After the Frax North Star Hardfork, the original Frax (FRAX) token was rebranded as Frax Legacy Dollar (FRAX).

The new frxUSD:

Frax USD (frxUSD) is a fully-collateralized stablecoin issued by the Frax Finance Protocol that can be redeemed for fiat. It employs a hybrid model where governance-approved enshrined custodians mint and redeem the coin using cash-equivalent reserves, supported by onchain mechanisms from the Frax Finance Protocol.

An enshrined custodian is a real-world entity authorized to mint or burn frxUSD at a 1-to-1 ratio against $1.00 of held cash-equivalent reserves. Specifically, they can create 1 frxUSD by depositing $1.00 in provable reserves, and retrieve $1.00 of those reserves by burning 1 frxUSD.

Governance adds real-world entities as enshrined custodians, setting a custodian cap that defines the maximum frxUSD they may mint based on their reserves. A frxUSDCustodian contract is deployed via this governance process, specifying the minting limit and the specific custody asset token (for example, Blackrock BUIDL).

While any user can interact with a frxUSDCustodian contract, the underlying reserve token may impose additional conditions like whitelists. This structure enables frxUSD to operate permissionlessly while allowing institutions to onboard in compliance with their internal rules. frxUSD is redeemable on demand for any custodian asset, but there is no guarantee it can be redeemed for a specific asset or from a specific enshrined custodian.

For instance, if Blackrock BUIDL and Superstate USTB serve as enshrined custodian assets, frxUSD is not guaranteed to be redeemable for both BUIDL and USTB if the entire supply of BUIDL is redeemed from the Blackrock frxUSDCustodian contract (or the reverse). frxUSD remains redeemable on demand from any frxUSDCustodian contract that holds collateral tokens.