Securitize, the brokerage unit of BlackRock's tokenization fund BUIDL, has proposed to integrate BUIDL as a collateral asset for the Frax USD (frxUSD) stablecoin.
Securitize proposes to use BlackRock's BUIDL fund token as collateral for Frax USD
On December 22, 2024, the financial platform specialized in tokenizing Real World Assets (RWA), Securitize, announced a proposal to improve Frax Finance (Frax Improvement Proposal) to integrate BlackRock's BUIDL fund token as collateral for the Frax USD (frxUSD) stablecoin.
1/ BlackRock 🤝 Frax@BlackRock, the world's largest asset manager, is proposing to become an enshrined custodian to power Frax USD $frxUSD fiat redeemability.
— Frax Finance ¤⛓️¤ (@fraxfinance) December 22, 2024
Read the full proposal posted by BUIDL tokenization provider @Securitize here: https://t.co/K2kzZqGR10
Learn more 👇 https://t.co/7KC79iTGNG pic.twitter.com/k3c5BdBnbv
According to the proposal, the BUIDL fund not only brings attractive earning opportunities thanks to high yields, but also enhances the liquidity and minimizes the risks of Frax USD through collaboration with BlackRock.
If approved by the Frax DAO community, BUIDL will become an important part of the Frax USD mint-redeem system. Users through BlackRock's KYC will be able to deposit BUIDL tokens into the frxUSDBlackrockCustodian.sol smart contract and receive frxUSD at a 1:1 ratio.
Although the proposal has not yet been submitted for voting, the initial feedback from Frax Finance DAO members has been supportive. A member shared:
"I fully agree with this proposal as it combines the superior advantages of traditional finance (TradFi) and decentralized finance (DeFi). I believe this collaboration will play a crucial role in shaping the future of the financial industry."
Securitize's proposal comes as the decentralized stablecoin protocol Frax Finance is planning to update its development vision, change its logo and rename its core stablecoin to Frax USD (frxUSD) to fit its brand positioning. According to the announcement, frxUSD will be collateralized by assets such as:
- Assets in Fraxlend's collateralized debt positions (CDPs).
- Tokenized real-world assets (RWA) from reputable custodians.
- Other stablecoins (USDe, USDC, sDAI).
It can be seen that BlackRock's BUIDL fund, since becoming the world's largest tokenization fund, has continuously expanded its influence by expanding to multiple blockchains such as Aptos, Arbitrum, Avalanche, Optimism and Polygon.
In October 2024, BlackRock proposed to major exchanges like Binance, OKX and Deribit to integrate BUIDL issued by the group as collateral for futures trading.
Additionally, in November 2024, users will be able to use BUIDL as collateral on Curve to mint the deUSD stablecoin of Elixir Protocol, thereby opening up the possibility of using RWA assets in DeFi without losing the initial value of the RWA assets.
Previously, Ethena (ENA) also launched a new stablecoin product called UStb, developed in collaboration with Securitize and invested its reserves in the BUIDL fund.
With over $549 million in assets under management and a portfolio primarily invested in short-term US Treasury bonds, the BUIDL fund promises to bring stability and sustainability to the stablecoins using this token as a reserve asset.
Statistics on the total assets managed by BlackRock's BUIDL fund. Source: rwa.xyz (December 23, 2024)
Compiled by Coin68
