Key Notes
- The Frax DAO is voting on using BlackRock’s tokenized treasury product as stablecoin collateral with 42 community members already voted in support of the motion.
- The voting is expected to close on December 31, 2024.
- While Frax Finance is still looking to adopt Blackrock’s BUIDL for collateral, Ethena Labs had already embraced the fund for its USDtb stablecoin.
On Thursday, December 26, the Frax Finance community began voting to determine whether BlackRock’s BUIDL, a tokenized US Treasury product, should be added as a reserve asset to serve as a collateral for Frax USD, the platform’s upcoming stablecoin.
The fund, launched in March this year was designed to offer decentralized organizations and institutional investors a blockchain-based investment solution, providing a novel approach to backing stablecoins.
Frax Community Votes in Support of the Proposal
The proposal initially unveiled earlier this month by Securitize has received positive feedback from community members, with many advocating for its adoption. So far, a total of 42 votes have been casted with all voting in favor of the proposal.
The voting period will remain open until December 31, 2024. If approved, the integration of BlackRock’s BUIDL is expected to bring several advantages, such as improved yield generation, reduced counterparty risk, and streamlined asset transfers through partnerships with industry leaders like BlackRock, Securitize, and Bank of New York Mellon.
During discussions leading up to the vote, community members highlighted the broader implications of integrating tokenized real-world assets (RWAs) into the Frax ecosystem.
A user known as “achaffee” noted that tokenized RWAs act as a bridge between traditional finance and decentralized finance, enabling institutional-grade investments to seamlessly transition on-chain.
“In the past 9 months alone, we’ve seen major players including DAOs and decentralized protocols put out large, public RFPs to explore how they can most effectively bolster their treasuries or back their stablecoins with RWAs, achaffee remarked during the December 22 community forum.
Not the First
Meanwhile, while Frax Finance is looking to adopt BlackRock’s BUIDL as collateral for its stablecoin, Ethena Labs has already utilized the blockchain fund to back its newly launched stablecoin USDtb.
In an announcement last week, Ethena Labs said it decided to adopt BlackRock’s BUIDL for its stablecoin to provide users an alternative product with a distinct risk profile compared to its USDe stablecoin
“In light of the rapidly accelerating demand for different stablecoin options, we saw a clear opportunity to provide a new product that offers users an entirely different risk profile from USDe without them having to leave our trusted ecosystem,” said Ethena founder Guy Young.
The newly launched stablecoin is designed to maintain a 1:1 peg to the US dollar, holding 90% of its reserves in BUIDL. Ethena Labs said it worked with Securitize for the development of USDtb. The stablecoin officially debuted on December 16 and has already accumulated $89 million in total value locked (TVL), according to DefiLlama data.
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Chimamanda is a crypto enthusiast and experienced writer focusing on the dynamic world of cryptocurrencies. She joined the industry in 2019 and has since developed an interest in the emerging economy. She combines her passion for blockchain technology with her love for travel and food, bringing a fresh and engaging perspective to her work.
