The Frax community has approved the frxUSD stablecoin backed by BlackRock’s BUIDL
The Frax community has voted to pass FIP-418 to allow BlakRock's US Dollar Institutional Digital Liquidity Fund (BUIDL) to be used as collateral for the Frax-USD (frxUSD) stablecoin.
According to the previous proposal after six days of voting, the tokenized fund offers potential yield opportunities to frxUSD holders.
By coordinating a stablecoin with BlackRock Fund, which has more than $10.4 trillion in assets, the risk of opposition is reduced. Following the vote, Frex Finance founder Sam Kazemian wrote:
“frxUSD combines the transparency and programmability of blockchain technology with the trust and stability of BlackRock's core treasury offerings. This collaboration is a major step towards connecting traditional finance with decentralized systems.
The Frax community's decision to use BUIDL as collateral for its upcoming stablecoin is part of a broader trend toward creating stablecoins that reward holders financially.
FIP-418 passes unanimously. Source: Frax Finance Community
Related: Stablecoin adoption, ETFs to drive crypto performance by 2025: Citi
BUIDL will be a stablecoin container.
Securitize, the brokerage firm of the BUIDL fund, initially proposed to support frxUSD by BUIDL on December 22. The future stablecoin is linked to the US dollar at a ratio of 1:1 and is backed by US government securities.
In September, Etena Labs – developer of the USDE synthetic dollar – announced the creation of a BUIDL-backed stablecoin called USDtb (USDTB).
The BUIDL-backed stablecoin launched on December 16 and has a current market capitalization of around $70 million.
Etena Labs' BUIDL-backed stable coin, a separate product from Etena USDe, helps stabilize the synthetic dollar during negative funding rates and bullish markets.
Decentralized exchange Curve Finance has announced that users will be able to use BUIDL as collateral in November 2024 to issue Elixir's deUSD (DEUSD) yield stablecoin on the platform.
Rev Collins, co-founder of WeFi, recently told Cointelegraph that demand for stable assets that yield will increase as investors shift away from traditional stable coins that do not offer interest-bearing opportunities.
According to the technology executive, this trend towards real-world assets generating revenue will be augmented by agent AI and account abstraction, which will simplify the next-generation stablecoin's dividend collection mechanism.
Magazine: Unstable Coins: Devaluation, Bankruptcy and Other Risks Ahead.
