Frax Community Votes on Using BlackRock’s BUIDL as Stablecoin Collateral

Voting to onboard Blackrock’s BUIDL as the first backing asset for Frax Finance’s upcoming frxUSD stablecoin has begun, according to a Dec. 26 X post from the Frax Finance X account. The vote is live on Snapshot and will end on Jan. 1.

So far, 2.8 million votes have been cast, and all of them have been in favor of the proposal. If it passes, it will grant the Frax community many benefits, such as yield generation, multiple options for asset transfer, and reduced counter-party risk as industry leaders like Securitize, BlackRock, and Bank of New York Mellon will back the frxUSD stablecoin.

BUIDL invests 100% of its total assets in cash, U.S. Treasury bills, notes, and other obligations issued or guaranteed as to principal and interest by the U.S. Treasury, and repurchase agreements secured by such obligations or cash, allowing investors to gain exposure to one of the most liquid markets.

“Holders benefit from a fund seeking a stable value of $1 per token and may earn any yield that is paid through daily accrued dividends issued directly to investors’ wallets as new tokens each month,” according to the proposal.

Timeline of Events

On Dec. 20, Securitize Markets, a tokenized real-world assets (RWA) issuer, submitted a proposal on behalf of BlackRock to introduce its BUIDL fund as a backing asset for the upcoming frxUSD stablecoin with exposure to the U.S. dollar. Securitize is BUIDL’s transfer agent, placement agent and tokenizes the fund.

BUIDL, short for the Blackrock USD Institutional Digital Liquidity Fund, was launched on March 21 and has $622 million in assets under management (AUM), according to rwa.xyz.

Frax is a decentralized stablecoin infrastructure provider. It currently has three stablecoins, FRAX, FPI, and frxETH, which have market caps of $648 million, $94 million, and $503 million. frxUSD is its latest stablecoin offering and will be a yield-bearing counterpart to the FRAX token.