1/ We evaluated onboarding $frxUSD as a PegKeeper asset for $crvUSD. Based on our analysis, we recommend onboarding frxUSD with a $3m debt ceiling. 🧵

2/ Peg behavior has been stable. Since May, frxUSD has held within ±10bps of $1 in nearly all hours, with only 3 outlier deviations. Recovery times were fast—typically 1–2 hours.

3/ 💧 On-chain liquidity is strong relative to market cap. ~$10.7m in onchain liquidity with a 25% average utilization over 30 days. Curve pools dominate frxUSD liquidity, particularly sUSDS/frxUSD.

4/ 🏦 Reserves are fully backed by tokenized T-bill assets (e.g. BUIDL, USTB, WTGXX). The system is overcollateralized at ~103.7%. Legal wrappers vary in quality; key custodians include BlackRock and Superstate.

5/ 🔐 Risks remain. Smart contracts are upgradeable and unaudited (however simple due to being a custodial stable). sfrxUSD yield strategy lacks transparency. Governance is off-chain and controlled via a 3/5 multisig with no timelock- tho it is structured to be GENIUS-compliant

6/ 📉 Adoption is early-stage. Active usage and transfer volume are low. Most frxUSD is staked (sfrxUSD) or bridged. Still, DeFi integrations are growing, and cross-chain support is broad.

7/ 🧾 Legal progress is ongoing. Frax Inc. is consolidating reserves and preparing for GENIUS licensing. Current oversight comes via underlying custodians, not at the issuer level.

8/ ✅ Recommendation: Onboard frxUSD with a $3m debt ceiling. Peg performance and liquidity are strong, but transparency and adoption are still developing. A measured entry with upside as maturity improves.

9/ For a thorough analysis of $frxUSD, read the full Pegkeeper onboarding report here: