[FIP - 425] AUSD as Collateral and Custodian Asset for frxUSD

Author: Agora

Summary

This proposal seeks to introduce AUSD as collateral backing Frax USD (frxUSD), delivering utility and liquidity as reserves behind the stablecoin.

AUSD is a digital dollar minted 1:1 with USD fiat. AUSD is designed to be a secure digital currency, utilizing one of the world’s largest custodian banks to safeguard assets.

AUSD’s 24/7 liquidity, transparent holdings, institutional-grade custody, and bankruptcy-remote structure make it an appealing asset behind Frax USD.

This proposal looks to introduce AUSD as a collateral assets with an initial cap of $25M

Background and Motivations

frxUSD seeks to onboard billions of dollars as a fully collateralized, fiat-interchangeable asset backed by various stable and yielding assets that can be rebalanced based on the optimal asset allocation by the protocol, depending on the market environment.

AUSD aims to achieve similar liquidity and trust as larger stablecoins such as USDC and USDT, which will help enhance the liquidity and access to fiat on and off ramps of frxUSD as we continue to build together.

Agora’s team is both TradFi and crypto-native.

Our co-founders, Nick van Eck, Drake Evans, and Joe McGrady have extensive experience and deep expertise in this sector as a result of their work in various DAOs at an institutional level as well as as core contributors. Frax has been a valued partner in AUSD’s growth and together, have the potential to drive further utility and liquidity to digital dollars.

AUSD Overview

At Agora, we believe the dollar belongs in the world’s hands. That’s why we’ve created AUSD, a digital dollar minted 1:1 with USD fiat. With AUSD, billions of people across the globe can now enjoy a more secure, inclusive financial system and an instant, low-cost gateway to the global economy – built on the world’s most widely recognized currency.

AUSD may be used, kept, or exchanged online wherever it is accepted and is 100% backed by Agora’s Reserves, which is composed of cash and cash equivalents, such as overnight repurchase and reverse repurchase agreements and short-term U.S. Treasury securities, and other U.S. Dollar-denominated assets such as regulated stablecoins.

We’ve built AUSD to be the first fully collateralized, freely tradable digital dollar that is partner-focused, scalable, and dependable. AUSD is the best stablecoin for your business or any businesses building on top of your blockchain network because we are:

1. Institutional-Grade: We use the largest regulated GSIBs (Globally Systemically Important Banks) and investment managers.
2. Credibly Neutral: We do not compete with our end customers.
3. An Open Model: We believe businesses and their users drive utility and liquidity. We believe they should play the largest role in the economic value chain. We are here to expand utility, drive global liquidity programs, and compliance. Your platform, your money.
4. Infrastructure Purpose Built for Business: Businesses are our core customers, and we are focused on building infrastructure that is low-cost and supports all of their needs.

Key Details and Milestones

• AUSD is a competitor to USDC and USDT and offers an alternative for frxUSD cash backing
• Direct access to GSIBs, integrations with Centralized Exchanges, and growing AUM.
• Currently launched on 5 chains, Ethereum, Avalanche, Sui, Mantle, and Injective (first native stablecoin on the network) and live on 15 LP Pools/Vaults with over $20M in TVL.
• $60M+ AUM (high of ~$75M) and $10M daily transfer volume (high of ~$45M). Latest stats can be found on CoinMarketCap.
• • Total transfer volume reached 3.2B and total holders reached 7.4K in December, 2024.
• Of ~$1.1M in total net revenue earned since launching AUSD, almost 70% has been shared with businesses we’ve partnered with under our Open Model.

Legal Design and Asset Management Overview

The Agora Reserve Trust is a Delaware Statutory Trust that holds assets on behalf of outstanding AUSD holders. The Agora Reserve Trust is the sole LP of the Agora Reserve Fund. In the event of bankruptcy or insolvency of the parent or operating entities, the trust will redeem AUSD holders with assets in the trust directly. The Agora Reserve Fund is managed by VanEck, a $120B asset manager as of September 30th, 2024. State Street acts as the cash custodian and admin of the fund.

A sample portfolio of the Agora Reserve Fund assets backing AUSD is provided below:

Voting

For: Add AUSD to back Frax USD with an initial cap of $25M. Against: Do nothing.