Sam Kazemian Moves FRAX Into frxUSD, a Fiat-Backed Dollar

Sam Kazemian, founder and CEO of Frax Finance, reworked the protocol’s original fractional-algorithmic FRAX into frxUSD, a fiat-redeemable, fully collateralized stablecoin. Frax Inc, a public-benefit corporation, serves as the delegated issuer and manages day-to-day issuance and reserve operations under a governance delegation from the Frax DAO.

Frax governance approved proposals to separate legacy FRAX from frxUSD and to delegate compliance and reserve management to Frax Inc. Under those governance rules, Frax Inc handles custodian onboarding, audits and attestations, KYC/KYB onboarding, fiat redemption operations and reserve composition, while surplus operating revenue is returned to the DAO and the DAO retains the power to amend or revoke the delegation.

frxUSD is documented as backed 1:1 by permitted cash-equivalent and tokenized U.S. Treasury reserves. Frax documentation names several permitted reserve tokens, including tokenized treasury funds labeled BUIDL, USTB, JTRSY, WTGXX and AUSD. Enshrined custodians and Frax Inc mint and burn frxUSD one-for-one against those reserves within defined caps.

Users can mint and redeem frxUSD via FraxNet using assets such as USDC, PYUSD, USDT, USDB and approved tokenized treasuries. frxUSD is available on more than 20 blockchains. The protocol also offers a staking product, sfrxUSD, which routes yield from treasury-linked instruments back to holders.

On 19 September 2026, the Frax Facts reserve sheet listed roughly $104.5 million in real-world assets and tokenized treasury holdings against about $103.7 million in frxUSD liabilities, a coverage ratio near 100.8%. Market-tracking data at the same time showed frxUSD circulating supply around $100.4 million.

The transparency sheet itemized holdings including a large WTGXX position held in a BitGo Trust account, USTB held in a redemption contract, an FDIC-insured Erebor Bank FBO reserve account of about $2.0 million, and other tokenized treasury lines. Those entries appear on Frax’s published reserve page and are not a third-party audit letter.

Frax documentation references a July 2025 Zellic audit covering frxUSD components and lists a proof-of-reserves file from Chaos Labs in public posts. The protocol notes these materials alongside on-chain reserve data but treats social posts and on-chain proofs as distinct from formal attestations.

Protocol documents state that frxUSD redemptions can be fulfilled with any available custodian asset and do not guarantee delivery of a specific reserve token or a particular custodian if inventories are exhausted. Governance rules separate token-layer ownership, which remains with the DAO, from issuer-layer operational control, which rests with Frax Inc under the delegation.

Sam Kazemian co-founded Everipedia in 2014, graduated from UCLA in 2015 and began work on Frax in 2019. The earlier FRAX dollar, built on a fractional-algorithmic model, remains in circulation as a separate product from frxUSD.