Frax Finance Launches frxUSD Stablecoin Backed by BlackRock’s BUIDL Fund

• Frax Finance has launched frxUSD stablecoin backed by BlackRock’s BUIDL fund for stability and yield.
• frxUSD stablecoin is pegged 1:1 to the U.S. dollar and integrates traditional finance with blockchain.
• Frax plans to expand frxUSD utility by applying for U.S. Federal Reserve Master Account access.

Frax Finance has introduced a new stablecoin, frxUSD. The stablecoin is backed by BlackRock’s BUIDL tokenized fund. This move connects traditional finance with decentralized ecosystems. The stablecoin is designed to provide stability and yield for users.

FIP-418 was recently approved by the Frax community, allowing the use of BUIDL as collateral for frxUSD. After a span of six days of voting, the proposal received full support of the Decentralized Autonomous Organization.

BUIDL Fund’s Role in frxUSD

BUIDL will serve as the custodian asset for frxUSD. The fund invests in liquid instruments including U.S. Treasury bills and repurchase agreements. BUIDL has more than $648 million in assets under management. It is seeking to reduce risk and maximize yield opportunities for frxUSD balances.

The new stablecoin is pegged to the U.S. dollar at a 1:1 ratio. This ensures price stability for users. Frax Finance has also partnered with Paxos to allow direct conversion of frxUSD into fiat currency.

Yield Distribution for Holders

Holders of frxUSD will benefit from yield distributions generated by the underlying assets in the BUIDL fund. This initiative aligns with Frax Finance’s strategy to integrate traditional financial products into decentralized finance.

Frax Finance plans to apply for access to the U.S. Federal Reserve Master Account. This move aims to enhance the stablecoin’s utility in regulated markets. The introduction of frxUSD highlights the growing adoption of real-world assets for stablecoin backing.

Broader Trends in the Stablecoin Market

The launch of frxUSD follows similar initiatives in the stablecoin market. Ethena Labs recently introduced USDtb, backed by BUIDL, to reduce volatility. On Curve Finance, users can mint deUSD stablecoins using BUIDL as collateral.

The stablecoin market is evolving amid changing regulatory landscapes. The European Union’s Markets in Crypto-Assets regulation, fully enforced since December 2024, has set new standards for issuers.

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