RIADeFiPublished by Ketju Research
Refusal file · tokenized RWA

Why Ketju rejected Frax USD (frxUSD)

Memo v1Published by Ketju Research

A registry memo, published verbatim and versioned. Superseded versions are recorded, never edited away. A rejection is a judgment for Ketju's client base and thesis, not a universal safety claim. Not investment, legal, tax, or compliance advice.

The memo

REJECTED, CORRECTING A JOIN-KEY GAP IN THIS REGISTRY'S OWN COVERAGE. This registry's existing "frax" entry (project id `frax`) is joined to DefiLlama's legacy algorithmic FRAX record — a mostly dormant, UST-depeg-era product now carrying roughly $44M of TVL — not to the live, custodian-backed frxUSD product DefiLlama actually tracks under the separate `frax-usd` slug, currently around $111M of TVL. Per this registry's own rule that a chain or project id must match the feed's string exactly or a rejection silently no-ops, that means the existing "frax" rejection has not been matching live frxUSD pool data at all. This entry closes that gap under the correct join key. On the merits, the underlying findings are the same ones already established for frxUSD: it is minted and redeemed against a fragmented set of six "enshrined" custodians (including BlackRock's BUIDL, itself already rejected in this registry) rather than a single unified reserve; no reproducible, dated, line-by-line reserve report was located; and the contract's freeze and blacklist authority reportedly carries no enforced timelock, meaning an admin action could execute without delay. sfrxUSD, the separate yield-bearing wrapper with a rotating-collateral strategy, remains a distinct and separately rejected risk under the existing "frax" entry's reasoning.

What would reopen the file

  • A reproducible, dated, line-by-line reserve report covering every enshrined custodian and any encumbrances is published
  • The freeze and blacklist admin function is placed behind an enforced timelock
  • The reserve composition sheds dependency on any custodian this registry has independently rejected, or those custodians clear their own rejections
  • This registry's existing "frax" entry is reconciled with this one so the two project ids do not present conflicting guidance on the same underlying frxUSD/sfrxUSD product family

Facts on file

Verdict
Rejected
Exposure
tokenized RWA
Chains examined
Ethereum
Instruments
FRXUSD
Memo version
v1
Reviewed
Next review

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