[FIP - 444] Add sGHO and USCC to sfrxUSD Strategies

Authors

Frax Core Team

---

Summary

This proposal seeks to expand sfrxUSD strategies by adding exposure to sGHO (with a $10M cap) and USCC (with a $25M cap). The objective is to enhance yield generation while maintaining diversification across DeFi-native and RWA-backed stablecoin strategies.

---

Background & Motivation

GHO is Aave’s native overcollateralized stablecoin, and sGHO represents its savings module, where users earn yield derived from GHO borrowing activity. Unlike external yield sources, sGHO yield is directly tied to Aave’s internal interest flows, making it a structurally sustainable and protocol-native yield source.

Integrating sGHO allows sfrxUSD to:

• Capture Aave-native revenue streams
• Align with one of the largest lending ecosystems in DeFi
• Benefit from a rate-controlled yield mechanism governed by Aave

USCC is a tokenized fund designed to provide exposure to cash-equivalent and carry strategies, combining short-duration Treasuries and crypto basis trades. As introduced in prior governance (FIP-420), USCC can serve as a yield source aligned with Frax’s RWA expansion strategy.

Adding USCC enables:

• Increased exposure to institutional-grade yield strategies
• Diversification into offchain + hybrid carry opportunities
• Alignment with Frax’s broader regulated asset framework

Together, these additions strengthen sfrxUSD’s position as a benchmark yield stablecoin, balancing DeFi-native and RWA-backed returns.

---

Proposal Details

1. sGHO Allocation

• Asset: sGHO
• Cap: $10,000,000
• Strategy Type:
  • Direct allocation to sGHO (earning yield from GHO borrow rates)
• Rationale:
  • Access to Aave-controlled yield (Savings GHO rate)
  • Exposure to Aave-native stablecoin economics
  • Simple and efficient integration via holding strategy

---

2. USCC Allocation

• Asset: USCC
• Cap: $20,000,000
• Strategy Type:
  • Direct allocation to USCC
• Rationale:
  • Exposure to RWA + crypto carry yield strategies
  • Complements existing assets like BUIDL / USTB
  • Expands sfrxUSD into institutional-grade yield sources

---

Risk Framework

• All allocations represent maximum caps, not required deployment
• Deployment will be gradual and opportunistic
• Strategies must meet sfrxUSD benchmark yield requirements
• Continuous monitoring of:
  • Smart contract risk (sGHO / Aave)
  • Counterparty and structure risk (USCC)
  • Liquidity and redemption conditions

---

Voting

• For: Approve adding sGHO (up to $10M cap) and USCC (up to $20M cap) to sfrxUSD strategies.
• Against: Do nothing.