The control finding
Legacy FRAX is a governance-managed stablecoin with mixed on-chain and centralized collateral; it is a separate balance sheet from the current reserve-backed frxUSD product.
- Backing
- A governance-managed combination of on-chain collateral and centralized assets distinct from the newer frxUSD balance sheet.
- Holder’s position
- Legacy FRAX is a protocol stablecoin claim, not the same legal or reserve product as current frxUSD.
- Redemption or exit
- Exit depends on Frax protocol facilities and market liquidity; holders should not assume current frxUSD redemption terms apply.
Dependencies an advisor should record
- Frax governance
- Legacy collateral contracts
- Centralized collateral issuers and custodians
- Secondary-market liquidity
Material incident check
- Frax governance formally separated legacy FRAX and frxUSD balance sheets; ticker similarity must not collapse the two products.
Why this distinction matters
Record Frax governance and protocol operating roles as the controlling party, verify direct-redemption eligibility, and do not treat an on-chain balance as eliminating reserve, custody, contract, or legal dependencies.
On-chain mechanisms sit beside custodians, real-world assets, a central transaction orderer, or other parties a court or regulator can compel. That finding can coexist with a sound reserve, useful product, or appropriate client role. The grade prevents the on-chain wrapper from being mistaken for the absence of an administrator.
Questions before use
- Does the exact contract and chain match the instrument reviewed here?
- Which party can mint, burn, pause, upgrade, block, or redeem?
- Does the client have direct redemption access or only secondary liquidity?
- What protocol, bridge, wallet, and custodian dependencies are added?
- Which event would force review or exit?
Sources
- Frax Governance: FIP-430 · primary
- Frax: Documentation · primary
- DefiLlama: Stablecoins circulation dataset · secondary
Documents and product terms can change. This profile records the control interpretation reviewed on 2026-08-19; verify current terms before implementation.
Legend: No freeze key: no issuer or administrator can freeze an address at this layer · Governed, no freeze: on-chain collateral and governance set the terms, but no issuer blocklist exists · Mixed control: on-chain mechanisms sit beside custodians, real-world assets, a central transaction orderer, or other parties a court or regulator can compel · Issuer can freeze: a named organization or administrator controls issuance, transfers, reserves, redemption, or address restrictions. How grading works.