Summary
Ketju does not approve Frax's frxUSD or sfrxUSD, for different reasons. sfrxUSD's yield strategy may move all staked frxUSD into Ethena carry trades and DeFi strategies. frxUSD has no dated, line-by-line reserve report that we could reproduce. frxUSD is a fully collateralized stablecoin that holders redeem against assets held by Frax's enshrined custodians. Frax says its backing today is BlackRock BUIDL and Superstate USTB. Current Frax materials do not name Maple, Ondo or Mountain as reserves. A Chaos Labs review states that "no comprehensive unified attestation covering all frxUSD reserves" exists. sfrxUSD is a managed yield vault, and its mandate includes venues Ketju does not approve. We will not approve it unless the mandate excludes those venues outright. That is a standing condition. frxUSD can be approved later, in a separate memo, once a reproducible reserve report exists.
Review triggers
- Any reserve asset outside cash, insured deposits, short government securities or approved tokenized Treasury funds
- Reserve composition or sfrxUSD allocation not reproducible from dated public reports
- frxUSD backing below 100% or a custodian redemption failure
- Any sfrxUSD allocation to an unapproved carry, lending, liquidity or private-credit strategy
- A proposed-size frxUSD or sfrxUSD sale or redemption that exceeds the written cost or time limit
Facts
- Verdict
- Not approved
- Type
- Dollar lending
- Chains examined
- Ethereum, Fraxtal
- Instruments
- FRXUSD, SFRXUSD
- Reviewed
- Last confirmed