Frax USD (frxUSD) is the dollar stablecoin at the centre of the Frax ecosystem. It marks the protocol's move away from its earlier fractional-algorithmic design towards a fully-collateralised model backed by cash-equivalent reserves and tokenised money-market exposure.
What it does
frxUSD is engineered to hold a one-dollar peg while remaining composable across DeFi. Redemptions are designed to route through regulated custodians and on-chain reserves, so the token can be used both as a settlement asset on-chain and as a bridge to yield-bearing off-chain instruments through the wider Frax stack.
The stablecoin sits alongside Frax's other primitives — its staked and yield variants — letting holders move between a plain dollar and a yield-bearing dollar without leaving the ecosystem.
Risks
As with any reserve-backed stablecoin, the peg is only as strong as the quality and liquidity of the collateral and the reliability of the redemption path. Readers should watch reserve attestations, custody arrangements, and the depth of on-chain liquidity before treating frxUSD as a like-for-like dollar. Regulatory treatment of reserve-backed stablecoins also remains a live variable.