frxUSD (formerly FRAX) is a fully-collateralized stablecoin issued by the Frax Finance Protocol, designed to be redeemable for fiat currency. It operates under a hybrid framework that combines offchain custodians with onchain infrastructure developed by the protocol for minting and redemption. ^[2]

Overview

frxUSD is the stablecoin of the Frax Finance Protocol and is designed to be pegged to the US dollar. It is the first and only stablecoin with parts of its supply backed by collateral and part of the supply fractionally stabilized. On February 23rd, 2023, the Frax Finance community voted to fully collateralize it. ^[3]

The price of frxUSD and collateral are all calculated with a time-weighted average of the Uniswap pair price and the ETH:USD Chainlink oracle. The Chainlink oracle allows the protocol to get the true price of USD instead of an average of stablecoin pools on Uniswap. Historically, at genesis, frxUSD (formerly FRAX) was 100% collateralized, meaning that minting frxUSD only requires placing collateral into the minting contract. During the fractional phase, minting frxUSD required the appropriate ratio of collateral and burning the ratio of FRAX (formerly FXS). This design was implemented so that as the velocity of the system increases, it becomes easier and safer to include volatile cryptocurrencies such as ETH and wrapped BTC into future pools with governance.

Frax Staking

Frax Finance protocol allows frxUSD holders to lock up frxUSD tokens to generate yield on various pools on different chains. ^[1]

ATW Partners Investment in frxUSD

On January 14, 2026, Frax announced a joint initiative with investment firm ATW Partners and digital asset custodian BitGo. The partnership centers on an institutional investment into frxUSD to bridge traditional and decentralized finance. Key details of the announcement include:

• Investment: ATW Partners agreed to deploy up to $50 million into frxUSD.
• Custody: BitGo Bank & Trust will provide qualified custody for the frxUSD held by ATW Partners.
• Reserve Backing: The frxUSD reserves are backed by tokenized U.S. Treasury exposure via a WisdomTree government money market digital fund (WTGXX) on the FraxNet platform.

Frax founder Sam Kazemian stated that the partnership demonstrates the utility of stablecoins for modern financial institutions. The firms also stated their intention to expand the partnership to develop further institutional and B2B applications for frxUSD. ^[4]