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The DeFi protocol Frax Finance has unveiled a new stablecoin pegged to the dollar, which is backed by tokenized assets from BlackRock’s treasury fund. This initiative aims to connect the divide between traditional finance (TradFi) and decentralized finance (DeFi).
Frax Finance has announced the release of frxUSD, a rebranded version of the FRAX stablecoin that is linked to the U.S. dollar. This new asset is secured by shares of the tokenized BlackRock USD Institutional Digital Liquidity Fund (BUIDL), which includes cash, U.S. Treasury bills, and repurchase agreements.
As part of this partnership, BUIDL will act as the custodian asset for the minting and redeeming of frxUSD, ensuring a transparent and verifiable collateralization process. According to RWA.xyz, as of January 8, 2024, the BUIDL fund oversees approximately $652.5 million in tokenized assets, providing a yield to maturity (YTM) of 4.5%.
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The tokenization of BlackRock’s assets is handled by Securitize, a global frontrunner in real-world asset (RWA) tokenization and the first organization to issue tokenized assets in both the U.S. and Europe.
Carlos Domingo, Co-Founder and CEO of Securitize, highlighted in the press release that tokenized RWAs enhance the link between TradFi and DeFi, facilitating institutional investment into blockchain technologies. “The integration of frxUSD and the BUIDL fund is a clear indication of the transformative power of tokenization in contemporary finance,” he stated.
In November 2024, the market for tokenized real-world assets exceeded $13 billion. At present, the sector’s volume has reached $15.3 billion, marking an increase of nearly 11% over the past 30 days, according to RWA.xyz.
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