Frax Finance opens community voting until Jan. 1 to adopt BlackRock’s BUIDL for new stablecoin

The voting period to use BlackRock’s USD Institutional Digital Liquidity Fund as the reserve asset for Frax Finance’s new stablecoin, Frax USD, will begin from December 27 to January 1, 2025.

Decentralized finance protocol Frax (FRAX) Finance is preparing to launch its new stablecoin frxUSD. But first, the protocol needs to determine whether it will accept Blackrock’s USD Institutional Digital Liquidity Fund or BUIDL as its reserve asset.

To make this decision, Frax Finance shared a proposal introducing the features, benefits, and background necessary to understand BUIDL and how it will work as an on-chain backing asset for Frax USD. The protocol invited the Frax community to vote on whether the partnership should continue.

“Voting is live to add Blackrock $BUIDL as the first backing asset for the new Frax USD (frxUSD) stablecoin!” wrote Frax Finance in his official X post.

On December 23, Frax Finance announced that leading asset management firm BlackRock had offered to become the custodian backing Frax USD in a separate X post.

The vote to onboard Blackrock $BUIDL as the first backing asset for the new Frax USD (frxUSD) stablecoin is live! The Frax community can now cast their vote to enshrine this seminal partnership formally & pave the way for even deeper collaboration 🤝
https://t.co/oTU4KlJWhQ https://t.co/0XvvM88wJt

— Frax Finance ¤⛓️¤ (@fraxfinance) December 26, 2024

According to the shared proposal, BUIDL is a tokenized product that invests all its assets in government-issued assets, namely cash, U.S. Treasury bills, buyback agreements, promissory notes, and other liabilities. It is promoted as “a blockchain-based investment solution that can be used alongside other investments as reserve support for fixed assets.”

Some of the benefits of holding BUIDL as reserve supporting assets listed in the offering include creating yield opportunities, strengthening liquidity, offering multiple transfer options, and also minimizing external risk with the help of major financial firms such as Securitize, BlackRock and Bank. From New York Mellon.

“By working with Securitize and BlackRock to use BUIDL as a backing asset for Frax USD, Frax USD will gain exposure to one of the most liquid assets in the world while continuing to reap the benefits of DeFi’s yield-generating, on-chain efficiencies. ” wrote Nader Ghazvini, Managing Director of Frax Finance.

In July 2024, BlackRock tokenized treasury fund BUIDL had more than $500 million in assets under management after its launch in April this year. BUIDL’s price is pegged to the US dollar and investors receive daily accrued dividends paid directly monthly through its partnership with Securitize.