Frax Finance has opened a community voting session to decide on adopting BlackRock’s USD Institutional Digital Liquidity Fund, known as BUIDL, as a reserve asset for its new stablecoin, Frax USD (frxUSD). The voting is set to continue from December 27 through January 1, 2025.
This marks a pivotal decision for the decentralized finance protocol, which aims to establish whether BlackRock’s BUIDL will serve as the backing asset for its stablecoin. The proposal, shared with the Frax community, outlines BUIDL’s features, benefits, and its potential role in supporting Frax USD.
The assets managed by BUIDL are exclusively invested in government-issued assets such as cash, U.S. Treasury bills, and other similar obligations. Promoted as a blockchain-based investment solution, BUIDL aims to be a stable reserve backing that can generate yields, enhance liquidity, and minimize risks with the involvement of major financial players like BlackRock, Securitize, and Bank of New York Mellon.
Frax Finance’s Head of Governance, Nader Ghazvini, emphasized the strategic advantage of this collaboration, allowing Frax USD to benefit from one of the world’s most liquid assets while leveraging on-chain efficiencies and DeFi’s yield potential.
Launched in April 2024, BlackRock’s BUIDL has quickly accumulated over $500 million in assets under management as of July. The tokenized treasury fund is pegged to the U.S. dollar and provides investors with monthly dividends accumulated daily, facilitated through Securitize. The approval of the community vote may lead to a considerable enhancement in the stability and growth of Frax USD by integrating BUIDL as its foundational asset.
