Frax USD

Frax USD is the current US dollar stablecoin of the Frax Finance protocol and trades under the symbol frxUSD. Each token is designed to be backed by cash-equivalent reserves held at regulated custodians and is redeemable for fiat currency. frxUSD is available on many chains, including Ethereum, Fraxtal (Frax's own layer-two network) and Arbitrum.

At the heart of the system are enshrined custodians authorized with the approval of Frax DAO: these institutions mint frxUSD against the reserves they hold and return reserves by burning tokens that come back to them. The reserves consist of tokenized funds that invest in short-term US Treasury bills, such as BlackRock's BUIDL fund and Superstate's USTB fund. Operational tasks such as compliance processes, custodian management and fiat redemptions are handled by Frax Inc., to which the DAO has delegated authority. For users seeking yield, a staked version, sfrxUSD, is also offered.

The main points to watch for frxUSD are the composition and transparency of the reserves, the custodians' redemption capacity, counterparty risks linked to tokenized funds and stablecoin legislation in the United States. On Lzzo.com, the dollar value of Frax USD is taken from DefiLlama's reference price; the historical chart also follows this source's data.