April 19, 2024
Latest Cryptocurrency News

Frax Finance Allocates $250M, Boosts DeFi Liquidity

Frax Finance, a decentralized finance (DeFi) lending protocol, has made a huge step forward by passing a community governance proposal that approves a substantial $250 million allocation.

This allocation is intended for a new liquidity pool in partnership with Ethena Labs’ USDe, signaling a watershed moment in Frax’s Singularity Roadmap.

The proposal, endorsed on April 5, sets the stage for the creation of an automated market operation (AMO). This operation will facilitate the minting of fresh FRAX tokens, backed by overcollateralized debt.

Deepening Liquidity Pool and Diversifying Backing Yield

Ethena Labs emphasized the strategic significance of the proposal, highlighting its potential to create one of the most robust liquidity pools within the DeFi ecosystem.

Moreover, the move is anticipated to diversify Frax’s backing yield, fortifying its position in the market. In an April 8 X post, Ethena Labs stated:

“As of yesterday, FRAX has begun adding USDe POL which will create one of the deepest pools of dollar liquidity on-chain, and enable FRAX to diversify their source of backing yield.”

According to data from Curve Finance, the newly established Curve-based liquidity pool already boasts substantial figures, holding $44.9 million worth of liquidity as of 10:45 am UTC. This includes $30.6 million worth of FRAX coins and $14.6 million worth of the USDe synthetic dollar, signifying a promising start for the collaboration and its potential impact on the DeFi landscape.

Liquidity Pool for FRAX/USDe. Source: Curve Finance

Image from Wallpapers.com

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