Algorithmic / under-collateralized stablecoin
Frax Finance's assessment for RD-F-069 — scored yellow on the v1.7.0 rubric. The evidence below is the curator's reasoning for this score.
Evidence summary #
Scored on CURRENT frxUSD design (U2). frxUSD is fully collateralized: >=100% CR target (actual ~103.7%), backed by RWA T-bills (BUIDL/BlackRock, USTB/Superstate, USCC, AUSD, WTGXX, JTRSY). This is NOT an algorithmic stablecoin design in its current form. Historical context: FRAX v1/v2 (2020–2024) was fractional-algorithmic (partially FXS-backed via AMO); March 2023 USDC/SVB contagion caused brief FRAX depeg due to USDC collateral exposure. Migration to fully-collateralized model (FIP-419, Jan 2025) completed. Current risk: RWA off-chain dependency — Securitize BUIDL requires qualified-purchaser whitelist ($5M min, 0.15% fee), no 24/7 redemption guarantee, settlement latency 1 business day. frxUSD custodian pathway is fragmented. Yellow (not red): design is fully-collateralized, not algorithmic; but RWA off-chain redemption latency and whitelist restrictions are structural risks that distinguish this from a purely on-chain stablecoin.
Sources #
- URLUSDC breaks dollar peg — SVB exposure — CNBCCNBC: USDC depeg March 2023 SVB; FRAX held USDC collateral and depegged as contagion — historical algo-vulnerability contextretrieved 2026-05-17
- FIP-419: Launch frxUSD — Frax Governance ForumFIP-419: frxUSD launch; migration from FRAX stablecoin to frxUSD fully-collateralized design; RWA and stablecoin backingretrieved 2026-05-17
- Chaos Labs: frxUSD Token ReviewChaos Labs frxUSD review: 1:1 backing; BUIDL + USTB + USCC + AUSD + WTGXX + JTRSY composition; BUIDL permissioned qualified purchasers; BNY Mellon custodyretrieved 2026-05-17
- LlamaRisk: frxUSD Pegkeeper Onboarding ReviewLlamaRisk frxUSD Pegkeeper review: fully-collateralized design; custodian redemption dependency; Securitize whitelist; BUIDL 0.15% fee; no 24/7 guaranteeretrieved 2026-05-17
Methodology #
Classify whether the protocol is an algorithmic or under-collateralized stablecoin design per curator classification.
See the full factor methodology and distribution across all protocols →