chain supporting asset for Frax USD. They’ve extended an invitation to their community to cast their votes on whether to move forward with this potential partnership.
Frax Finance announced that the voting process for making BlackRock’s $BUIDL the initial supporting asset for the new Frax USD (frxUSD) stablecoin has begun!
On December 23rd, Frax Finance disclosed that BlackRock, a prominent asset management company, had put forth a proposal to act as the custodian for Frax USD in a separate announcement.
As per the joint plan, BUIDL represents a tokenized investment product that allocates its entire capital into government-backed assets such as cash, U.S. Treasury bills, repurchase agreements, notes, and various other debt instruments. This is marketed as a “blockchain-supported investment tool,” which can be utilized alongside other investments to bolster the reserves of stable assets.
One way to rephrase the given text for better readability could be: The advantages of keeping BUIDL as a reserve for backing listed assets in the proposal are numerous. These benefits include earning income through yield opportunities, improving liquidity, offering various transfer methods, and reducing external risks by collaborating with significant financial institutions like Securitize, BlackRock, and Bank of New York Mellon.
According to Nader Ghazvini, Head of Governance at Frax Finance, by collaborating with Securitize and BlackRock, Frax USD will have access to one of the world’s most liquid assets using BUIDL as its backing. This move not only exposes Frax USD to this global asset but also allows it to enjoy the advantages of DeFi, such as yield-bearing and on-chain efficiency.
By April 2024, BlackRock’s tokenized treasury fund, named BUIDL, accumulated over $500 million in assets under management following its debut in July of the same year. The value of each BUIDL token corresponds to one U.S. dollar. Investors enjoy daily accrued dividends that are disbursed monthly through a partnership between BUIDL and Securitize, facilitating seamless income distribution.
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2024-12-27 14:32