Frax Finance has initiated voting on whether to adopt BlackRock's USD Institutional Digital Liquidity Fund (BUIDL) as the primary reserve for the new stablecoin Frax USD (frxUSD).
Voting on New Reserve Choice
The voting period runs from December 27, 2024, to January 1, 2025. An official post on X invited community participation, detailing the benefits of holding BUIDL as a reserve asset, such as yield generation, liquidity enhancement, and minimized counterparty risks.
Advantages of Choosing BUIDL
According to Nader Ghazvini, Head of Governance at Frax Finance, the proposal positions the new stablecoin to benefit from one of the world's most liquid assets while leveraging the yield-bearing advantages of DeFi. The protocol suggests that adopting BUIDL could strengthen liquidity, enhance efficiency, and align frxUSD with secure, high-performing assets.
Details about BUIDL Fund
Launched on March 21, 2024, BUIDL is BlackRock’s first tokenized fund built on Ethereum as an ERC-20 token. It exclusively invests in U.S. government-issued assets such as Treasury bills, cash, and repurchase agreements. The fund reached over half a billion dollars in assets under management in less than four months after its launch.
Managed in collaboration with Securitize and financial institutions like the Bank of New York Mellon, BUIDL is also being explored as collateral for derivatives trading. This initiative may strengthen Frax USD's position as a leading stablecoin in the market.
